Nintendo cuts price of Wii console to $199

Dan Gallagher
MarketWatch (MCT)

SAN FRANCISCO — Nintendo Ltd. cut the price of its popular Wii console by $50 to $199, the latest price reduction by video game console makers who have watched sales fall sharply over the last six months.

Late Wednesday, Nintendo issued a statement announcing the reduction, which had been widely expected across the gaming industry after rivals Sony Corp. and Microsoft Corp. scaled back the prices of their own consoles earlier this year.

It is the first time the Wii has seen a price reduction since its initial launch on the market in late 2006 — the longest a game console has ever gone at its initial price.

"We expect the price cut, coupled with the release of several key first-party titles, to spur demand for the console, helping to provide the console with some momentum going into the holiday season," Edward Williams of BMO Capital Markets wrote in a note to clients Thursday.

The Wii has been the most popular of the latest generation of gaming consoles, outselling the PlayStation 3 and Xbox 360 since its launch. More than 50 million units have been sold to date globally, according to Nintendo.

However, the console has also suffered from a recent slowdown in sales, along with the rest of the industry. The Wii sold 277,400 units in the U.S. during the month of August, according to data from the NPD Group. That's down 63 percent from the 753,000 units sold in February.

Sony was the first console maker to cut prices for the current holiday season. On Aug. 18, the company cut the price of the PS3 by $100 to $299.

Less than two weeks later, Microsoft cut the price of its Xbox 360 Elite unit to match the PS3 and $299. The company had previously cut a lower-end model to the $199 price point.

Analysts predict that the holiday shopping season will make up for a weak spring/summer period for the industry. Game sales fell for their sixth consecutive month in August, according to NPD data. Sales are expected to move back to gains in September thanks to lower console prices and popular games such as "The Beatles: Rock Band."

"A competitive console market with incremental price cuts have historically helped to drive strong software sales through the course of the video game cycle," Colin Sebastian of Lazard Capital Markets wrote in a report Thursday.





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