Nintendo President Critical of Hardware Price Cuts

[Nathan Meunier]

Nintendo President Critical of Hardware Price Cuts

"Price cuts? Pffff. We don't need any stinking price cuts. Mwuhahaha."


Ok, well that's not quite what he said, but it appears Nintendo certainly isn't going to be giving in to pressures to chop prices of its über-hot selling Wii and DS hardware anytime soon. In an interview with Japanese gaming site Touch-DS, translated via Kotaku [http://kotaku.com/5075682/price-drops-nintendo-president-not-a-fan], Nintendo president Satoru Iwata stated he feels those consumers who initially support companies by buying new gaming hardware are being sent mixed messages when the prices are later dropped.

"This is my personal thinking, but when the model's price-tag drops over time, manufacturers are telling consumers it's better to wait, and I've always thought that was a mistake," said Iwata.

Right. This tends to tick people off who shelled out big bucks for a new system only to find out they could have saved a large fraction of their hard-earned money by waiting just a wee bit longer. But what about the many gamers who can't afford to drop hundreds on the latest gaming hardware the second it comes out? These folks wait many agonizing months in hopes of a reduction to bring prices to a more reasonable level.

Of course, there really hasn't been much incentive for Nintendo to cut its prices. The Wii's immense popularity, its inability to stay on retail shelves for very long, and a low pricing point continues to drive demand. It's doubtful Nintendo is in any serious danger of losing tons of console sales for sticking to its guns.




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[Aardvark Soup]

From a buisness perspective, it would be incredibly stupid to drop Wii prices now. Eventually they will have to, but I think that will still take a while.

 

[ffxfriek]

From a buisness perspective, it would be incredibly stupid to drop Wii prices now. Eventually they will have to, but I think that will still take a while.

seconded

 

[domicius]

No point dropping prices while you're restricting supply in order to make your products appear sold out.

On the other hand, it helps if you're cheaper than the competition to start off with.

 

[ckeymel]

On the other hand, it helps if you're cheaper than the competition to start off with.

I think this is the fundamental difference between Nintendo's ability to 'stick to their guns' and not lose any sales.

Coincidentally, I think it's also as good of a way as any (opposed of course to DRM and other measures) that publishers are going to minimize the Used Games sales: Lower prices on brand new games will allow people to buy more games new.

Of course this is just common sense and nothing that hasn't been said before... just need someone to start the trend.

 

[blood77]

Well the DS prices would have been nice, but I really don't see a reason to cut the prices for the Wii. It is the lowest cost next-gen console from when it came out and still is, so why drop your price even lower if you are using an IV drip method for introducing your product to the consumer?

 

[KSarty]

Well now that the 360 has been cut to &199 US, you gotta ask what does the Wii have for the extra $50? I never thought the Wii was worth $250 to begin with to be honest, but now they're just reaming people for a console that doesnt cost anywhere near the amount they are selling it for.

 

[Baby Tea]

...I really don't see a reason to cut the prices for the Wii. It is the lowest cost next-gen console from when it came out and still is...

Not quite! Not here in ye olde Canada anyways! Xbox 360: $199.99 Wii: $249.99

Granted, that's the arcade version of the 360, but still. It's cheaper.

 

[SenseOfTumour]

'Hey, every single damn game and console we send out sells at full price in minutes! Why don't we drop the prices and cut our profits for no reason?'

I can't see that guy having a huge future at Ninty HQ.

They have a great range of products that people want, they're doing the industry good by pulling 'non gamers' into gaming, who will hopefully move on to regular games too, and I think they deserve their success, tho they could use some new mascots so they don't have to milk Mario and Zelda til their nipples go blue.

 

[KSarty]

'Hey, every single damn game and console we send out sells at full price in minutes! Why don't we drop the prices and cut our profits for no reason?'

I can't see that guy having a huge future at Ninty HQ.

Every console drops in price after being in the market for a few years. The cost of manufacturing them definitely goes down, so cutting their prices wouldn't necessarily cut their profits either. As it stands now, their profit margin continually increases because manufacturing costs go down, but their sell price stays the same.

 

[blood77]

...I really don't see a reason to cut the prices for the Wii. It is the lowest cost next-gen console from when it came out and still is...

Not quite! Not here in ye olde Canada anyways! Xbox 360: $199.99 Wii: $249.99

Granted, that's the arcade version of the 360, but still. It's cheaper.

Ok that is a little unfair pulling the regional differences move on me, but then I don't always play fair either, touche.

 

[Rensa]

Easy to sound principled when your console's selling like fairy tears, Ninty.

 

[Anton P. Nym]

'Hey, every single damn game and console we send out sells at full price in minutes! Why don't we drop the prices and cut our profits for no reason?'

I can't see that guy having a huge future at Ninty HQ.

Every console drops in price after being in the market for a few years. The cost of manufacturing them definitely goes down, so cutting their prices wouldn't necessarily cut their profits either. As it stands now, their profit margin continually increases because manufacturing costs go down, but their sell price stays the same.

Yeah, but what's Nintendo's incentive to cut the prices? It won't increase the volume of consoles sold, because every lot they ship sells out. Demand is still high, and Nintendo (for whatever reason) hasn't increased the supply at the same rate; there's no pressure on Nintendo to lower that price. Yes, they're making more profit on each one sold now due to the drop in costs, but if they can still sell every unit they make at release price why should they cut the price? "Just because everyone else did" is obviously not how Ninty's thinking on this... because if it was, the Wii would have a dual-analog controller, a big honkin' hard disc, and support HD.

Maybe they'll cut the price when demand slackens, but until then there's no reason for Nintendo to enrage their stakeholders by throwing away money.

-- Steve

 

[KSarty]

'Hey, every single damn game and console we send out sells at full price in minutes! Why don't we drop the prices and cut our profits for no reason?'

I can't see that guy having a huge future at Ninty HQ.

Every console drops in price after being in the market for a few years. The cost of manufacturing them definitely goes down, so cutting their prices wouldn't necessarily cut their profits either. As it stands now, their profit margin continually increases because manufacturing costs go down, but their sell price stays the same.

Yeah, but what's Nintendo's incentive to cut the prices? It won't increase the volume of consoles sold, because every lot they ship sells out. Demand is still high, and Nintendo (for whatever reason) hasn't increased the supply at the same rate; there's no pressure on Nintendo to lower that price. Yes, they're making more profit on each one sold now due to the drop in costs, but if they can still sell every unit they make at release price why should they cut the price? "Just because everyone else did" is obviously not how Ninty's thinking on this... because if it was, the Wii would have a dual-analog controller, a big honkin' hard disc, and support HD.

Maybe they'll cut the price when demand slackens, but until then there's no reason for Nintendo to enrage their stakeholders by throwing away money.

-- Steve

Thats what my first post addressed. One version of the 360 is now cheaper than the Wii, and it won't be long before the other versions follow suit. IMO the Wii gets the sales it does because of parents picking out a game system for their children, and they go with the cheapest one. If they see the 360 for $50 cheaper, they'll either wonder what the Wii has that the 360 doesn't, or they'll just blindly grab the 360.

 

[shatnershaman]

Their answer is the more consumer friendly version of "we want money" but what is wrong with that? People love their product and are willing to pay the launch price its just good business. Now on the supporting those people that bought them by making games side they've been Evil. Not EA Evil but getting there.

 

[Anton P. Nym]

Maybe they'll cut the price when demand slackens, but until then there's no reason for Nintendo to enrage their stakeholders by throwing away money.

Thats what my first post addressed. One version of the 360 is now cheaper than the Wii, and it won't be long before the other versions follow suit. IMO the Wii gets the sales it does because of parents picking out a game system for their children, and they go with the cheapest one. If they see the 360 for $50 cheaper, they'll either wonder what the Wii has that the 360 doesn't, or they'll just blindly grab the 360.

That theory isn't supported by evidence yet. The Wii has a cachet now as a family system, whereas the 360 is still fighting the impression that it's for hardcore players. That is one factor parents take into account when buying. Price is a factor, yes, but the $50 price difference has yet to tip the balance; Nintendo is still selling every lot of consoles they make as fast as they can ship them out.

You may be right in the future... but for the next quarter, anyway, Ninty's going to keep the money presses rolling and I think they're right to do so.

-- Steve

 

[TsunamiWombat]

Maybe they could try stocking the shelves with enough of them first.

 

[jamesworkshop]

the Wii has sold more hardawre than the ps3 and xbox combined a price drop is a terrible idea i mean they can't even supply current demand let alone increasing that demand