Nintendo May Have To Cut Wii Price To Keep Its Lead

Nintendo is facing more competition for its remarkably successful Wii and DS products. Microsoft (MSFT) and Sony (SNE) are both coming out with consoles that appeal to the casual game market, which Nintendo has dominated for three years.

According to the FT, “Sales of Nintendo’s Wii have already slumped by more than 50 percent, according to the latest US monthly figures.” Nintendo’s two large rivals are preparing to release products aimed squarely at the strengths of its most popular products.

While Nintendo is also improving its consoles, primarily by adding features that allow players to use motion sensitive games which involves sports and exercise, the Wii may be nearing the end of its natural life cycle. The FT points out that “Nintendo has shipped 50m Wii units worldwide since its launch in November 2006, compared with 30m units of the Xbox 360, released by Microsoft a year earlier, and 23m units of Sony’s PlayStation 3.”

Nintendo’s only significant option to keep a large unit sales lead over its rivals is to cut the $250 price tag for the Wii. It is already priced below the Xbox 360 and PS3, but that differential may not be enough to keep its market share well ahead of its rivals.

Whether Wii sales continue to stagnate or the company has to cut prices, Nintendo’s future does not look particularly good.

Douglas A. McIntyre