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Posted by: Kenji Hall on September 24, 2009
It may have been coincidence or a shrewd move to steal a rival’s thunder. Nintendo said that it would lower the price of its Wii video game console by $50 to $200 in the U.S. and would also lower prices in Europe and Japan. The announcement came just as Sony’s gaming honcho, Kazuo Hirai, was delivering the keynote speech at the Tokyo Game Show.
Traditionally, Nintendo stays away from TGS, and instead hosts its own games convention in Tokyo a few weeks later. (Independent developers show their own games for the Wii at TGS, though.) But this time Nintendo didn’t wait for its own event to play its wild card. The industry had been rife with rumors of a price cut in recent weeks after developers called on Nintendo to cut its prices and game bloggers spotted ads showing that U.S. retailers would soon sell discounted Wii machines.
Cutting prices could give the Wii momentum going into the crucial yearend holiday shopping period. Sony reduced the price of its top-of-the-line PlayStation 3 by $100 to $300 in August, sparking big sales gains. Microsoft also reduced the cost of the most expensive Xbox 360 model to $300.
The Wii is the best-selling living-room console on the market. But lately it has been losing momentum, reporting its first fall in global sales since the machine was released in November 2006, according to researcher NPD.
As of late June, Nintendo had sold 52.6 million Wii consoles; it expects to sell another 23.8 million by the March 2010 fiscal year end. Sony’s tally was at 23.8 million in June with another 1.19 million expected by next March. Meanwhile, Microsoft, which released the Xbox 360 in 2005, had sold 31 million consoles as of late August.
Game developers like it when game console manufacturers lower their prices but it usually lures new buyers and triggers a renewed interest in game software. Plus, there’s the recession to contend with, which has exacerbated the gap between hot-selling games and duds. You only had to walk through the Tokyo Game Show to see what the global financial crisis and recession have done to the gaming industry: The booths are bigger than in past years but that’s because there are far fewer key exhibitors. Besides Japan’s game developers, Ubisoft, Microsoft and Alienware, Dell’s gaming unit, were the only major global brands with a sizable presence.
BusinessWeek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies. Eye on Asia’s bloggers include Asia regional editor Bruce Einhorn, Tokyo reporter Ian Rowley, Korea bureau chief Moon Ihlwan, Asia News Editor and China Bureau Chief. Dexter Roberts, and Hong Kong-based Asia correspondent Frederik Balfour.