Nintendo Co. (7974) cut the price of its Wii U video-game console by $50 and unveiled a new handheld player as the company tries to boost sales in the months before Sony Corp. (6758) and Microsoft Corp. (MSFT:US) release competing machines.
The suggested price of the Wii U in the U.S. will drop to $299.99 on Sept. 20, Kyoto, Japan-based Nintendo said yesterday in a statement. The company won’t lower the console’s cost in Japan, where it sells for a suggested 30,000 yen ($307). Nintendo also introduced an entry-level 2DS portable machine going on sale Oct. 12 for $129.99.
President Satoru Iwata took the helm of U.S. operations to drive sales growth at the creator of Mario and Zelda before new versions of rival consoles arrive for the holiday shopping season. Yet combined sales for Nintendo’s hardware totaled 1.8 million units in the quarter ending in June, compared with 3.1 million a year earlier, as more customers migrated to mobile devices for playing online games.
“They needed to cut the Wii U price to stay competitive,” Michael Pachter, an analyst at Wedbush Securities in Los Angeles, said in an e-mail. “But it probably won’t help much over the long term.”
Nintendo fell 1.3 percent to 11,840 yen, the lowest since July 8, in Tokyo trading. The stock has gained 31 percent this year, compared with a 30 percent jump in the broader Topix index.
The Wii U, released in November, has missed sales targets and will be challenged by the upcoming Microsoft Xbox One and Sony PlayStation 4. At $299.99, Nintendo’s machine is priced $100 below Sony’s PlayStation 4, which makes its debut in November, and $200 below Microsoft’s Xbox One, which hasn’t specified a release date.
The 2DS has no hinges like the original DS or 3DS. It will have two screens and be able to play 3DS games in 2-D. It will be $40 cheaper than the 3DS, yet won’t be sold in Japan, company spokesman Yasuhiro Minagawa said.
“The handheld market will be challenged on the casual side by mobile games,” Pachter said, adding that the lower price for the 2DS console may spur handheld sales between 20 and 25 percent.
Nintendo has forecast global 3DS sales of 18 million this fiscal year, up from 13.95 million last year. The company sold 1.4 million 3DS units in the three months ended June, down from 1.86 million a year earlier, Nintendo said Aug. 1.
The company said in June it will release more of its own titles to boost demand for the Wii U. A limited edition Wii U bundle, featuring “The Legend of Zelda: The Wind Waker HD,” will also begin selling on Sept. 20, Nintendo said yesterday.
Nintendo is targeting sales of more than 5 million of its 3DS handheld console units in Japan this year, President Satoru Iwata said at a Capcom Co. event in Tokyo Aug. 27. The company plans to introduce a series of “strong titles” after “Monster Hunter 4,” he said.
New titles for the Wii U, including “Super Mario 3D World” and “Donkey Kong Country: Tropical Freeze,” will go on sale in the fourth quarter, the company said.
“The price cut will affect earnings directly,” said Eiji Maeda, an analyst at SMBC Nikko Securities Inc. in Tokyo. “Nintendo is counting on a weaker yen to help absorb the impact” from the price cut, he said.
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