Video game giant Nintendo is gearing up to keep its popular Wii console competitive, announcing this week it will be reducing the price of the Wii by $50, to $199.99 on September 27. Still included in the price is the motion-sensitive Wii Remote controller, Nunchuk controller and Wii Sports game. The announcement came after rival console maker Microsoft lowered the price of its gaming platform, the Xbox 360 $100, to $299.99, and Sony’s PlayStation 3, which saw a price cut of $299 for the 120GB version, while the price of the PS3 with a 160GB hard disk drive was reduced to $399.
As the industry gears up for the competitive holiday shopping season, there are signs the price reductions are working. Sony of America CEO Jack Tretton said in an interview with Reuters the price cut spurred a sharp rise in PS3 sales. “We are up about 300 percent over where we were pre-price drop,” he said, bullishly suggesting shortages were possible. “We are up significantly versus last year.”
In late August, NPD Group analyst Anita Frazier predicted the price cut is likely to spur sales, suggesting Sony could see sales rise as much as 60 percent in the United States in September. “The $299 price point is important to getting to a point where the next segment of price-conscious consumers can jump into the market and it most certainly will re-energize sales of the platform,” she explained. “We would expect to see in the range of a 40 percent to 60 percent unit sales increase when September sales are reported.”
For an industry once regarded as largely recession-proof, console price cuts couldn’t come soon enough. Hampered by a weak economy and few breakout games, the industry has posted sales declines for six months straight. In the month of August, NPD reported sales falling 16 percent, to $908.7 million. With the company predicting the worst of times is behind the industry, Frazier said the proactive move to drop console prices made an impact.
Microsoft took its price cut for the Xbox 360 global, announcing consumers in the Asia-Pacific region can expect lower-priced Xbox 360 models starting Sept. 10. The company also revealed new pricing for the Xbox 360 Elite console in Hong Kong, Singapore, South Korea and Taiwan, which translates into a roughly 25 percent reduction, or around $305, depending on exchange rates.
Sony’s price cut was coupled with the unveiling of a sleeker, less bulky console design and revamped interior architecture. Sony said the internal design architecture of the new PS3 system, from the main semiconductors and power supply unit to the cooling mechanism, had been completely redesigned in order to craft a more compact console. Compared with the very first PS3 model with a 60GB HDD, the internal volume as well as its thickness and weight were trimmed down by approximately two-thirds.