Gamestop Calls For A Wii Price Cut; Bad Idea


By now, it’s become something of conventional wisdom in the gaming industry that Sony’s (SNE) $400 PS3 console needs a price cut. But increasingly and in the face of slowing performance, calls are starting to come in for lower prices on Nintendo’s (NTDOY) $250 Wii as well.

The latest call comes from Gamestop (GME) CEO Dan DeMatteo, who told CNBC:

“I think [demand for] the Wii could slow down to the extent that Nintendo may want to cut the price,” he says. “Nintendo has it within its arsenal to do that. The component costs have come down considerably. They used to break even on the Wii, but now they’re making a considerable margin.”

But as Dan himself notes (talking about possible price cuts for the PS3), “I don’t know that $50 gets you that much.”

We agree, and we don’t think a $200 Wii would move the needle all that much in sales, either.

So where can Nintendo go with the Wii? $175? $150? Console price cuts are tricky: They need to be substantial to really make a splash, and once the price is dropped it’s nearly impossible to ever raise them again.

The problem for the Wii right now (and Gamestop) is a problem affecting the industry as a whole: Game publishers haven’t made any must-have games recently. But we’re looking towards Wii Sports Resort to jazz interest in Nintendo’s console this summer, and a new Zelda game probably isn’t too far off.

We think the Wii will still be the far-and-away leader in U.S. console sales when March estimates get released this afternoon.

Down the road, if Sony or Microsoft ever manage to stage a serious threat to Nintendo’s ongoing dominance, that’s a good time for Nintendo to counter with a price cut. But that’s an ace up Nintendo’s sleeve that can only be played once — better to keep the option in reserve for now. (And keep its margins high.)