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Why a Wii U price cut wouldn't make sense
- Thread starter Snowden's Secret
- Start date
- Status
Snowden's Secret makes some good points. Nintendo is really in a bind in which they're in a "damned if they do, damned if they don't" scenario with no way out.
They either:
A.) Cut the price, & hope that more people will buy the console & increase a larger userbase while taking tons of losses, or
B.) Keep the price where it's at while only taking a small loss in profits, & risk being further & further behind in sales, especially when we're comparing the sales of the Wii U to the sales of both Xbox One & PS4.
They either:
A.) Cut the price, & hope that more people will buy the console & increase a larger userbase while taking tons of losses, or
B.) Keep the price where it's at while only taking a small loss in profits, & risk being further & further behind in sales, especially when we're comparing the sales of the Wii U to the sales of both Xbox One & PS4.
michaelius
Banned
Not dropping price is really amazing plan.
If the decision to axe development of home consoles after Wii U and fully concentrate on handhelds have been already made in NCL.
With current state of affairs this is Nintendo Saturn killing any customer trust people had into Nintendo.
Who will be buying next Nintendo console day one if they don't turn Wii U into any reasonable numbers ?
Which third party will invest into software development for next console seeing current numbers ?
So the short term penny crunching should definitly be low priority when future of home console bussiness is at stake.
If the decision to axe development of home consoles after Wii U and fully concentrate on handhelds have been already made in NCL.
With current state of affairs this is Nintendo Saturn killing any customer trust people had into Nintendo.
Who will be buying next Nintendo console day one if they don't turn Wii U into any reasonable numbers ?
Which third party will invest into software development for next console seeing current numbers ?
So the short term penny crunching should definitly be low priority when future of home console bussiness is at stake.
POWERSPHERE
Banned
It matters to me, as soon as it drops i'm gonna bite. If it doesn't, then i'm in no rush.
Thank you, I guess
can't sell software to folks, that only (!) bought your device, because it was cheap.
And if the OP is right, you may not able to sell enough software to make up for the loss.
If Nintendo did "fuck over" their early adopters, how would lowering the price change that?
I would like to know how you came to that conclusion. Do you think people really buy hardware priced at let's say $250 just to let it sit? Of course they buy software to go along with it.
Because that way they secure a possibility for Wii U to exist in future. If they continue stubbornly driving straight until they hit a cliff then unfortunately the early adopters (who invested a significant amount of money to play games to future on a platform) get caught in the blast.
I can't believe people still demand a price drop after the OP has explicitly explained why it's just not possible. Every time I try to explain to someone why a price drop is madness and will not happen (this year) I get the same answer: Buhu, but I don't want to pay 350$ for a Wii U. Don't fucking buy it then. The world does not spin around you. Wait 2 years and buy it for 250 then. There are so many factors involved in this most people can't even comprehend and shouldn't worry about in the first place. But I guess everybody is an analyst these days. I wonder how many here are leading a big firm.
Many people bought a Wii just for Wii Sports, crazy, I know. If you get those people to buy your Wii U for 250$ and they don't buy other games, you basically threw money at them.
Many people bought a Wii just for Wii Sports, crazy, I know. If you get those people to buy your Wii U for 250$ and they don't buy other games, you basically threw money at them.
Dark Octave
Banned
Well of they don't cut their prices by Nov, it's a wrap.
I understand how it's not possible for Nintendo but you have to understand why the current price point is not attractive for customers. They are the one to please if you want to move consoles.
Also Wonderful 101 is a must buy.
Nikodemos
Member
Compared to the current competing consoles, it's not underpowered. Compared to the Wii, it's a goddamn supercomputer. Compared to what's coming in November... Ehh, well...
And yes, sadly Nintendo can't drop prices without some more games out. Maybe go for a price drop (say, $50) when the next Kart comes out, then another smaller one ($20-25) for the next Bayonetta. But still, being caught between the current $200 outgoing generation with its enormous library of titles and the next $400-500 one with its improvements and hype is a crappy place to be.
michaelius
Banned
With Nintendo Land as bundled game you can safely assume it won't happen this time.
I agree with TW101, but Nintendo has to focus on customers that are willing to pay the full price for their console. And as the launch showed us, there are customers who do that, the others just need a reason to pay the price - the reason is of course great games. He also explained how a price drop will cost Nintendo more money than selling less consoles at full price. We will see what happens at the end of the year when all first party titles are released and the holidays are over.
Why? It seems to not have the big impact Wii Sports had. Don't get me wrong, Wii U owners love that game, but others don't see its value. You have to play the game to understand what is so great about it, that's the problem.
Bill Rizer
Member
They've always made most of their money on software.
But if people don't buy hardware because it's too expensive, Nintendo has no one to sell their software to.
But if people don't buy hardware because it's too expensive, Nintendo has no one to sell their software to.
Its a mystery wrapped in an enigma.
Basileus777
Member
Nintendo has the cash reserves to eat selling the hardware at a loss, and it'd make sense to do it if there was legitimate hope for a turnaround. To not cut the price is to leave it dead. The problem is that it might still remain dead even with a price cut, meaning a price cut could just lose them money without much gain. But with a console in this dire situation, they don't exactly have many good options. Install bases aren't just important for 3rd parties, Nintendo needs customers to buy their own software a well.
DragonSworne
Banned
The only way Nintendo can reduce the cost of the hardware is too sell more units. Manufacturing costs are still high because they have barely sold any systems.
By cutting the price of the hardware, they'll be able to shift more units and in turn get better prices on their hardware pieces.
By cutting the price of the hardware, they'll be able to shift more units and in turn get better prices on their hardware pieces.
GrotesqueBeauty
Banned
While I appreciate the fact the amount of thought that went into the OP, the faster units are produced the cheaper it gets to make. Better to take a modest short term loss if it means you can maximize the impact of software while it's still fresh. If consumers hold off too long a lot of new releases will gradually lose value. A well timed price cut means pushing more software out the door upon release, rather than after the novelty of its launch has faded and used copies are cropping up everywhere.
I personally believe they should aim for a holiday price drop, but my sense is that Nintendo will try to ride on new releases between now and Christmas first, then price drop with a Mario Kart bundle next Spring to counter the second wave of Xbox One/PS4 games. For the time being it seems they're banking on hardware sales driven by the rapid deployment of software, some originally intended for "launch window", plus more recently unveiled titles like Tropical Freeze and 3D World.
Also, I disagree $100 drop is necessary to make it worthwhile. I think they'll aim between $50 and $80, and that's enough of a gap as long as it includes the added value of software deeper and more substantial than Nintendo Land. They could also offer incentives that are fairly low risk for them, like download codes rather than physical retail games
It's true that Nintendo limited their options with the way the system was designed, but I don't think the situation is as inflexible as the OP assumes. I also think the analysis ignores some of the risks of trying to sit pretty at the current price point while Sony and Microsoft try to soak up undecided games.
I personally believe they should aim for a holiday price drop, but my sense is that Nintendo will try to ride on new releases between now and Christmas first, then price drop with a Mario Kart bundle next Spring to counter the second wave of Xbox One/PS4 games. For the time being it seems they're banking on hardware sales driven by the rapid deployment of software, some originally intended for "launch window", plus more recently unveiled titles like Tropical Freeze and 3D World.
Also, I disagree $100 drop is necessary to make it worthwhile. I think they'll aim between $50 and $80, and that's enough of a gap as long as it includes the added value of software deeper and more substantial than Nintendo Land. They could also offer incentives that are fairly low risk for them, like download codes rather than physical retail games
It's true that Nintendo limited their options with the way the system was designed, but I don't think the situation is as inflexible as the OP assumes. I also think the analysis ignores some of the risks of trying to sit pretty at the current price point while Sony and Microsoft try to soak up undecided games.
Yea, having different tastes is wrong. I get mostly my gaming fix on PC. Really isn't any system with more value.
It's not wrong but somehow you made it sound like there's objectively nothing to play on the system. I mean you are probably in the minority if you have no interest in platformers, action games, whatever the tell Pikmin is, arcade racing, JRPG's or fighting games. And as such I have to wonder why did you a) buy the system in the first place b) come to complain about the lack of games to a thread ultimately about Wii U sales performance where your own narrow tastes are to blame?
efyu_lemonardo
May I have a cookie?
this is the saddest news I've read all day..
no way to reduce manufacturing costs significantly, later down the line?
how the hell did Nintendo make such a poor decision with this tech?
Honestly I think the Wonderful 101 is a very american based title. In europe we don't care about superhero's, at all. Sure it might be a fun game, but it isn't appealing so it won't be the systemseller Nintendo maybe thinks. We just need more games.
efyu_lemonardo
May I have a cookie?
the most experienced company in the business doesn't just all of a sudden make every mistake in the book..
there's got to be something more to it, if things are indeed this bad
Well they clearly did. Games weren't there and OS was (is) lacking to put it mildly. I just want to know why they did it. Probably wanted a product out there before PS4 and XBONE were unveiled but they had pay a heavy price for it. Now when the compelling software is finally starting to be here they have absolutely no momentum. They also screwed out the early adopters before with releasing no software for the first six months of the system and now potentially hefty price drop less than a year since the system launched. I'm not sure how they're expecting anyone to be there day one for a Nintendo platform after 3DS and Wii U. That's also one reason why I think they're waiting with the price drop. Iwata did say after 3DS that they wouldn't let it happen again but Iwata does say a lot of things.
axisofweevils
Holy crap! Today's real megaton is that more than two people can have the same first name.
Good OP. I do think that anyone expecting a price drop this year will be disappointed, especially because Iwata is striving for massive profits. This is not like the 3DS situation where they could afford to drop the price - the Wii U is already being sold at a loss.
Besides, there has been unofficial dramatic reductions in price on the Wii U since it launched. Some places in Europe are selling it for £100 lower than the original price, yet that still didn't shift systems. I've looked on places like Hot UK Deals and the comments are always "Meh. I will buy when Mario Kart comes out."
When the 3DS price dropped, sales increased, but it was only when the games arrived that it really took off. To quote Reggie, "Software sells Hardware."
Nintendo can afford for their console to play second fiddle to their handheld device this year - with a new Monster Hunter, Pokemon and Zelda, profits are assured.
Besides, there has been unofficial dramatic reductions in price on the Wii U since it launched. Some places in Europe are selling it for £100 lower than the original price, yet that still didn't shift systems. I've looked on places like Hot UK Deals and the comments are always "Meh. I will buy when Mario Kart comes out."
When the 3DS price dropped, sales increased, but it was only when the games arrived that it really took off. To quote Reggie, "Software sells Hardware."
Nintendo can afford for their console to play second fiddle to their handheld device this year - with a new Monster Hunter, Pokemon and Zelda, profits are assured.
'My time have just been too focused on the PC.
I bought it in hope there would be at least a few better launch games. But Nintendo just delays everything. This gen, it seems I have to say mostly good bye to Nintendo. And where is Zelda, Waverace, Fzero, Metroid, Mario (real mario)? Nothing so far. Getting tired of waiting.
edit: And cutting the price, like I said, would solve nothing. Games, games, games, etc.
Nintendo's strategy has always been questionable.
efyu_lemonardo
May I have a cookie?
questionable or not, selling a console at a loss with no manufacturing cost reduction on the horizon has never been part of their strategy.
If they honestly can't simply afford a price drop in the near future then they might as well pack it up. I honestly can't see how they're going to compete with Wii U this Christmas not to mention further next year.
Vintage_Creep
Banned
I think a price cut is required but at this point some people is ridiculously against the console and won't buy it even for 100$. So maybe at this point fuck them and the games will do the talking in the next months.
(I now see, that I should try to improve my way to make this point, and my initial was is very flawed)
I am trying to say that people who need a low pricepoint to be convinced are probably not hte people who will buy games for it anyway.
Dropping a price alone does not help, neither short term nor long term.
Early adopters are already there, they have the system and the games, and they can have fun with it.
And to see how the WiiU can have a future is a, if not the, point of this kind of discussions.
A price drop may, or may not be part of a way to help the WiiU.
But on its own, a pricedrop does not mean good news for early adopters.
Mithos
Member
Yeah, its half of what it did cost at release. Picked my Basic up for the same price myself in beginning of July.
Snowden's Secret
Banned
I've seen a couple posts saying that the Wii U is $350 while the PS4 is $400.
That's not really accurate, no matter how you slice it. That $400 PS4 doesn't include a game (as far as any of us are aware) so it's either a $300 Wii U versus a $400 PS4 or a $350 Wii U + Game versus a $460 PS4 + Game.
Especially if we're concerned that the market is so price sensitive as to demand a steep price cut, it doesn't make sense to compare the top tier Wii U versus the low end PS4.
That's not really accurate, no matter how you slice it. That $400 PS4 doesn't include a game (as far as any of us are aware) so it's either a $300 Wii U versus a $400 PS4 or a $350 Wii U + Game versus a $460 PS4 + Game.
Especially if we're concerned that the market is so price sensitive as to demand a steep price cut, it doesn't make sense to compare the top tier Wii U versus the low end PS4.
Pie and Beans
Look for me on the local news, I'll be the guy arrested for trying to burn down a Nintendo exec's house.
Free to play games on PS4 don't require PS+, so you have a whole host right there (oh and 14 day PS+ trial will give you Drive Club and Resogun for 2 weeks). Nintendo was calling back stock of the basic in America at least, so the only model on the market that is mainly visible is the $350 one.
Which is $50 off a PS4, and thus unacceptable.
Sorta Maximus
Member
I still think the Wii U should have been a real portable tablet gaming machine without the base unit (less powerful than a Wii U, but more powerful than a Vita). A sort of deluxe Nintendo laptop portable with a gorilla glass IPS touchscreen. A Super 3DS or Mega Vita if you will. Then price would not matter as it would be a far more compelling, unique item and not some sort of expensive yet underpowered hybrid that trades a competive stance for the Gamepad controller. If the 3DS was Nintendo's iPhone, this would be its iPad. And how cool would it be to have a Super 3DS? Now your playing with power, super power!!
Who knows, in ten years we could be playing digital Wii U classics on a Nintendo product like this.
Who knows, in ten years we could be playing digital Wii U classics on a Nintendo product like this.
As I work in the a planning and budgeting area, it was quite clear for me (based on the known information) that the business case for a price cut would be overwhelmingly negative and not backed up by a realistic-optimistic scenario in which the sales (both console and games) will grow that much to cover the gap. And the earning reports for Nintendo don't show a good picture. I can imagine that fixing the operating loss is the highest priority now. They could of course try to make a crazy bet and still do a price cut, but I really think that would be the worst alternative for this fiscal year. Almost insanely worst. I know people sometimes overlap their wishes and the reality and I would like to see a price drop followed by a huge spike in sales (because I will miss the 3rd party support from next year onward), but this scenario is highly unrealistic for me. My guess is that all the big cuts in price in Europe were some kind of test cases and the result of those is even more undermining a price cut decision soon.
I think they will go with different bundles + fall games and they will do another analyse post holiday. In the end the people that are not interested in a bundle including a new game don't help in this situation. What would be the financial logic to sell them a console $50 cheaper if they don't want any game? That would result in a loss almost never covered. I could see though a Mario Kart bundle at $299, because that is the game most probably capable of driving huge sales.
I think they will go with different bundles + fall games and they will do another analyse post holiday. In the end the people that are not interested in a bundle including a new game don't help in this situation. What would be the financial logic to sell them a console $50 cheaper if they don't want any game? That would result in a loss almost never covered. I could see though a Mario Kart bundle at $299, because that is the game most probably capable of driving huge sales.
Was that confirmed?
Are they still doing this because you wrote "'was calling back"
So are they not doing so anymore ?
If not, I dont know what your point is.
Red Chocobo
Banned
We I'm not buying one until an official price cut (Neither are a lot of people I know). So that's your theory crushed.
family_guy
Member
There are around 3-4 free to play games at launch.
Software is key. It seems as though its starting to rise up with a steady stream of games hitting this next few months and sometime next year.
http://youtu.be/gwOJyKxPt1s
http://youtu.be/gwOJyKxPt1s
Snowden's Secret
Banned
silver.tongue
Member
Maybe not the BIGGEST issue. But it is a problem.
Pie and Beans
Look for me on the local news, I'll be the guy arrested for trying to burn down a Nintendo exec's house.
I don't think you read what I wrote? Unless you're going to move into the post-2 week point for "keeping" PS+ games.
Fact is you can get a PS4 and play more "free next-gen games" at launch than with WiiU. Its got a clock ticking on two of them, but in the marketing war the value is already in someones hands.
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