Nintendo Slashes Wii U Prices, But Is It Too Late?

The clock is ticking on Nintendo's (NASDAQOTH: NTDOY  ) Wii U. The gaming device has had the next-gen console market to itself for a year, but that's set to change as Microsoft (NASDAQ: MSFT  ) and Sony enter in November. The Xbox One and PS4 are coming, and Nintendo needs to make the most of the time it has left before this industry gets too crowded.

That could be one of the reasons why it just slashed the price of the console by $50. Starting on September 20, the 32-gigabyte Wii U deluxe model will cost $299, which compares favorably to Xbox One's $499 price tag and to the PS4's $399 cost.

It's just a flesh wound!
But Nintendo's move is more about defense than offense. The Wii U has had a terrible start, selling just 3.61 million units so far. Microsoft, by comparison, has sold about 10 million of its current-generation Xbox 360 console over the last year. And recent trends aren't good. Last quarter, Nintendo only managed to sell 160,000 Wii U consoles worldwide.

The company admitted that it didn't do itself any favors by having a skimpy selection of first-party titles ready at launch, and that's clear enough from the numbers. Shoppers have only purchased about four games to go along with each Wii U sale, on average. That's well below the attach rate for the original Wii, which has racked up almost nine times as many software sales as console sales.

Can Mario save the day?
However, Nintendo thinks it can start turning things around by introducing a strong slate of titles this year. It is running a kind of "grand reopening" of its console for this coming holiday season, including the above-mentioned price cut. Also on tap will be new games from all the powerhouse brands you would have expected Nintendo to bring out at launch like Legend of Zelda, Super Mario, and Donkey Kong.

There's good reason to think that Nintendo's Wii U will recover once the game library gets a boost. For example, GameStop (NYSE: GME  ) recently polled its own customers about why they haven't purchased a Wii U yet, and the No. 1 reason they gave was the limited number of new games available for the console. Remove that problem, and robust sales are still possible. A GameStop executive told investors as much last week, saying, "We are excited about the number of new games from Nintendo, and we do see the potential for significantly improved performance this fall and holiday ."

Nintendo needs to book some major improvement over that time period. There's no chance that it will get a third shot at establishing the Wii U.

It may be too late for Nintendo to dominate the video game market, but huge tech companies are fighting over an even bigger pie. At stake is the future of a trillion-dollar revolution: mobile. To find out which of these giants is set to dominate the next decade, we've created a free report called "Who Will Win the War Between the 5 Biggest Tech Stocks?" Inside, you'll find out which companies are set to dominate and give in-the-know investors an edge. To grab a copy of this report, simply click here -- it's free!

 

Read/Post Comments (4) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 29, 2013, at 8:55 PM, excelscior wrote:

    One great title missing for the current lack luster of game titles for the Wii U this holiday is Super Metroid!!! Why couldn't the Big N have made a Super Metroid for the Wii U?

  • Report this Comment On August 30, 2013, at 12:19 AM, wisdom1965 wrote:

    Wii U is toast unless they can get the older generation to connect with the newer generation. I'm not just talking about the games, but about the age at which the players can connect with..

  • Report this Comment On August 30, 2013, at 4:04 AM, shadowysea07 wrote:

    Yes getting games out will definitely help sales along with the price cut. the same can be said for the poor vita. but promises of titles in the future are worthless. the very least they can do is give release dates for all big titles next year to help cozy up to customers.

  • Report this Comment On August 31, 2013, at 2:47 PM, stefanog1 wrote:

    They have Super Metroid. For 8 dollars it was fantastic!

Add your comment.

DocumentId: 2614477, ~/Articles/ArticleHandler.aspx, 4/18/2014 2:50:03 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement