As the holiday season video game wars begin, Nintendo has fired a shot.
Yesterday, online retail partners Amazon (NASDAQ:AMZN) and Toys R Us (NYSE:TOY) listed the price of the Nintendo GameCube at $99. Nintendo had made no formal announcement, but the cut from $149 to $99 was expected. Today it came.
But who benefits?
Video game software developers such as Electronic Arts (NASDAQ:ERTS), Activision (NASDAQ:ATVI), and Konami (NYSE:KNM) would have benefited greatly from a price cut for Sony's Playstation 2 (PS2) and Microsoft's Xbox.
A price cut from either Sony (NYSE:SNE) or Microsoft (NASDAQ:MSFT) would have led to a wider base of customers for the big games this winter, namely Konami's Metal Gear Solid 3 and Castlevania (PS2); Sony's Gran Turismo 4 and SOCOM II (PS2); Activision's True Crime and Tony Hawk Underground (PS2, Xbox, GC); and Tecmo's Ninja Gaiden (Xbox).
But not only is Nintendo's GameCube a firm third, many people who own a GameCube own it as a second system. And the draw to the GameCube is the exclusive games -- those developed by Nintendo itself, such as Metroid Prime, Zelda, F-Zero, and Mario Kart. As video gamers have shown a clear preference for Xbox or PS2 versions of the same games, third-party developers don't gain much from a wider Nintendo base.
With the less expensive platform, Nintendo should sell more of its GameCube software, and also strengthen its base for its market-dominating Game Boy software (GameCube compatible via an adapter). But it will do so at little benefit to third-party software developers, while posing little threat to Microsoft's second position.
Hey, game fans: Electronic Arts and Activision are both among David Gardner's top picks in Motley Fool Stock Advisor .
