Parents with Nintendo (OTC BB: NTDOY.PK) Wiis on their holiday checklists will have an extra $50 to spend elsewhere. Nintendo plans to slash the price of its family-friendly console on Sunday, from $249 to $199.
This isn't a surprise.
"A price cut is inevitable for the Wii," I wrote last month, after Microsoft (NASDAQ:MSFT) and Sony (NYSE:SNE) made their systems cheaper. "It can't let its two console rivals eat up all of the holiday sales."
Nintendo was able to hold to its original sticker price for years, but the gaming landscape is changing. Video-game hardware and software sales have plummeted in each of the past six months.
There are too many people playing ad-supported freebies -- such as Farmville and Mafia Wars on Facebook, or tens of thousands of Apple (NASDAQ:AAPL) App Store diversions -- to justify plunking down $50 or $60 on a new console title.
The crummy economy isn't helping, but the problem may be bigger than it looks if September doesn't see an industry turnaround. If the arrival of big-ticket faux-guitar releases in Viacom's (NYSE:VIA) The Beatles: Rock Band and Activision Blizzard's (NASDAQ:ATVI) Guitar Hero V earlier this month don't do the trick, especially coupled with the fire-starting impact of cheaper consoles, stay far away as an investor.
If the industry has peaked, lower console prices will clobber the hardware makers who figure to make up the difference in software royalties. The game makers will hold up better as clear beneficiaries of cheaper hardware, but gamers still need to show up.
There are naturally more than a few blockbuster releases planned as we head into the telltale holiday season, but the industry can't afford to slip up again after several disappointing months.
Wii wishes you a merry Christmas, but it's up to the industry itself if it has a happy new year.
Is the Wii price cut good or bad for the industry? Let us know in the comment box below.
