Support NeoGAF

[rpmurphy]

Hey, I just got Little King's Story and it's surprinsingly awesome.

Why didn't it sell at all? Didnt they set their estimates at like 120k for NA?
it got like 11k

It received a lot of early hype even though people didn't know much about it other than it was a Wii game for gamers. But after a couple years, people forgot about it, the teaser didn't help, media was rather scarce, and then a release people didn't know about. And yeah, the lack of retail carriers.

 

[John Harker]

Stores that dont carry Little King's Story (In-store):

Walmart
Best Buy
Target
Toysrus


Having the majority of video game retailers not carry your game is a pretty good way of not getting sales.

Damn, I didn't know that. Really? That's probably more due to the lack of clout of XSEED than anything else... which means its going to far fall short of its shipment estimates, poor Marvelous. They trying so hard this gen for so little reward

Knock them all you want, good thing No More Heroes at least has Ubisoft here...

 

[NRiQ]

The Xbox will get the Elite price cut and a Halo game, i'm sure that is enough to increase the weekly sales at least 15k.
The PS3 needs to increase its weekly sales more than 100%, i doubt that is possible only with a pricecut, but the new slim will sure help Sony.

Maybe Nintendo will cut the price, introduce a new Wii bundle, or sales will magically bounce back, but if they continue at the july levels they can get behind Sony and Microsoft.

People forget that the Halo OSTD audience may own a 360 already, so i don't know about that 15K increase...

 

[Psychotext]

People forget that the Halo OSTD audience may own a 360 already, so i don't know about that 15K increase...

That's already been discussed... at length. The increase in sales wouldn't necessarily come from Halo fans buying the console for ODST, more that with heavy advertising of the game (and the price cut if it happens), shoppers will have more awareness of the console.

 

[liuelson]

Take that rationale and add the condition that you don't sell at a loss, or even below a reasonable margin, and it still applies nicely. Nintendo is being stubborn on this point for naive reasons.

(Rationale referring to secondary profits from expanded userbase justifying price drop)

A "reasonable margin" condition leaves a lot of wiggle room. In theory, if maximizing profits via expanded marketshare is the strategy, shouldn't one price drop until marginal revenue = marginal cost? Unlike the loss leader console manufacturers (who want marketshare for other reasons besides profit from games), it doesn't seem like that is Nintendo's philosophy.

 

[LiquidJin]

I don't see a Wii price cut anytime soon. It still sells too well to pass on the profits. Nintendo won't (and shouldn't in my opinion) care if PS3 outsells it or not. I really hope for Sony that it can for a longer time than just one or two months.

I agree with this.

How do the recent price moves by Sony and Microsoft (allegedly), change the dynamics of their respective markets? Nintendo is still King of software for people that don't care about HD or online gaming. That audience is definitely not growing smaller because of a price cut on HD gaming hardware; not in this economic climate.

Nintendo can sit tight until Sony and Microsoft get their motion controller solutions on the market. And even then, with a rumored price of $200 for the Natal, they still might not need to budge.

 

[JoshuaJSlone]

Taking this rationale to its logical conclusion, isn't this the basic justification for selling console hardware at a loss? I don't see how this line of reasoning would be compelling to Nintendo, especially a market-leading Nintendo.

Well, there's always going to be a point where lowering the price starts losing more than it's worth. I just find it really hard to believe that $200 is that point for Wii in late 2009.

 

[Version 3.0]

(Rationale referring to secondary profits from expanded userbase justifying price drop)

A "reasonable margin" condition leaves a lot of wiggle room. In theory, if maximizing profits via expanded marketshare is the strategy, shouldn't one price drop until marginal revenue = marginal cost? Unlike the loss leader console manufacturers (who want marketshare for other reasons besides profit from games), it doesn't seem like that is Nintendo's philosophy.

No, you're right, that's not Nintendo's philosophy. They clearly want to profit from the razor and the razor blade. And they've stated very clearly that they don't want to and shouldn't have to lower prices. And they've had some success there, it's true. But this is a market where price drops are a considered a certainty, backed up by 30 years of consoles that all had periodic price drops. So if Nintendo wants to maximize profits, they should consider that the Wii's drastic sales slowdown recently is a sign of price saturation. If they think people aren't expecting the Wii's price to drop at some point, they're dead wrong.

 

[Parl]

No, you're right, that's not Nintendo's philosophy. They clearly want to profit from the razor and the razor blade. And they've stated very clearly that they don't want to and shouldn't have to lower prices. And they've had some success there, it's true. But this is a market where price drops are a considered a certainty, backed up by 30 years of consoles that all had periodic price drops. So if Nintendo wants to maximize profits, they should consider that the Wii's drastic sales slowdown recently is a sign of price saturation. If they think people aren't expecting the Wii's price to drop at some point, they're dead wrong.

It's impossible to make a proper analysis of long-term profit implications of a price drop without us knowing Wii's average hardware and shipping cost, how much it's sold to retailers on average, a good estimate of how much it will increase sales in the long-term on average, how much software these new buyers as a result of the price drop will buy, and how much Nintendo bring in from licence fees and from their first party software.

But, instead of us completely pissing in the wind with absolutely nothing but the vague notions of short-term profits vs marketshare, I'd like to see what can be gathered by making some very rough estimates. First of all, I'd like to say that I would expect that any new Wii owners as a result of a price drop (aka, those unwilling to pay $249 and those who are not even close to being early adopters) will have a much lower tie-in ratio than the average Wii customer.

If hypothetically, Wii would sell 20 million each of the next 3 years without a price drop, and at a reduction to $199 would sell 26 million, then 23 million, then 22 million, that would be 71 million instead of 60 million systems. If hardware+shipping is $120, and the price retail pay is $190 or $240, that's $70 profit per reduced price system and $120 per system for the non priced dropped one.

That would be $7.2 billion in hardware profit staying at $249 and $4.97 billion hardware profit for those three years at $199. That would mean $202 would have be made up on average for each of the additional 11 million who didn't want a Wii at $249. That would be a lot of games, even if they were mostly by Nintendo (which on average, they're not, especially as this generation has progressed).

What would make a price drop good for Nintendo's long-term bottom line would be if sales increased at much more than my unfounded estimates. Also, minshare is something to be considered, but from doing great to a bit better than greater wouldn't make all that much difference in that department, and I figure Nintendo intends to wipe the slate clean next generation.

If somebody could provide figures on what Nintendo gets on licence fees, and what they get for their first party games (would depend on price), and information on how much it costs Nintendo to make and ship a Wii, and how much they sell it for, then this would be much more useful.

But it seems apparent that with our limited knowledge of the figures we could conclude that it's not necessarily a good idea for them to drop the price.

 

[Kilrogg]

No, you're right, that's not Nintendo's philosophy. They clearly want to profit from the razor and the razor blade. And they've stated very clearly that they don't want to and shouldn't have to lower prices. And they've had some success there, it's true. But this is a market where price drops are a considered a certainty, backed up by 30 years of consoles that all had periodic price drops. So if Nintendo wants to maximize profits, they should consider that the Wii's drastic sales slowdown recently is a sign of price saturation. If they think people aren't expecting the Wii's price to drop at some point, they're dead wrong.

This industry has been used to price cuts after a reasonable period of time, but if nobody tries to do it the other way and provide enough value so that pricecuts can be delayed as much as possible, we'll never know whether it's a valid route.

I assume that Iwata isn't so foolish that he would devise that theory without evidence backing it up. Maybe he's been watching other industries, I don't know. In any case, it should be obvious that Iwata and Nintendo are trying to change the expectations of the market. Whether they'll succeed in regard to price expectations remains to be seen, but I'd say we don't know either way.

Using your argument about market expectations, one could say that the Wii should have been a failure. After all, this is a market where leaps in graphics technology were a certainty, right? Well, the Wii changed that expectation, or at least found a way to go around it. I'm aware that the issue here is a bit different, but I'm just saying that you never know until you try, and even if you try, it can take time before you see the results.

It's not even like we're talking about a profound change in pricing philosophy. It's just a matter of doing everything you can before cutting the price, no big deal.

 

[JoshuaJSlone]

What would make a price drop good for Nintendo's long-term bottom line would be if sales increased at much more than my unfounded estimates.

It's definitely a big guessing game, but if things went as you guessed, the difference would be pretty disappointing. That a console which has already seen 50 million sales at its current price would only get 15% fewer sales by keeping this price for three years more versus what it could do at a lowered price seems pretty unlikely to me. If that were the case, then definitely yeah I'd recommend they keep their current prices too.

I myself was toying with some comparative figures, too, though I didn't take it as far as you did. In my own guesstimation I was thinking maybe the August-December US figures as things are currently going could be around 4 million, but at $200 maybe more like 5.5. Last year 6.1 were sold in that period.

First of all, I'd like to say that I would expect that any new Wii owners as a result of a price drop (aka, those unwilling to pay $249 and those who are not even close to being early adopters) will have a much lower tie-in ratio than the average Wii customer.

I wouldn't think that's much to be worried about. The vast majority of Nintendo's history has been selling to people who are only spending $200 or less on hardware.

If somebody could provide figures on what Nintendo gets on licence fees, and what they get for their first party games (would depend on price), and information on how much it costs Nintendo to make and ship a Wii, and how much they sell it for, then this would be much more useful.

That's the big unknown. We know it should be cheap, but not how much so.

 

[Parl]

It's definitely a big guessing game, but if things went as you guessed, the difference would be pretty disappointing. That a console which has already seen 50 million sales at its current price would only get 15% fewer sales by keeping this price for three years more versus what it could do at a lowered price seems pretty unlikely to me. If that were the case, then definitely yeah I'd recommend they keep their current prices too.

Wii has much less than something like the PS3 to gain from a price drop, IMO. Wii doesn't compete with 360 or PS3 to anywhere near the same degree as PS3 and 360 compete with each other. I expect that there are relatively many customers who chose 360 over PS3 because of the price being too high, though much less likely the case with 360 over Wii - that's be more down the how much the software library and what not appeals to them. A Blue Ocean product like Wii has much less to gain in terms of sales than a system like PS3 and 360 that offer similar value propositions.

And it's important to take it far because of the long-term implications. I expect the Wii to still be on the market after the 3 years I including in my estimations, and for each continuing year, the price drop bump is lesser and lesser, and thus the relative hardware profit differences between the two hypotheticals becomes larger. The long-term term figures do matter, and make a huge difference in the decision.

I myself was toying with some comparative figures, too, though I didn't take it as far as you did. In my own guesstimation I was thinking maybe the August-December US figures as things are currently going could be around 4 million, but at $200 maybe more like 5.5. Last year 6.1 were sold in that period.

I wouldn't think that's much to be worried about. The vast majority of Nintendo's history has been selling to people who are only spending $200 or less on hardware.

Though I expect early adopters to spend more on software than late adopters. If Wii sells 120 million with a tie-in ratio of 9 at the end of it, I'd expect the first 60 million on average to be above 9 and the latter half to be below 9. Even without any price drop, but especially those who are unwilling to spend $249 as that could have correlation to a less dedication gamer and less active software buyer.

That's the big unknown. We know it should be cheap, but not how much so.

Indeed. I tried to represent that with the pretext of a large increase in sales for the first few months, followed by a smaller increase in sales on what-would-have-been for the rest of the year, that using certain made up figures, it's not unreasonable to suggest that Nintendo is making a good decision by not price dropping.

If they can create momentum out of decline like did with DS worldwide, then a price drop would have been a massively lost opportunity to retain prices, IMO. I expect them to use price drop last and only if it, as a product with no direct competitor, it's initiate enough extra software buyers to surpass the huge losses in hardware profits.

 

[The Librarian]

People forget that the Halo OSTD audience may own a 360 already, so i don't know about that 15K increase...

It's Halo 3: ODST not "OSTD."

 

[Arpharmd B]

It's Halo 3: ODST not "OSTD."

That'sthejoke.gif

 

[charlequin]

First of all, I'd like to say that I would expect that any new Wii owners as a result of a price drop (aka, those unwilling to pay $249 and those who are not even close to being early adopters) will have a much lower tie-in ratio than the average Wii customer.

I don't think this is an accurate assumption. There's a general trend towards lower tie ratios as a generation rolls on, but no specific evidence to suggest that people who buy after a price drop represent a significant, immediate shift in buying patterns.

That would mean $202 would have be made up on average for each of the additional 11 million who didn't want a Wii at $249. That would be a lot of games, even if they were mostly by Nintendo (which on average, they're not, especially as this generation has progressed).

$202 isn't really that much. If they buy three Nintendo first-party titles, that's about $105 right there. If one of those games is Wii Fit it's more like $120. An extra Wiimote and Nunchuck puts another ~$30 on there. You are now looking at a customer who only needs to put an extra $50 into Nintendo's coffers over their entire life of ownership to justify their existence.

You're also ignoring (as I've been saying, I'm sure, to the point of annoyance) the opportunity costs at play. Nintendo has production capacity for Xm Wii systems a year, and takes measurable losses inasmuch as they don't utilize that capacity or are forced to spend money to repurpose it to something else. Keeping sales relatively level over time is in itself a monetarily beneficial thing for a hardware company.

Basically, I think the history of price drops in the industry suggests that your napkin math here can't possibly accurately suggest that a $50 price drop on the Wii would be inherently unprofitable. Companies have made far larger, far quicker drops on profitable market-leader systems (see the PS2) so the benefit to not dropping the price must come in a different overall product strategy for the Wii, not in math that could apply equally well to almost any platform.

Using your argument about market expectations, one could say that the Wii should have been a failure. After all, this is a market where leaps in graphics technology were a certainty, right?

This is a really different situation, though. That was a misconception about which features of a successful product were driving its success -- a very easy sort of misconception to make and one that can be easily taken advantage of by a savvy customer. But this no-price-drops idea is relying on the idea that the demand curve that has actually manifested in reality is somehow wrong or inaccurate, which I think is a pretty bold claim without a very clear example demonstrating what factors have rendered it inapplicable.

Wii has much less than something like the PS3 to gain from a price drop, IMO.

But that's basically the opposite of what actually happens: more popular systems gain more sales (or, rather, prevent the loss of more sales-per-period) off of equivalent price drops than less popular ones, because a price drop on a product people actually want is much more enticing than a price drop on a product people don't actually care much about.

 

[Kilrogg]

This is a really different situation, though. That was a misconception about which features of a successful product were driving its success -- a very easy sort of misconception to make and one that can be easily taken advantage of by a savvy customer. But this no-price-drops idea is relying on the idea that the demand curve that has actually manifested in reality is somehow wrong or inaccurate, which I think is a pretty bold claim without a very clear example demonstrating what factors have rendered it inapplicable.

Fair enough, but again, unless Iwata created the theory out of thin air, maybe the route he's chosen is worth giving it a shot, don't you think? He's just trying to extend the length of time during which a system doesn't get a pricecut, that's all. I'd say let's see how things pan out, because nobody else has tried this as far as I'm aware, and then we'll be able to assert whether he's right or wrong.

 

[dolemite]

It looks like NPD expects only a 40-60% bump in PS3 sales with the introduction of the slim:

The NPD Group, famed tabulator of video game hardware and software sales, says it sees the new $299 price point of PlayStation 3 contributing to a significant sales boost for the system. "We would expect to see in the range of a 40% to 60% unit sales increase when September sales are reported," NPD analyst Anita Frazier told InformationWeek. We'll see how accurate of an estimate that was when the September NPD data hits mid-October.

NPD's reasoning for the increase is that cheaper consoles attract more price-conscious people
sauce

 

[ksamedi]

Fair enough, but again, unless Iwata created the theory out of thin air, maybe the route he's chosen is worth giving it a shot, don't you think? He's just trying to extend the length of time during which a system doesn't get a pricecut, that's all. I'd say let's see how things pan out, because nobody else has tried this as far as I'm aware, and then we'll be able to assert whether he's right or wrong.

Pretty much this. Nintendo is releasing 3 (very) big titles quite close to each other this year. They are going to sell 10 million+ units each. And They're going to have long legs. I think momentum will be pretty much guaranteed with 3 big titles releasing so close to each other.

 

[Freeza Under The Shower]

It received a lot of early hype even though people didn't know much about it other than it was a Wii game for gamers. But after a couple years, people forgot about it, the teaser didn't help, media was rather scarce, and then a release people didn't know about. And yeah, the lack of retail carriers.

It was already hard to find it here in Europe...

I honestly do not understand why publishers think that they will be able to sell something what people don't (can't!) know exist.

Such as the recently released Wolfenstein. :')

but that will be for next month.

 

[Version 3.0]

After all, this is a market where leaps in graphics technology were a certainty, right? Well, the Wii changed that expectation, or at least found a way to go around it. I'm aware that the issue here is a bit different, but I'm just saying that you never know until you try, and even if you try, it can take time before you see the results.

Changing hardware has been a certainty, but the market leader has never been determined by graphical capability; most of the "winners" were considerably weaker than their competition. And the industry has been considering the "diminishing returns" of graphics technology for a while now. Nintendo certainly has NOT changed the expectation of changing hardware, though, nor is the Wii an exception to changing graphics technology. It's merely a small upgrade rather than a large one.

I'm not saying that expectations about price can't be changed. Indeed, they already have been. This gen has by far the highest hardware prices we've seen, and gone the longest between reductions. Nevertheless, there's a steep decline that suggests the Wii is meeting price resistance.

 

[Stumpokapow]

Changing hardware has been a certainty, but the market leader has never been determined by graphical capability; most of the "winners" were considerably weaker than their competition.

Considerably was never an order of magnitude, though, and that's what's unique here.

 

[charlequin]

I'm not saying that expectations about price can't be changed. Indeed, they already have been. This gen has by far the highest hardware prices we've seen, and gone the longest between reductions. Nevertheless, there's a steep decline that suggests the Wii is meeting price resistance.

This is kind of my point. It was never actually true that graphical fidelity was a primary driver of adoption in the gaming industry (and much evidence existed to support this long before the Wii); Nintendo took a gamble on how strong this rule was and it paid off.

Similarly, I think there was clearly a lot of room for flexibility in scheduling of price drops, and this generation everyone has pushed them further back than was once true -- but that doesn't prove that the fundamental logic behind price cuts was wrong, just that there's more wiggle room on how far you can go without them. The idea that price should never be dropped is a big jump from there and that's what I've been trying to argue against.

 

[Parl]

I don't think this is an accurate assumption. There's a general trend towards lower tie ratios as a generation rolls on, but no specific evidence to suggest that people who buy after a price drop represent a significant, immediate shift in buying patterns.

No evidence, though at least something to consider as there's no evidence to the contrary as far as I'm aware. I don't think it's definitely a good idea to not price drop, I just don't think it's a good idea to price drop either, as I don't consider myself to have enough information available to come to such a conclusion, and I'd have to give different answers for different scenerios. Those who decided not to pay for $249 may well be significantly less active software purchasers than those who would have paid $249 during the same period. I'm basing this on the expectation that those only willing to spend less on hardware would also show similar behaviour towards the value of their software purchasing.

$202 isn't really that much. If they buy three Nintendo first-party titles, that's about $105 right there. If one of those games is Wii Fit it's more like $120. An extra Wiimote and Nunchuck puts another ~$30 on there. You are now looking at a customer who only needs to put an extra $50 into Nintendo's coffers over their entire life of ownership to justify their existence.

The more price sensitive shoppers and less dedicated gamers could easily be buying just 4 games over the lifetime of the product, not only because they could well buy software at a much low rate than the average buyer, but also because of when they entered the generation, the less time they have to buy software too. Could even just be three in tie-in ratio. One thing we do know is that there's mass amounts of people significantly below the average in tie-in ratios and mass amounts above it.

Though, I didn't consider peripherals. They completely bypassed me when thinking about this. Do Nintendo really make such a big slice of their software?

You're also ignoring (as I've been saying, I'm sure, to the point of annoyance) the opportunity costs at play. Nintendo has production capacity for Xm Wii systems a year, and takes measurable losses inasmuch as they don't utilize that capacity or are forced to spend money to repurpose it to something else. Keeping sales relatively level over time is in itself a monetarily beneficial thing for a hardware company.

That's a very good point. I haven't been following this discussion all that much, I just turned up to give my reasons why I don't think, from what we know, that a price drop is definitely the best course of action. If you're saying that this opportunity cost effectively increases the production cost per unit compared to how it would be at increased sales/production, then that's a valid. Another figure to which we don't know the value of unfortunately. I think Nintendo intends to keep sales and production up from titles like NSMBWii and whatever the hell they have planned for next year. Good strategy or not, they've showed their rigidity on price with the DS despite significantly weakened sales in Japan for a very long period of time - their response, new propositions.

Basically, I think the history of price drops in the industry suggests that your napkin math here can't possibly accurately suggest that a $50 price drop on the Wii would be inherently unprofitable. Companies have made far larger, far quicker drops on profitable market-leader systems (see the PS2) so the benefit to not dropping the price must come in a different overall product strategy for the Wii, not in math that could apply equally well to almost any platform.

I don't think it's necessarily unprofitable, my intention was to show it's not inherently profitable. Sony had other big interests in dropping the price of the PS2. They needed to prevent Microsoft from getting a foot in their market. They know Microsoft was aiming to compete with them directly on their playing field.

The Xbox and GameCube had games that would have satisfied some gamers and would have got one of them instead of PS2 without a price drop, but a PS2 price drop would push them to buy a PS2 instead of an Xbox or GameCube. In most situations, people would have only bought a PS2 and were completely uninterested in the Xbox and GameCube regardless of the price though.

Wii would mainly benefit from a price drop now rather than later if it would mean prevent potential customers from purchasing a PS3 or 360 instead. I think there's relatively little competition between Wii and PS360 compared to the competition between the different systems of many previous generations. I don't have data at hand. What kind of benefits did DS have from its only price drop? NES would also be a good one for comparison (outside of Europe). And the GameBoy systems too. I'd probably like to use these systems for comparison

But that's basically the opposite of what actually happens: more popular systems gain more sales (or, rather, prevent the loss of more sales-per-period) off of equivalent price drops than less popular ones, because a price drop on a product people actually want is much more enticing than a price drop on a product people don't actually care much about.

It could easily create a higher absolute increase in sales compared to a less popular system, but PS3 sales have benefited greatly from a price drop from terrible to.. much better, and 360 did something similar. They benefit because they're taking potential customers away from their HD rival. Wii wouldn't do the same on anywhere near the same scale. Its sales increase would come mostly from people who only want a Wii and would buy it when its price drops. Less competition in general means a more favourable price elasticity of demand.

Anyway, you've made lots of valid points and I've certainly altered my perspective on the subject a bit, leaning more away from no price drop than before, though still firmly in thinking we-don't-have-enough-info to make a reasonanle conclusion.

 

[phisheep]

You're also ignoring (as I've been saying, I'm sure, to the point of annoyance) the opportunity costs at play. Nintendo has production capacity for Xm Wii systems a year, and takes measurable losses inasmuch as they don't utilize that capacity or are forced to spend money to repurpose it to something else. Keeping sales relatively level over time is in itself a monetarily beneficial thing for a hardware company.

Good point, but I'm not sure it has much real impact. As Nintendo don't do their own manufacturing it is not as if they are left with idle plant costs, and I would expect their contracts are written so as to give measurable losses if they fall below a given minimum number of units, but that will be a lot lower than the total available manufacturing capacity.

So Nintendo may not be making any losses at all on manufacturing capacity, not yet anyhow.

 

[JoshuaJSlone]

Fair enough, but again, unless Iwata created the theory out of thin air, maybe the route he's chosen is worth giving it a shot, don't you think? He's just trying to extend the length of time during which a system doesn't get a pricecut, that's all.

On the whole, I think the strategy of not wanting to rush to price drops so that people don't learn to just wait a few months to pay less makes sense--especially on software. However, cutting the price now wouldn't be an abandoment or refutal of this strategy. When it comes to hardware they've already wildly succeeded, but this first round of pricing is showing its age.

 

[charlequin]

Those who decided not to pay for $249 may well be significantly less active software purchasers than those who would have paid $249 during the same period.

I'm not saying it can't even conceivably be true, but that it's not a good default assumption without specific evidence behind it. The Wii already targets what has been described as a more "casual" audience, but the overall tie ratio remains in the 5-ish region. We could allow a 1.0 drop in the average tie ratio for these new, post price-drop consumers and still be looking at an overall profitable venture -- I think expecting a drop bigger than that with just a $50 change in the product's price is fairly unlikely.

The more price sensitive shoppers and less dedicated gamers could easily be buying just 4 games over the lifetime of the product, not only because they could well buy software at a much low rate than the average buyer, but also because of when they entered the generation, the less time they have to buy software too.

Sure. If I thought we were really looking at the end of the generation next year I'd say "yeah, a price drop will probably hurt more than it helps due to the limited software-buying period remaining" but, uh, I don't. I don't expect the Wii to get replaced before 2012.

Do Nintendo really make such a big slice of their software?

Something like it. They do their own publishing and don't have to pay out a cut for licensing fees. Might only be $25-30, but it's a lot.

Good strategy or not, they've showed their rigidity on price with the DS despite significantly weakened sales in Japan for a very long period of time - their response, new propositions.

I've argued for the existence of a "price floor" below which additional pricedrops aren't very helpful for some time, and I think that certainly in the US the $130 DS Lite is pretty close to that level.

 

[The Librarian]

That'sthejoke.gif

It's not a very funny one.

 

[donny2112]

but the overall tie ratio remains in the 5-ish region.

If the Wii had the third-party support that its sales numbers deserved, I don't think it'd be anywhere close to 5 in tie ratio. In other words, the ~6.4 tie ratio that it has now is greatly deflated from what is possible for the system. The PS2 at the same point was about 1 higher, and it didn't have the advantage of having Nintendo as a publisher on the system. Therefore, I'm not even sure it's reasonable to assume a lesser tie ratio for lower price point adopters, since the tie ratio is already lower than what it should be. That probably even supports your main point that a price drop now would be worth it, further.

 

[Stoney Mason]

Probably already posted but still.

NPD Expects PS3 Sales to Jump 40-60%

Posted August 21, 2009 by James Brightman

SCEA's Eric Lempel has already told IndustryGamers that Sony is anticipating a "nice uptick" in PS3 sales, thank to the new $299 price point and introduction of the slimmer model. It would appear that The NPD Group agrees. Talking with InformationWeek, NPD's industry analyst Anita Frazier said that with the new price point, Sony will finally start attracting more price conscious consumers.

"The $299 price point is important to getting to a point where the next segment of price-conscious consumers can jump into the market and it most certainly will re-energize sales of the platform," she said. "We would expect to see in the range of a 40% to 60% unit sales increase when September sales are reported."

Looking at the last two reported NPD data periods (June and July), PS3 hardware sales have averaged about 143,000 units monthly. A 60% jump in sales from that approximate sales level would take PS3 sales in September to around 228,000 units. Wedbush Morgan analyst Michael Pachter recently told us that Sony's ability to pass and remain past the 200,000 sales mark will be the real "acid test."

As Frazier points out, however, software is the key. "Content is still the key motivator of a hardware purchase decision," she said. "Other systems might too take a price cut, so there's a lot playing into which system tops sales any particular month."

http://www.industrygamers.com/news/npd-expects-ps3-sales-to-jump-40-60/

 

[Saiyar]

Probably already posted but still.
http://www.industrygamers.com/news/npd-expects-ps3-sales-to-jump-40-60/

Isn't September a 5 week month? A 40% - 60% increase for September seems very low considering that, unless NPD are talking about weekly sales.

 

[dolemite]

Isn't September a 5 week month? A 40% - 60% increase for September seems very low considering that, unless NPD are talking about weekly sales.

Well, it looks like the Slim will have at least one week worth of sales in August if that Amazon date is correct (In stock on August 25th). Stacked with all the discounted Phats, the month of August should be good saleswise and will take the first rush week out of September.

 

[Kilrogg]

On the whole, I think the strategy of not wanting to rush to price drops so that people don't learn to just wait a few months to pay less makes sense--especially on software. However, cutting the price now wouldn't be an abandoment or refutal of this strategy. When it comes to hardware they've already wildly succeeded, but this first round of pricing is showing its age.

You're definitely right, and thanks for the graph, Joshua. Good work as usual .

It's just that the WSR/Wii Fit Plus/NSMB Wii combo is still unproven, and the Vitality Sensor is apparently scheduled for release "not too late" in 2010, so Iwata obviously wants to see if sales can skyrocket once more thanks to this software, and I think he's right to wait and see.

At any rate, this is unprecedented. Do you know the statistics for the NES and SNES, by any chance?

 

[donny2112]

and the Vitality Sensor

Will do nothing for sales. We've known about it for months, and I haven't read one actual workable game possibility. Putting the pulse-ox monitor on your finger means you have to keep your hand still to get a consistent reading. That means you can only play "games" with it with the Wiimote+. Wii Fit works because it takes something people want (but really don't want) to do in the form of exercise and wraps it in a fun covering. The Wii Pulse-Ox monitor isn't going to propel sales. Price drop early next year in the U.S. I'd guess at the change of fiscal year.

 

[JoshuaJSlone]

Good strategy or not, they've showed their rigidity on price with the DS despite significantly weakened sales in Japan for a very long period of time - their response, new propositions.

This is true. However, DS already passed everything else's total and is still putting up bigger numbers than most dominant systems in their prime. They must've mined most of the gamers by now, so even further expanding the types of software available or getting people to upgrade to new models of hardware would seem to be the way to go. Wii in the US is only around half of what the last few top consoles did, though, so it's got plenty of room for growth.

At any rate, this is unprecedented. Do you know the statistics for the NES and SNES, by any chance?

Afraid not. PS1/N64 is as early as I was paying attention. Even trying to get a consensus on launch dates for consoles earlier than that on the Internet can be tricky. :lol

 

[Kilrogg]

Will do nothing for sales. We've known about it for months, and I haven't read one actual workable game possibility. Putting the pulse-ox monitor on your finger means you have to keep your hand still to get a consistent reading. That means you can only play "games" with it with the Wiimote+. Wii Fit works because it takes something people want (but really don't want) to do in the form of exercise and wraps it in a fun covering. The Wii Pulse-Ox monitor isn't going to propel sales. Price drop early next year in the U.S. I'd guess at the change of fiscal year.

I did not suggest that it will or won't drive sales. Only that Iwata sees it as a defining next step. We'll have to know what the software is and if it catches on. I agree that it might be a tougher sale than Wii Fit, if only because it's harder to communicate what it does, as opposed to a fitness product. But since Iwata is seeing it as a potential killer app, I'm sure he'll want to wait and see if it catches on before cutting the price of the Wii.

@JSS: I thought you'd said that. Thanks anyway.

 

[duk]

wow all 3 consoles heading into XMAS season will be neck n neck. amazing!

 

[Version 3.0]

This is true. However, DS already passed everything else's total and is still putting up bigger numbers than most dominant systems in their prime.

That's not technically true: the DS did have one price drop on the original model. But aside from that, its hardware revisions have allowed Nintendo to actually raise its price, so that's pretty unusual.

 

[Karma]

Isn't September a 5 week month? A 40% - 60% increase for September seems very low considering that, unless NPD are talking about weekly sales.

If it increases by 60% per week it will do 240K in Sept. At 360s current rate it would do 252K and the Wii should do 300K.

I am more curious where the new baseline will be not the temporary price cut bump.

 

[MightyHedgehog]

I am more curious where the new baseline will be not the temporary price cut bump.

And it's going to be difficult to see what that new baseline might look like until after the holiday season doubling/tripling of sales...like February or so at the earliest, I'm guessing.

 

[ksamedi]

Will do nothing for sales. We've known about it for months, and I haven't read one actual workable game possibility. Putting the pulse-ox monitor on your finger means you have to keep your hand still to get a consistent reading. That means you can only play "games" with it with the Wiimote+. Wii Fit works because it takes something people want (but really don't want) to do in the form of exercise and wraps it in a fun covering. The Wii Pulse-Ox monitor isn't going to propel sales. Price drop early next year in the U.S. I'd guess at the change of fiscal year.

I strongly disagree here. A device that can show your stress level and software to help you relax is a pretty big idea if you ask me. Maybe not a game, but more of a tool that will sell Wii's to people because of its novelty.

 

[apujanata]

I strongly disagree here. A device that can show your stress level and software to help you relax is a pretty big idea if you ask me. Maybe not a game, but more of a tool that will sell Wii's to people because of its novelty.

"Stress-Age: How to reduce your stress level in 5 minutes everyday" will be gobbled up by lots of people : Lawyers, Doctors, Nurses, Police etc. In fact, almost every person who work for a living every day, and those person that are still alive (not dead), even alpha moms, are going to buy this "non-game", and the sales will make Wii Fit looks like a bomba.

Disclaimer : In case anyone are not aware of it, the above title is just my imagination. I am NOT an expert, I didn't work at Nintendo, nor do I have any special sources at Nintendo or any nintendo affiliated company, including game freak.

 

[OldJadedGamer]

wow all 3 consoles heading into XMAS season will be neck n neck. amazing!

Sales Age this year is going to be great.

 

[jvm]

Afraid not. PS1/N64 is as early as I was paying attention. Even trying to get a consensus on launch dates for consoles earlier than that on the Internet can be tricky. :lol

Well, if the launch or price changes were announced via PR or picked up by the AP, etc. I can possibly find them via Lexis Nexis. That's how I got exact dates for the PS1 price drops.

Supply me with time windows and I'll see what I can find.

 

[Thunder Monkey]

Well, if the launch or price changes were announced via PR or picked up by the AP, etc. I can possibly find them via Lexis Nexis. That's how I got exact dates for the PS1 price drops.

Supply me with time windows and I'll see what I can find.

Can the world survive a team-up of these two nefarious Sales-Agers?!

Find out in next months NPD Sales thread issue #349!

 

[a Master Ninja]

What about the original Xbox? Was it even 6 months?

 

[Guy Legend]

Well, it looks like the Slim will have at least one week worth of sales in August if that Amazon date is correct (In stock on August 25th). Stacked with all the discounted Phats, the month of August should be good saleswise and will take the first rush week out of September.

Agreed. I just wonder if the price cut of the phats hits the sunday newspaper ads before the end of the month. Unless you walk into a store or read an article online, I'm not sure if the PS3 price cut is well known yet.

 

[jvm]

What about the original Xbox? Was it even 6 months?

My offhand recollection is that the first price drops of last generation were all within a few weeks of each other. I believe it was precisely six months, like GameCube.

 

[donny2112]

I agree that it might be a tougher sale than Wii Fit, if only because it's harder to communicate what it does,

I see it as the exact opposite. Wii Fit is something that's harder to communicate what it does until you see it. It's mostly a blank slate that can be lots of things (e.g. skateboard, snowboard, scale, tilt sensor), whereas a pulse-ox monitor is pretty dang well defined as to what it is. It takes your pulse and reads your oxygen level. There's also the issue similar to the one that Amir0x posted about in another thread in that there is no direct control offered by a pulse-ox monitor. It just reads what your state is as opposed to you directly controlling that state. At best, this is a supplemental input for the game that you have no direct control over. This is not a new way to play games.

Maybe not a game, but more of a tool that will sell Wii's to people because of its novelty.

Definitely not a game, and I don't see anyone buying a Wii to be able to use it to relax. Most people already have a way to relax (e.g. reading a book, doing a crossword, watching a movie, taking a nap), so they have no need to try to shoehorn a video game into that process. People who need biofeedback to help them figure out how to relax might be interested, but I have to figure that's a pretty small % of potential Wii buyers and most of those would probably think of going to a doctor for pills before playing a video game.

Wii vitality sensor is basically the next step for the Bio-Tetris game in Japan. That just read your pulse and changed what pieces it gave you based on whether you wanted to be stressed or relaxed. This is not a game-changer and based on the ideas I've seen thrown around for games/software that use the device, it's not going to sell systems.

Price drop next year.

 

[jrricky]

Definitely not a game, and I don't see anyone buying a Wii to be able to use it to relax. Most people already have a way to relax (e.g. reading a book, doing a crossword, watching a movie, taking a nap), so they have no need to try to shoehorn a video game into that process. People who need biofeedback to help them figure out how to relax might be interested, but I have to figure that's a pretty small % of potential Wii buyers and most of those would probably think of going to a doctor for pills before playing a video game.

Wii vitality sensor is basically the next step for the Bio-Tetris game in Japan. That just read your pulse and changed what pieces it gave you based on whether you wanted to be stressed or relaxed. This is not a game-changer and based on the ideas I've seen thrown around for games/software that use the device, it's not going to sell systems.

Price drop next year.

Man, I couldve said the same thing about Wiifit...

 

[donny2112]

Man, I couldve said the same thing about Wiifit...

I couldn't have. It's a direct-control device that's a big tilt-sensor you happen to control with your weight distribution. It's easy to think of how that can be used in games and lots of good game ideas were instantly thrown around when it was announced. There are even a lot in Wii Fit itself.

Vitality sensor offers no direct control. The game ideas I've read offer nothing that is game-changing/easier for people to get into, in my opinion. As I said, at best, this is a supplemental input for the game that you have no direct control over. This is not a new way to play games.