During a conference held this morning in Osaka Nintendo’s President Satoru Iwata explained to the press and investors the reasons behind the considerable slice to this fiscal year’s earning forecasts, and gave the signal that the company is finally looking seriously at the possibility of price cuts.
We cannot continue a business without winning. We must take a skeptical approach whether we can still simply make game players, offer them in the same way as in the past for 20,000 yen or 30,000 yen, and sell titles for a couple of thousand yen each.
At the moment the Wii U is offered in Japan at the price of 31,500 yen for the Premium Set and 26,250 yen for the basic console. Games cost between 5,000 and 6,000 yen. According to Iwata’s statement, a price cut might come not on the hardware front, like many expected, but on software.
Considering that Nintendo’s main strength is definitely placed in its games, offering them for a cheaper price could help bolstering sales, especially since such a move would create a very large price gap between Nintendo’s offering and that of the competition.
Another element that could encourage Nintendo to consider price cuts for software instead of hardware is the fact that selling consoles at a considerable loss is a difficult notion to pass with investors, while games have a minimal manufacturing cost per unit, meaning that selling large volumes can effectively recoup the loss and turn it into a gain.