UK Wii market price may have to go up
Margin may be too small for GBP 179.
Nintendo's decision to increase the UK trade price of the Wii may result in an unprecedented console price increase for consumers, retailers have told our sister site GamesIndustry.biz.
Yesterday, Nintendo reluctantly announced that it would be raising the trade price by GBP 18 - 20, putting pressure on retail margins.
"I don't think any retailer has got the ability to soak up that sort of margin change," Don McCabe, managing director of UK retailer Chips, told GamesIndustry.biz.
"I think I saw one story that said the supermarkets wouldn't be passing the price point on but I think they will. I don't think any retailer can take that sort of squeeze."
ShopTo.net's Igor Cipolletta said the move would leave "no margin for us at all".
The two men voiced differing views on Nintendo's justification. The platform holder blamed currency fluctuations for the increased price - the company traditionally won't sell its consoles as loss-leaders, as Sony and Microsoft do.
"I can see their reasons why and there are reasons which are perfectly valid in today's market place - the Pound has been dropping against the Euro for a while now and it shows no sign of bouncing back," McCabe said, suggesting Nintendo should have chosen a GBP 199 price point originally rather than the current GBP 179.
But Cipolletta disagreed. "If you look at the history, the pound was higher [against the Euro] and they've been making quite a percentage more of money, so now they can take the loss rather than increase the price."
Meanwhile, Nintendo hasn't ruled out the possibility of software prices rising as well.
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Comments (65) Latest comment 3 years ago
Comments threads automatically close after 30 days, but please feel free to continue chatting on the forum!
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Well said Igor!
/ sniggers at the name Igor
/ Waits for Smelly
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Ah Someone with a brain.
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Price INCREASE!?
Wow. This money printer doesn't even need to change toner cartridges, does it?
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Well as i said in the other thread - this is simple math:
When the wii launched in dec 1st 2006:
1 pound = 228.284 yen
Today:
1 pound = 135.44 yen
And this is just the start! If things keep going the way they are, we'll go down to 50 to 100 yen in no time at all...
So you'd want to run a company where the product is selling for 70 quid less than what you put it on the market for? If so, remind me never to go into business with you!
Sometimes I wonder about gamers.. If it was a television which had gone up in price.. none of this fanboy shit.. that's just the way it is...
This is the way GLOBAL economics work.. But gamers seem to be too stupid to figure this out. - It always AMAZES me how whenever a new games chonsole gets released they compare the UK price to the US one and declare the uk is being "ripped off".
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Wont happen..
Sony have priced the machine high in the first place, and kept it up high.. So they dont need to go through this PR disaster of idiots who dont understand the UK pound is fucked trying to figure out why they need to pay more for stuff...
I cant see sony needing to lower the price of the ps3.. The UK price was sky high to start with.
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"Wii sucks! It's not even in hi-def.. just like halo 3 wasnt.. and it only has on rails shooters.. Just like my 360 only has grey and brown fps games which force me along corridors.. like a on rail shooter.. and the highest rated game ever - mario galaxy sucks too! So therefor it's not fair its selling more than the machine i bought.. boo fucking hoo"
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/ ruffles Smelly's hair
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Whilst Nintendo have no control over global market conditions, they are not entirely with out blame for this price increase. Firstly electronic components should drop in price as they increase in age which should decrease the manufacturing costs. This clearly hasn't happend which most likely means Nintendo have made some very bad desicions in this area (like MS did last generation). Secondly there are steps you can take to minimise the effects of changes in global markets, for example use more than one factory, ideally at least one in each major territory. That way if the value of one territory's currency drops or rises your costs will drop and rise roughly in line. It also means that you are less likley to have your super selling product out of stock.
So whilst you may deride your fellow forumites for not having a good understanding of global economics, you should perhaps save some of your bile for your beloved Nintendo that don't seem to either (or at least made all their descions regarding the Wii on a purely short-term basis).
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Are they next going to announce that the price of the DS and DSi needs to rise in england too?
When the exchange rates are good, we see zero benefits and when they are bad we get price increases. If I didn't already own a Wii I would have told Nintendo to frak right off!
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A grain of truth to that..but not that much.Looking at the history of the pound/euro-
the Wii was around £11 more in the UK for the first year.
Since April 08 we've be paying around £17 less than the rest Europe
Since December we've been paying around £45 less than the rest of Europe.
I do think it's a bad move to put the price up...but £45 less per unit is a big hit.
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There isn't a single company? Prices falling across the board?
You are not a photographer, are you? No companies increase their prices? Same thing is happening with Japanese camera manufacturers (Canon, Nikon, Sigma, ...). Camera body and lens prices are currently significantly increasing for the same reasons.
You guys can rant all you want but it's a fact now that Japanese manufacturers are hurting and increasing prices, and not just for game consoles. Gamers can have a blinkered view of economic realities...
Wendelius
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Is not true.
It didn't take a whole lot of research to find the following
[link url=http://www.ephotozine.com/article/Nikon-price-increa se-11189
]http://ww w.ephotozine.com/article/Nikon-...[/link]
[link url=http: //www.amateurphotographer.co.uk/news/Sony_to_raise_flagship_ camera_price_by_18_update_news_278451.html
]http://ww w.amateurphotographer.co.uk/new...[/link]
Prices are crazy at the moment. Even though honda are suffering - they are having to increase their car prices in some markets.
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The ability to de-value our currency when we need to and avoid deflation? I hate to think what state the British economy would be in if it was in the Euro.
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As a result the owners are forced to frequent sites like the FT and watch the news and stuff.
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Hopefully, this move will backfire on them. You don't see Microsoft or Sony increasing their console prices despite the fact that, unlike Nintendo, neither make a profit on them to begin with.
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Cheap? You what? I love Nintendo, I love my Wii. I got it on the release day. It was a ripoff. £180 was too much for the Wii two years ago, and it's even more too mucher now, regardless of the shitty pound.
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And remember Nintendo is a moderately run company that makes a large chunk of it's revenue from hardware. You can't compare it to Microsoft, who have followed an 'expand and achieve market share at all costs' strategy, in fact there's hardly any other companies in the world that could afford to do this.
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I'm looking for links about Nintendo's manufacture costs, prices of components are of particualr interest, can you post them please?
IIRC the PS3 was about $800 dollars to build, so presumably the cost of electronics has come down in that too?
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Someone with a brain
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and yet I have a Wii with about 10 games, 2 wiimotes, 2 nunchucks, Wii fit (never use) and am about to go get hotd overkill.
I must need my head looking at.
Hopefully they will increase the price by loads so that I can sell mine for a profit and finally feel good about my Wii purchase.
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In December 2006.
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The Wii is a ripoff at the minute anyway, I mean seriously, it must be the worst value console in the history of gaming already.
Glad I sold mine, they won't be getting any of my money, I'll save that for companies that at least seem to have a little more respect for their consumers.
/ends over-reacting
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Gaming is the core business of Nintendo, it’s pretty much all the do. Microsoft (and to a lesser extent – Sony) subsidise their gaming divisions. No other company in the world could have afforded the strategy employed by Microsoft to bring the Xbox brand to the market.
As has been pointed out time and time again, every other company is not ‘sucking it up’, everything from cameras, to cars, white goods, home entertainment etc are all experiencing increases, despite the general view that everything at retail is cheaper.
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The rest of you seem to think that product prices are decided on a whim or something.
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$341.97 using the GDP deflator
$420.52 using the value of consumer bundle
$379.17 using the unskilled wage
$514.62 using the nominal GDP per capita
$651.07 using the relative share of GDP
I still think we're getting a good f#cking deal. Were kids such whiny brats in those days?
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In December 2006"
And they sold at $249, which is only $89 left to pay off the R&D costs, marketing and logistics etc etc. Sounds like quite a fair business risk to me. A business risk that anyone here could have taken on. Look at the Pandora console for example.
Also note that Nintendo have recently invested in Video gaming R&D, as opposed to ripping of other peoples ideas and simply asking Nvidia and Ati for their best GPU to sell us the same FPS games only prettier than before.
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If anyone is planning a major electronic purchase then do it now as over the next few months the price of all electronic products is set to rise.
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Any complaints about the pound's devaluation: 10 Downing Street.
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Oh, and the only reason i posted about the 360 - was to fit in with all you "cool kids" slagging nintendo off..
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" All these arguments defending Nintendo would hold if they reduced prices when the pound was growing in strength. Did they? Did they f***. "
Another cry baby
Nintendo have launched consoles cheaper than ever as the YEN has weakened.
We've never had it so good with electronic goods, and now the spoilt kiddies think they're owed a f#cking living.
Hopefully the next generation will launch at £900 and we can have some peace and quiet.
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I posted this in the forum, but thought it was worth sharing again...
Sony Price Increase
Nikon Price Increase
Sigma Price Increase
Canon Price Increase
Panasonic Price Increase
Ford Price Increase
Vauxhall Price Increase
Nokia Price Increase
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Maybe the shops will have to resort to "steering" consumers to a different console just to make money.
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I hope for your sake you never go into business...
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"However, industry experts have predicted that the price increase will not be passed on to customers because shopkeepers are desperate to encourage spending."
This is a quote from your Telegraph article. Kind of proves my original point doesn't it. Prices are falling across the board to encourage consumers to spend. Having the Japanese companies raise their prices to try to maintain their pre-recession profit margins is pretty stupid on their part. How long do you think it's going to be before retailers simply can't afford to stock their goods at all? I'm guessing that it's not going to be that long. At that point they are either going to go looking for Government bailout money or start looking to shed some more jobs.
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From December 2006 to August 2007 the pound was constant, it then started to fall to the level we have today. It hasn't risen in the Wii's lifetime.
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Prices are not 'falling' across the board, in some areas they there may be price reductions, but certainly not all. We are talking about one nation here don't forget, only we use the pound, on our little island. Whether you think is it stupid it doesn't take away the fact that companies originating from certain areas are losing money if the charge the same RRP.
Is it really so shocking that they are changing the price?
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What exactly am I being a cry baby about? I don't give a toss how much they sell the thing for, it's the defenders I find hilarious.
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In May 2006 Nintendo stated that UK pricing of the Wii would be in line with the US and Japan of < $250. At that point the cost worked out at £150 including VAT. From then until release the Pound strengthened against the Yen but the machine was released here at £180.
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It seems that NoE try and maintain a similar margin per console sold in each country in their territory.
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That's nice but they stated that UK pricing of the Wii would be in line with the US and Japan not Europe.
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Or maybe they could have set it at GBP 200 originally as some have suggested that the market would have borne it but then there'd be accusations of rip off Britain.
In fact the current price is still €30 cheaper than the European price.
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Eh? The point is they didn't price it in line with the US and Japan and were therefore making more on a console sale in Europe than there. Not much margin? How do you justify the extra £30 they made per console over and above the margins they had in the US?
My core point still stands. When exchange rates were more favourable they took the extra cash themselves by setting an effective price higher here than in Japan and the US. Now the exchange rates are less favourable they are using it as a reason to raise prices. If you can't see the hypocrisy there you are blind to it.
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They announced it in September 2006 as... GBP 179. link 1 link 2
You might be rememering speculation.
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Smelly you have lost all credibility.
There is no way that Wii should be costing Nintendo enough to justifty a price increase after the amount of sales theyve had along with the amount of time on the market. There is just no defending it, its either they are whinging because they were enjoying the profits too much(greed... make some more decent software then if you want more money) or they got too confident and just sat back without doing something theyve been good at for years, minimizing manufacturing costs throughout a consoles lifespan. Theres nothing in the console itself that should be costing them that much to make, the wii-mote? dont be daft the infra-red camera should be cheap as chips on the level of mass production its reached now aswell as the other components. I say they were making a packet on the Wii already and wanted that to last as long as possible(this cut that short of what they were hoping for), only Nintendo could get away with that and not be made out to be an evil greedy corporation.
It makes me sick the amount of bashing the likes of Smelly and Les have done over greedy MS(hard drives, wi-fi prices ring any bells? Even though Nintendo have their own history of unreasonably expesive accessories and the like) or Sony on occasion(not often though, they might be the most Ameicanized Japanese company in the industry but they are still Japanese "and thats just kewl... must defend them"
Dare I say if Nintendo do raise their price and Sony dont then Nintendo risk making Sony look good because the rise in the value of the Yen will affect them too and they were already roumered to be taking losses.
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The whole point is Nintendo have the weakest case to make about not making enough money because theirs SHOULD be by far the cheapest to make(by a large margin, I beleive it is already, they are keeping that close to their chest though), Sony havent announced a raise in price I dont think they will for the PS3, 360 I doubt will raise price here in the UK(it wont go any lower though its safe to assume). Both MS and Sony are showing that Nintendo arent really competing at all on the value for money front already a price rasie from Nintendo is really going to make them look deservedly greedy.
Also remember the majority of all consoles come from the same place now, buy any three today and its likely that it was made in China. So if MS can break even(or even profit on the Premium as Robbie Bach suggested) at the prices theyve been selling at so far and Sony can afford to sell their console at the prices they have(whether they are taking losses or not) being a company operating in the same country as them facing pretty much the same challenges(which are being exagerated to justify this) yet are only £100 or so more expensive yet with so much more up to date technology that costs more to manufacture, it doesnt leave Nintendo with many excuses does it.
So Im not really saying Nintendo are "teh evil" Im just saying even when its staring people straight in the face --they are no better than MS or Sony when it comes down to it(ok maybe they do deserve their image a little but the attitudes from some of the fans, like they are the saints of the video game world is just idiocy)-- the very people acting high and mighty to "the Xbots and the Sonybots" about "defending a corporation that just wants money"(when its more about fondness of a product they enjoy to most... some are just blindly devoted followers though but thats a minority) are the ones seemingly in denial here doing just that.
Anyway its more about Smelly being an annoying tool that spouts alot of crap, than hating Wii or Nintendo. Les is worse Id much rather he had the nerve to do it, with the amount of waffle we've endured from him.
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"Eh? The point is they didn't price it in line with the US and Japan and were therefore making more on a console sale in Europe than there. Not much margin? "
Short memory you have, it was all set to be £150 but the big UK retail complained that there was not enough profit in the Wii (at the time US retailers were making $10)