All Nintendo had to do was make a console with power of the XB1 and a regular controller, priced it at $299. Instead they went for weak hardware and put all their eggs into the controller.
Even after six months of stagnating or declining sales of Wii U, Nintendo is reluctant to cut price of its latest video game console. The president of the company claims that Nintendo does not have too many opportunities to reduce pricing of the console due to its bill of materials and “aggressive” initial price. It is unclear how the company wants to attract attention to the console now that there are no exclusive games from third parties.
“Because from the very beginning we came up with a very aggressive price point. We do not think [a price cut] is a very easy option to take,” said Satoru Iwata, the president of Nintendo, in an interview with CNBC, reports GamesRadar.
Nintendo sells Wii U basic version for $299 and more advanced deluxe flavor at $349. The bill-of-materials of Nintendo Wii U is not precisely known, however, the company itself claims that it starts to make money on Wii U once it sells one game title for $50 - $60. Therefore it is highly likely that the manufacturing cost of Wii U is very close to break-even point.
In case Wii U cost is close enough to break-even and Nintendo does not want to cut the price, then it is obvious that the company either does not want to lose money and take additional risks, or believes that it can fix the demand for Wii U with additional marketing efforts. What Nintendo clearly understands that its Wii U at $349 will not only inevitably compete against Sony PlayStation 4 at $399 (with higher performance, Blu-ray player and plenty of exlusives), but any of its marketing campaigns will be opposed by similar actions from both Microsoft and Sony.
“We are to blame. We relaxed our [marketing] efforts, so the consumers today still cannot understand what's so good and unique about the Wii U. As long as people have hands-on [experience], they can appreciate the value of the Wii U, but because there is not software that's simple and obvious for people as Wii Sports for the Wii, potential consumers do not feel like trying the Wii U. Our challenge today is with the software lineup we are introducing now, we have to encourage [people] to experience the Wii U in the first place,” added Mr. Iwata.
While Nintendo is unlikely to win the battle against both Microsoft and Sony with an underperforming console priced at $349, the company has a weapon against its bigger rivals that is hard to ignore. Around 100 million people worldwide have bought Nintendo Wii. Perhaps, the only thing Nintendo needs to do is to persuade at least half of them migrate to Wii U?