Analyst: Nintendo May Consider Wii Holiday Price Cut
As Nintendo's hardware, first-party software and royalties decline across the board, analyst Michael Pachter says the company may consider a holiday price cut for Wii to help meet its sales targets.
The company's hardware sales are tracking "well below" last year's, says Pachter, with Wii unit sales down as much as 50 percent year-over-year. Although DS sales are up by about the same amount, Nintendo's expected to finish the year about 10-15 percent behind last in terms of hardware revenues.
It's not just hardware. The company's first-party software sales are also down 30 percent, and royalty dollars are "roughly flat." The company still plans on selling 26 million Wii units and 30 million DS units in its fiscal 2010 (the company closes the first quarter of its fiscal '10 on July 30).
Nintendo's own guidance assumes 220 million units of Wii software and 180 million units of DS software, an estimate Pachter calls "realistic despite the current slowdown in sales."
But Nintendo's forecasts are so attainable largely because it has the wiggle room to enhance marketing and reduce Wii prices, says the analyst.
"We believe Nintendo will be more promotional, and will consider price cuts in order to increase sales during the holidays," says Pachter.
Despite its considerable slowdowns, however, Nintendo -- one of the most profitable companies in the game business, year in and year out -- is hardly in dire straits.
The analyst expects the Motion Plus peripheral enhancement and games like Wii Fit Plus, New Super Mario Bros. Wii and The Legend of Zelda Spirit Tracks to support continued solid performance for the company, and next year, it has Metroid: Other M and Super Mario Galaxy 2 to look forward to.