Wii to See 40% Boost in Weekly Sales, says EEDAR

IndustryGamers has received some analysis from EEDAR following today's Wii price cut news. Analyst Jesse Divnich noted that the price cut from Nintendo is not  "a reactive strategy towards the recent Xbox 360 and PlayStation 3 price cuts, but rather a preemptive strategic decision." 

The bottom line is that Nintendo needed to make this move. Wii hardware sales have been down over 50% this year and the console's total decline from Quarter 1 2009 through Quarter 3 2009 is expected to be 57%, EEDAR noted. 

"EEDAR believes Nintendo is making a pre-emptive strike to capture as much of the mainstream and casual market as possible before Microsoft and Sony can release their mainstream targeted motion capture devices (expected to launch in late 2010). By maintaining their position as the lowest cost option in conjunction with strong software support from both first and third party titles, EEDAR expects the Wii to continue to maintain its position as the leading hardware platform in monthly sales over the short to medium term," said Divnich.

Unlike its competitors, Nintendo should be able to sell each Wii at a profit, even at the new price. Furthermore, the Wii should see an immediate sales lift in October. "EEDAR expects weekly sales of the Wii to rise 40% in October 2009 compared to September 2009," Divnich said. "For November through December (and even in late October), it is challenging to deliver an accurate estimate as to how much the price cut will benefit the Wii as the increase in monthly sales will likely be the result of the seasonal holiday influence."

While there's been some talk in the industry (led by Michael Pachter) of Nintendo launching upgraded Wii hardware with HD visuals sometime in 2010, EEDAR doesn't believe this to be likely. "While EEDAR believes this remains a possibility, we are skeptical on how an upgrade for the Wii focused on visual aesthetics can effectively compete with the significantly more comprehensive hardware offerings from the PlayStation 3 and Xbox 360 when their motion devices are launched in 2010," Divnich explained. "Hardware upgrades mid cycle are very challenging in the video game industry. Backwards capability is a serious issue for publishers trying to appease the lowest common denominator and maximize their target market."

He continued, "With the Nintendo Wii’s global install base above 50 million, it will be incredibly difficult for Nintendo to release any significant hardware upgrade without alienating current consumers or third party publishers. Nintendo has already penetrated more than 5 million households worldwide with the new Wii Motion Plus device; predominantly through software bundling with titles such as Wii Sports Resort (NTDOY), Tiger Woods 2010 (ERTS) and Grand Slam Tennis (ERTS). In order for the Wii Motion Plus to be fully embraced by publishers and further enhance Nintendo’s appeal to mainstream consumers, at least 20 million households worldwide will need to have adopted the hardware. EEDAR speculates that Nintendo will likely implement the Wii Motion Plus as the standard controller for new Wii retail units in late 2010 as other motion based device offerings from competitors appear at retail."