Console Pricing: The New Battleground

Now only $249... will it be able to beat 360 sales in the USA?

The underlying message of three straight years of declining console game sales must finally be getting through to console makers, as they are hauling out their biggest sale-boosting weapon: Price cuts. The latest entry in his field is Sony, which announced at Gamescom that they are reducing the price of the PS3 to $249, effective immediately. Clearly they've gotten tired of being the regular #2 to the Xbox 360 in monthly sales numbers, and this is their bid to have a go at first place.

Early reports are positive, with Amazon sales of the PS3 jumping 400% after the price cut. Overall, analysts expect the price cut to add 30% to the PS3's monthly sales. For now, Microsoft is content to wait and see what happens, but you can bet they will lower the 360's price if the sales of the PS3 start to pass up the 360, especially with the crucial holiday selling season coming up.

Meanwhile, what about Nintendo's massive price cut on the 3DS? So far, it's having a positive impact (as you would expect), but precise numbers aren't in yet except from Japan, where the 3DS had its second best week since launch. Nintendo is being more cautious in proclaiming "problem solved", as they should be, and noting that they have major 3DS release planned for the holidays (Super Mario 3D Land, Mario Kart 7, and Star Fox 64 3D). If Nintendo can't have an excellent holiday selling season for the 3DS with that price point and those software titles, then they have a problem with the 3DS that won't have an easy fix, if any fix is possible. This holiday will be a crucial test for the 3DS and for Nintendo.

Meanwhile, what about the Wii? We haven't really heard much about its sales since the price drop to $149, have we? Let's look at July 2011 sales: The Xbox 360 sold 277,000 units, the Wii sold 190,000 units, and the PS3 sold 148,000 units (all sales are USA only). We can certainly see why Sony is feeling the need to drop its price, and why Microsoft is holding off.

Nintendo just announced a new version of the Wii, with backwards GameCube compatibility for controllers and software removed (and the ability to stand upright, apparently), which should be reducing the cost to Nintendo somewhat. Inexplicably, this new version is for Europe only, Nintendo of America confirmed it has no plans to introduce this version in America. You'd think a chance to cut the Wii price to $99 for the holidays would be reason enough to have a lower manufacturing cost version shipping, but I guess not.

So far it would seem like Nintendo is placing its hopes on a sales recovery for the 3DS because of the lower price and some key new titles, and the Wii with its new Zelda title will have to pull its own weight against the PS3 and the Xbox 360. I suspect Microsoft will respond with a lower 360 price before all is said and done this Christmas. Which will set things up for an even harder intro for the Wii U if its price point is going to be north of $249.... Nintendo may be in the uncomfortable position of having the most expensive console on the market when the Wii U launches.

When the dust settles and final holiday numbers are in, there will be a reckoning in the console business; the next E3 is going to be very, very interesting.