I thought I was having more fun for less money...
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That's the sentiment of many gamers following today's announcement of the Wii's price point and launch date. Before we jump to any more conclusions, let's review what has happened. My original predictions had called for $229 price with a Wiimote/Nunchuck and Wii Sports bundled in, at a November 9th launch. As it turns out, I was $20 and ten days off.
The Wii will now launch, of course, on November 19th at $249 MSRP. Wii Sports will be bundled with the system, along with one Wiimote/Nunchuck combo. Let's run down the reasons for this price point and the implications the news has on the industry at large.
Blue Ocean 100%
The price of the console should not come as a real surprise to anyone who has analyzed Nintendo's almost religious devotion to "Blue Ocean Strategy". The idea of Blue Ocean is to set a new path and to chart a new product area that hasn't been explored before. This is why the Wii features such a unique gameplay system in comparison to its competitors. However, people often forget the second side of the Blue Ocean coin: creating a brand new type of product allows for a new type of price point.
Consider this: how much is a coffee worth? Ten years ago, the answer would probably hover around a dollar. Yet with the massive growth in the industry, powered by Starbucks and its unique branding of its products and atmosphere, people line up to pay four to six dollars for a cup of java not much different than before. Apple's iPod is another excellent example. Whereas portable CD players were the norm a few years ago, hovering around perhaps $80 in price, Apple's iPod has firmly shifted the pricing structure in the portable music market up several hundred dollars. Nintendo is trying to capitalize on the same idea; who is to say that $249 is not a reasonable price point for something that never existed before?
Also, Nintendo is trying to avoid repeating the stigma of the Gamecube. Nintendo launched it at a lowball price in comparison to its competition and touted its affordability. Yet the move backfired; all too often, the system was seen as the "cheap", underpowered lunchbox that didn't quite fit in with the "cool" consoles that sold at a very cool $300+. Nintendo is trying to avoid being labeled with that "cheap" image this time, while still providing a decent value to customers.
Every Last...Yen
Even given Blue Ocean pricing, there remain some concerns about the Wii's price. Some of this Nintendo unfortunately has little control over. As a Japanese company doing business in America, Nintendo has to deal with the currency markets on a daily basis. In 2002, one US dollar bought nearly 135 Japanese yen. Yet a weaker dollar today can only afford 117 yen. This may not seem like a big difference, but consider this: $250 today is worth 4,000 yen less than in 2002. This weaker dollar forces Nintendo to a $249 price point, whereas just a few years back a $199 price point may have been feasible. As Nintendo is a publicly-held company, they must in good conscience maintain a certain margin on the Wii, and the fluctuations in the currency market drive up the price the end consumer must pay.
The Plumber and the Bounty Hunter
The news that Mario and Metroid are being held into 2007 comes as particularly disturbing news to many fans, yet this should not be very surprising. Nintendo tried releasing a number of AAA-titles within a short period of time just a few years ago. Called "Game Giants", the marketing push saw the release of Mario, Star Fox, Metroid and Zelda for the Gamecube within less than a year. My first article for AMN, in fact, speculated that this major push might have been just the fuel Nintendo needed to beat back the Xbox in North America. Yet I, and Nintendo, were wrong. The concussive force of so many huge titles barely left a mark on total system sales, and there are lingering feelings that the releases being in such close proximity actually cannibalized sales for several of those titles, especially Metroid Prime.
Fear not. Zelda should be reason enough for most gamers to look forward to the Wii's launch, and if it is not, then third parties have quite a bit in store. Madden for the Wii is actually one of my highest-anticipated titles, due to its exceptionally innovative control scheme. As well, Ubi Soft is leading the charge with Splinter Cell, Rayman and Red Steel, among many others. Sega will be bringing Monkey Ball and Sonic, while Activision offers up Tony Hawk. All of these are the formula for quite an impressive launch. It may not be all you originally hoped for, but it's certainly better than the Gamecube's launch, and leaps beyond the N64's ghastly introduction.
Controlling Expenses
The biggest pock mark on today's news is undoubtedly the price of the Wii's controller. With the Wiimote at $40 and the nunchuck attachment separately sold at $20, Nintendo has made a serious misstep. One might argue that Blue Ocean pricing should apply to the controllers as well, but here I disagree. The problem with the controller price is how quickly it adds to the Total System Cost (TSC). The TSC for the Xbox 360 is why many people are holding off from purchasing, and why even more will balk at the PlayStation 3's proposition.
After all, $399 isn't that bad, but once one adds about $120 for three more controllers, $79 for Xbox Live, and $60 several times for games, the price quickly gets out of hand. Nintendo may suffer from this issue as well. While $249 is not unreasonable for the package, and the bundled copy of Wii Sports makes that even more attractive, the Wii is being marketed as a multiplayer system. Charging gamers nearly another $200 to complete their controller set, all before considering add-ons like the classic controller and a zapper gun, makes the Wii seem like a raw deal. Lowering the price of the Wiimote to $30 and the Nunchuck to $15 would put the combo price at $45, just slightly north of the Wavebird's price and very fair. If Nintendo chooses to capitalize this highly on their controller sales, they may just find they lose some customers to the Xbox 360. Keeping the TSC low is the surest path to success.
Freedom!
Luckily, not all is terrible in the Mushroom Kingdom. The news that all first-party games will be region free is welcomed by importing gamers worldwide, and third-parties will likely follow Nintendo's move on this issue (though they do retain the right to region-limit individual titles). Also worth noting is that all Nintendo-developed games will have a 16:9 widescreen aspect ratio option, something that will appease many HDTV owners that were initially bitten by the lower video resolution the Wii offers. As well, the prices for the Virtual Console are certainly very fair, and though Nintendo has chosen a points system for purchasing titles, it is simple to understand, with each point roughly equalling one cent. This stands in stark contrast with the Xbox Live Marketplace that obscures prices in difficult fractions, keeping gamers from having much more than a rough estimate of what anything costs.
PS3 Warfare
Many are wondering why Nintendo would pick November 19th as their launch date. After all, launching two days after the PlayStation 3 is just asking for it, right? Not so fast. While this may not make much sense on its surface, digging just a little bit makes Nintendo's reasoning readily apparent. Sony only plans on having 400,000 PS3s available in the United States, and to the best of our knowledge they will ship all of them on launch day. Regardless of the price Sony sets on the system and regardless of what games are available on launch day, Sony will be able to sell through all 400,000 on pre-orders and day-one purchases alone. Therefore, customers that come in only a couple of days after the system's launch will already be out of luck.
This is when Nintendo plans to swoop in. By hitting with launch noise right after Sony runs out of product, the Mushroom Kingdom can potentially "save Christmas" for millions, while crashing Sony's party. Those that would perhaps not be interested in the Wii, or had no prior knowledge of it, will suddenly be hit squarely with the new system and presented with what remains (even after today's pricing announcements) a unique system at a good value.
A Bite Out of the Apple
It was just Tuesday that Steve Jobs tentatively took the curtain off of the iTV, Apple's foray into wireless content distribution to TV sets. The "Wii Channels" featuring weather, web browsing and- most interesting- photo sharing and editing, are a direct affront to Apple's own little white box set to launch next spring. While it's a little early to form an opinion on the matter or to accurately interpret Nintendo's intentions, I find it very interesting that this "Gaming Only" company is showing a few cracks at convergence.
Microsoft's Move
Peter Moore has led the charge on the theory of a "Wii60" unofficial Christmas bundle in response to the PlayStation 3. This theory is built on the idea that a 360 and a Wii would cost the same as a PS3. As it stands now, with prices of $399 and $249, this unofficial combo actually stands about fifty dollars above the price of Sony's next console. Microsoft is now left with a choice. If they wish to fully realize this "Wii60" idea, I believe they will unify the Core and Premium systems into one "Premium"-style bundle at $349. In other words, a price drop of $50 to coincide with the early November release of Gears of War seems to be in the offing. Of course, Microsoft's move wouldn't be made to help Nintendo; the price cut would also lower the system's TSC, leading to those on the fence possibly buying a 360 instead of a PS3 or Wii.
Wrapping Up
Today's announcements bring good and bad for Nintendo fans. You'll be happy to know that it doesn't matter. If you are reading this, chances are that Nintendo's minions could kill your dog, break your car's windshield and smack you across the head by a Gamecube's handle and you'd still come crawling back. I see that old E-Reader on your shelf; don't lie to me.
What really matters is the value offered to the new audience. Old people, females, particularly smart animals. These are all potential targets in Nintendo's Blue Ocean strategy. While Metroid and Mario being held to next year may concern you and I, Joe Schmo had no idea the game was even in the works, much less delayed. The biggest challenges Nintendo has created for itself are the exorbitant prices for the controller components, a lack of Wii awareness in the general public and the image it has held for the last ten years. If it can overcome these admittedly severe issues, look for success in not just the next few months, but for years to come.
And if not? We'll leave that for another day.