Video Game Saga *

The following article is from IGN.com

February 16, 2010 - Janco Partners analyst Mike Hickey states in his latest equity research newsletter that Nintendo needs to promptly cut the price of the Wii console in order to stave off the upcoming releases of both Microsoft and Sony's new motion controllers due this fall.

"We believe Nintendo needs to cut the price of their console from $200 to $150 immediately, as they should establish as meaningful of an installed base as possible before the Natal and Arc are introduced," Hickey wrote.

"We believe they also need to generate strong hardware sales momentum into their competitors release or face the draconian consumer perception of the Wii having a dramatically reduced entertainment value proposition over a faded technology innovation; Rock Band anyone?".

Hickey also believes third-party publishers will "benefit significantly" with both Project Natal and the PlayStation Motion Controller, and cause a certain segment of the casual Wii audience to "migrate" to these new motion controllers.

"We expect 3rd party publishers could benefit significantly over the emerging casual cycle, as their prior experience at the casual market was often tortuous from Nintendo's software domination," Hickey wrote.

"The casual hardware extensions from both Sony and Microsoft will likely drive both additional hardware and software sales, for casual and non-gaming mass market opportunities," he added. "We expect a potential up-migration from a portion of Nintendo's Wii market, as many new gaming console households chose to upscale their game entertainment experience, enjoy a broader array of multi-media options and experience "the new" casual gaming opportunities."

Jim's 2 cents: Okay, so while I can see why this would be a valid concern for Nintendo with Natal and Arc on their way, I in no way feel that this warrants yet another price drop. I mean the Nintendo Wii sales have been on top even since before the last price drop and at the current $200.00 price tag, Wii’s are flying off the store shelves like crazy! Take a look at the NPD numbers below for the month of January for system console sales:

Consoles

Wii 465.8K

Xbox 360 332.8K

PlayStation 3 276.9K

PlayStation 2 41.6K

Plus with Wii 2 being announced and including more multi-media options such as Netflix, this will give Nintendo a fresh new model on the market to compete with Natal and Arc. And since the Wii 2 will probably be a little bit more expensive than standard Wii's, this is all the more reason why a price drop is not warranted for the standard Wii model. So using those NPD numbers above as an example, Natal and Arc technology will surely increase Microsoft’s and Sony’s sales but probably not surpass Nintendo’s Wii sales by a whole lot or at least not enough to warrant another price drop. I am super excited for Natal and Arc, I know it is going to be an amazing option for gamers who have wanted Wii style of gaming on their PS3 and 360.