Nintendo to Unveil Wii Update in June, But at What Price?

Under pressure to respond to competitors offering souped-up features for their video game systems, Nintendo announced Monday it will offer a sneak peak at its successor to the Wii console player in June. But while consumers may love the shiny new system, the real question is how much it will cost.

That's a valid concern, especially for the 86 million people who have already purchased the formerly red-hot Wii, along with the requisite array of games and accessories. But analysts are finding that estimating a price tag for the next Nintendo (NTDOY) console is difficult, given the lack of details in the company's announcement.

All Nintendo said was that it planned to show a "playable model of the new system" and announce more specifications in early June at the E3 Expo in Los Angeles. The company plans to begin shipping the new gaming system next year.

"Until this last cycle, $300 was the norm for video game consoles," says Michael Pachter, a Wedbush Securities analyst.

For example, Sony's (SNE) Playstation 1 and Playstation 2 launched at $300 and Microsoft's (MSFT) Xbox 360 hit the markets in 2005 with one version priced at $300 and a second at $400. When Nintendo launched the Wii in 2006, it hit the stores with a $250 price tag, Pachter noted.

But the Wii also faced competition from the Sony's PlayStation 3, which launched in 2006 with one version for $500 and another for $600, noted Brian Blau and Toung Nguyen, analysts with research firm Gartner. And Microsoft, which launched later versions of the Xbox 360 with price tags around $480, released its wildly popular motion-sensing Kinect bundled with an Xbox 360 for $400 late last year.

"Since we don't know what the [specifications] are, it's hard to guess," Pachter says. "If Nintendo's new console has the power of an Xbox 360, then it could be $200 to $300. But if it's something that has an iPad attached, then, who knows, it could run $1,000. We just don't know yet."

Blau and Nguyen, however, believe Nintendo will follow it's tried and true path on pricing a successor system to the Wii.

"We believe that Nintendo will keep the price consistent and will work within a $200-$300 price range, with the $250 price point being the sweet spot again," they said in an email interview. "This could change depending on what is revealed at E3 during the console's public debut."

The games that run on devices like the PlayStation and Xbox generally cost around $50 to $60 apiece, But Pachter says that, too, may be different for the Wii successor, depending on how easy it will be for game developers to write software for the new Nintendo system.

Blau and Nguyen noted that Nintendo has done well for itself by pricing its Wii games about 20% to 30% below Sony's PS3 and Microsoft's Xbox titles.

And although Nintendo has built a reputation for itself as the low-cost player in gaming consoles and games -- a strategy that has served it well since it debuted the Wii -- it could easily go after hard-core gamers with a high-end device and attempt to encroach on Microsoft's and Sony's territory. That would only be fitting, since both Sony and Microsoft have tried to expand into Nintendo's casual gamer niche.

But Blau and Tuong believe Nintendo will continue to focus on casual and family gamers, rather than pushing into the mature market of hardcore gamers. For the company to be competitive in that realm, it would have to make a significant leap forward -- and a transition to high-end graphics chips.


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