Nintendo Wii pricing explained
In a recent article, MyBroadband published data comparing console prices in the USA to console prices locally. The data revealed that the Nintendo Wii carried a significantly higher price locally than it did in the USA. We immediately got in touch with the Wii’s local distributor Core Group for an explanation.
So, why are South African consumers paying so much more?
The answer is simple. South African’s are paying so much more because Europeans (outside the UK) are paying more. Currently, the Wii is priced at €250 (R3250) in Europe and $250 (R2570) in North America. Nintendo recently announced that the Wii is making just $6 profit per console in the USA. While this does not sound like much, it is more than the PS3 which sells at a loss and the Xbox 360 which just about breaks even on every sale.
According to Core Group, South African Nintendo distribution works alongside Nintendo in Europe. This is largely due to the fact that we share the same time-zone which makes business interactions far more convenient than working alongside Nintendo in North America for example.
This means that in South Africa the Wii is fixed to European prices. When we consider that in Europe the Wii sells for €250.00 (R3250.00), our price of around R3400.00 does not look too bad, especially when we take shipping costs and import taxes into account. At this rate, it would seem that Core’s profit margin on the console is quite slight.
When the Nintendo Wii was originally launched the American dollar and the Euro were very closely matched in terms of their value. Therefore at launch the Wii was priced at $250 in the USA and €250 in Europe, with little lost in the exchange rate.
While these values were comparative back then, right now the Euro is significantly stronger than the dollar yet Nintendo has been reluctant to cut European prices to compensate for the discrepancy. In fact, Nintendo has stated that they believe the console to be grossly underpriced in the USA.
Since Nintendo in SA is connected to Nintendo in Europe, we follow their pricing scheme.
Unfortunately, this results in the Wii being significantly overpriced in South Africa. Microsoft on the other hand has maintained a highly competitive edge by cutting Xbox 360 prices in the face of global economic turmoil.
This has resulted in Wii prices being highly dependent of global currency fluctuations, while the Xbox 360’s strategy has proactively negated the problem.
Considering that Nintendo is currently not manufacturing Wii consoles fast enough to keep up with global demand, cutting the console’s price would be contrary to basic supply and demand principles.
So basically, as long as the Wii continues to be the top selling console in the world, there is no need for Nintendo to cut its price.
Nintendo Wii pricing discussion
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