Iwata: Exchange Rates Preventing Wii U Price Cut - News
by William D'Angelo , posted on 23 March 2015 / 8,674 ViewsNintendo President and CEO Satoru Iwata has told Time that the high price of the Wii U has hurt its sales. The Wii U price has remained high due to the current exchange rates between the yen and the dollar and the yen and the euro.
"I think, to be honest, we were in a difficult situation," said Iwata. "Because for the home console our biggest market opportunity was in the overseas markets in the U.S. and Europe, but because of the valuation of the yen and the exchange rates into dollars and euro, it made it a difficult proposition for us to capitalize on that, because of the cost that we were forced to sell the system at."
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A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel dedicated to gaming Let's Plays and tutorials. Outside, in the real world, he has a passion for the outdoors which includes everything from hiking to having received his B.A. in Environmental Studies. You can contact the author at wdangelo@vgchartz.com or on Twitter @TrunksWD.
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It's time for a fucking price drop Iwata...
More like time for a fucking PRESIDENT DROP Nintendo
Raise the price, then. So it dies faster and less painfully.
I don't get it, shouldn't it be the opposite? The dollar is very strong against all currencies lately, but against the yen it has changed massively. The yen was as strong as 78 yen per dollar, now it is 120. If you sold something for $100, you would get 12000 yen now, while while you would have gotten 7800 yen before. I get that your expenses increase as well, but it should help anyway.
Ok if they purchase the parts in USD, then it will cost more (I already said this).
However the revenue you get from selling the Wii U would go up by the same percentage. That's the part you don't get.
I don't know about where they buy the parts and where they assemble, but it should benefit them if it is built almost anywhere except the US, and even if it is the US it should be a wash because of increased revenue from selling the console. Nintendo gets most of it's revenue from the US.
I didn't think about this on my first post but the increase in software revenue should be even more beneficial since the physical disk costs very little and the revenue in yen is increasing.
Unless they are purchasing the parts in the US and then selling the hardware in Japan, that would be bad. However making them in the US and selling them in the US is a wash at worst, and the increased revenue from software and peripherals would be huge.
purchasing the parts in China or most other countries right now and selling them in the US would still be a benefit.
yes it does mean it's worth less especially for people abroad, but for people in Japan it's not so simple. Japan is still not having much inflation at all despite all the money printing, and salaries are not increasing very much at all. Commodity prices are going up, but other stuff is not going up that much.
I hope their able to drop the price by 100$ later this year
That would cut into their razor thin profit margin and this modern day version of nintendo dont believe in taking short term risks/losses for long term gains like sony has in the past. Its also among the reasons why they got their butt handed to them 3 of the last 4 gens thus far.
That would cut into their razor thin profit margin and this modern day version of nintendo dont believe in taking short term risks/losses for long term gains like sony has in the past. Its also among the reasons why they got their butt handed to them 3 of the last 4 gens thus far.
Really Nintendo needs to work on this. The Xbox One is edging closer to its price
I'm sure Nintendo can still get the Wii U down 50 dollars by the time Zelda U comes out.
So make a version without the gamepad already. Hardly any games use it and the ones that do aren't essential.
Then give us more games in one bundle like MK8, 3D World and Smash !
Why wasn't the PS4 affected by this?
He's not saying the exchange rate is why the Wii U hasn't been successful. He simply answering the people who have questioned why the Wii U hasn't seen further price cuts beyond the elimination of the Wii U basic and reduction of the Wii U Deluxe to the Basic's pricepoint. Look at the Xbox 1, Microsoft had to gut the system of it's Kinect peripheral to drop the price below $400. Wii U's pricecuts are harder because they aren't taking anything away from the manufacturing cost when they lower the retail price.
The PS4 has gone down in price...?
It has? I still see it at it's $399 launch price everywhere.
@KLXVER, nevermind my last comment. I thought you were replying to me, lol. I get what your comment now.
It may have. PS4 is still $399. All Iwata is saying is the rates make price cuts difficult. The difference is the PS4 is selling at its price.
Noticed any PS4 price cuts lately. Also, Sony often sells there consoles at a loss.
Sony mentioned that the impact of the rising dollar didn't help them has much has others ,since they had transitioned a lot of PS4 expenditure to the dollar to offset the high yen .and it would take time to gain benefits.
And then from US dollars to Canadian dollars..... $10 more for a game :(
Typical nonsense. There is nothing in the wii u of value. Just about every part is dirt cheap. Is there anyone left that actually believes the wii u is capable hardware. In cpu terms it is far less powerful than 360 and PS3. It's memory bandwidth is less than 360 and PS3 too. The gpu is on the same level as an entry level laptop, still better than ps3 and 360 but not comparable to ps4 or xbone. There is no hard drive and the chips are fabricated on a low cost process no better than ps3 and 360. The gamepad only has a low res resistive screen worth hardly anything. Nintendo managed to sell weak hardware at huge profits with the original wii but they have failed to repeat that with the wii u. It's likely Nintendo's margin on wii u is far more than Microsoft or Sony with their consoles despite their higher prices.
It's funny... he's like a politician. He fucks up everything... but then smiles to the cameras "Directly to you" and that's why people love him.
OK, this article is absolute garbage. Base on the statement Time quoted him saying, he said Nintendo was forced to sell the Wii U at a higher price. The inference from that is when they released the console, the valuation of the yen was so strong they couldn't afford to sell it at a cheaper price in dollars in euros. I don't know how you got exchange rates is preventing a price cut as nowhere does he ever mention the possibility of a price. Hell, the statement is in past tense. Why Nintendo isn't rolling out a price cut now, I do not know but it sure isn't having anything to do with what he said during the interview. Better reading comprehension next time before you jump a gun on the story.
I'm surer we'll see a pricecut in the next months. $249 for one game bundles and $199 for "basic" set is ideal.
Then make more bundles with more games included. Make a Smash Bros Wii U bundle, make a Splatoon Bundle, hell make a Lego City Bundle.
To be honest as much as I love the system and it's games, it's the gamepad and console name that's hurt it's sales more than anything else.
Thats been Nintendo MO lately just to turn a small profit and survive as opposed to dominating like the did back in the day.
So keep the money in Euros or US Dollars, it's better then the alternative not selling more consoles. Sony seams to sell systems, I know there not lowering the price but there not raising it.
So Iwata is saying that the exchange rates are what affected the Wii U sales at first year... SURE!!
Strange though... no exchange rate stopped the Wii from selling A LOT!!
It doesn't say that anywhere. You must be reading it wrong. Iwata is simply saying that exchange rates (which drive up the costs for the Wii U) are making Wii U sales, especially in the US and Europe, lower than it could potentially be.
I'm not contradicting myself at all. I'm not even seeing how you see a contradiction, really. What he's saying is that exchange rates keep the costs of the Wii U up, so they cannot reduce the price without taking a hit to profits. Since the price remains high, sales are inevitably hurt. No one said by how much. I don't think you think that a price cut could harm sales, do you? It could harm profits.
Show me where Iwata mentions 1st year sales as you do. He said "the reason the price has remained high". That's referring to why the price is where it's at now in 2015. Nowhere does that infer pricepoint in 2012.
All he's saying is that the exchange rate are keeping the cost of the console high which is preventing better sales. With the Wii, aside from better marketing and having a more focused message, the Wii launched at $250, making it far less expensive than the $400 Xbox 360 and $600 PS4. Even when inflation is added, the Wii in 2006 still costs less than than the Wii U today. Then by 2009 I believe, Nintendo was able to drop the price of the Wii to $200, giving it even more value. Another thing to consider is that the Wii was incredibly cheap to manufacture compared to Wii U so Nintendo was able to take a lot of liberties with pricing without having to worry about losing money.
Then manufacture the Wii U somewhere else, not to hard...
How is that a solution?
Which means the margins are pretty tight on the console right now. If they had a $50-$75 margin on Wii U right now they would definitely cut the price. But exchange rate is probably causing the US margin to be more like $20-$30.
It's the opposite. The exchange rate is favorable for Japanese companies.
Nintendo's margin has been rising significantly due to the weakening Yen.
Nov 2012 - 80 Yen / Dollar. $300 = 24000 Yen
Nov 2013 - 100 Yen / Dollar. $300 = 30000 Yen
Nov 2014 - 118 Yen / Dollar. $300 = 35400 Yen
Or to put it the other way:
Nov 2012 - 80 Yen / Dollar. 24000 Yen = $300
Nov 2013 - 100 Yen / Dollar. 24000 Yen = $240
Nov 2014 - 118 Yen / Dollar. 24000 Yen $203
They couldn't cut the price when the Yen was high, and they still didn't cut the price after the Yen dropped 20% in one year. Something doesn't really add up.