Estimating the Wii Lift at $150 / 129 GBP / 150 Euros / 15k Yen - News
by VGChartz Staff , posted on 04 May 2011 / 6,263 Views
Nintendo has confirmed that Wii is getting a price cut in the USA and Europe on May 15. Below, we'll take a look at how large the Wii lift should be in the weeks following the price cut. No price cut announcement has yet been made for Japan, but Golden Week is still under way, so if a price cut is coming, it probably won't come until after the holiday ends later this week.
Figures below assume Wii is $150, 129 Pounds, 150 Euros - although this is up to retailers in Europe to some degree, and 15,000 Yen as of May 15th in the USA and May 20th in Europe 2011.
Since launching in 2006, Nintendo has only officially cut the price of Wii once, in September 2009. The price dropped from $250 to $200. We can examine the immediate lift of the price cut by looking at hardware sales just before and just after the cut in each market. Taking the week before the price cut alone is not really rigorous though - as the drop was announced during the week preceeding the price cut, lowering sales. Thus I've assembled the four weeks prior to, and after the 2009 price cut for a slightly broader look at the lift based on VGChartz data.
From the data, we can see that the Americas, EMEAA, and Japan responded differently to the price cut. Wii was already fairly weak in Japan, so the price cut less than doubled baseline sales, while in the West, the reaction was 40% to 90% stronger than the Japanese lift. Nintendo launched Wii Fit Plus with the price cut, but Wii Sports Resort, another motion-sequel hadn't pushed much hardware earlier in 2009 in any region, so its likely that the price cut did the overwhelming majority of the 'lift' work here.
We don't yet have data in for the four weeks to May 13th / May 20th, just ahead of the American and European price cuts, but if we were to assume conservative numbers for Wii entering the price cut week and identical lifts to 2009, we would see the following figures.
There are a couple of reasons why this kind of lift, "the optimistic scenario" is unlikely for 2011 though. For one thing, Wii has a far more sporadic release list in 2011 than in 2009, and the new Wii Play in June is really the first big Wii game of 2011, while the 2009 price cut was backed by new and more recent hits. Beyond that, the 2009 price cut was the first for Wii, roughly three years into the life cycle. The cut to $150 is a relatively short 20 months later. Nintendo's 13m forecast for the fiscal year also implies (roughly) a split of 2m-2m-7m-2m Wiis shipped by quarter. At 266,000 / week in the initial month after the price cut, sales longer term would like stabilize at 180,00-210,000 per week - or 2.6m per quarter, with roughly an 8m December quarter.
Thus, we can say with some certainty then that Nintendo doesn't expect a lift on the magnitude of the 2009 lift given the game line up for Wii and its own forecast. The question then is how much lower will the lift be?
If we assume the lift in each region on the current price cut is exactly half of the 2009 lift, even though each price cut was a $50 discount, the numbers look like so in what I've dubbed the "pessimistic scenario":
In this case, even with an arguably bigger discount than in 2009 (25% instead of 20%), and Wii cheaper than ever before, Nintendo would still miss its 13m projection. Shipments would probably be 1.6m - 1.6m - 6.8m - 1.4m in this case, 10-15% below the forecast of 13m as weekly sales would stabilize at 130,000 - 145,000 per week after the initial big push.
The other issue with simply halving the lift from 2009 is that Wii had an 80%+ lift in Japan in October 2009 - and if you adjust for population, USA figures in early 2011 for Wii are similar to, but stronger than Japanese figures in September 2009 by 30% or so (65k / vs. 16k in Japan * 3 for the Americas). In other words, if a weaker Wii could see an 80%+ lift in Japan in 2009, then the Western lift should be stronger. The Japanese Wii market has also weakened less from 2009 to 2011 than the Western markets - so the Japanese lift will probably be close to 2009 levels. Thus we can say that while matching the 2009 lift will be hard, the numbers above are unlikely as well.
With all of that in mind, the numbers that make the most sense in the wake of the price cut are these:
At 216,000 per week in the month after the price cut, Nintendo can ship 2.2m Wiis or so in the June quarter, roughly 2m in the September quarter as Wii stabilizes at 145,000 - 165,000 per week for the period, and then 7m-7.3m in the Christmas quarter, and probably 1.5m to just under 2m in the March 2012 quarter.
The figures above also tie in fairly well to the realities of the total videogame market - as PS3 & X360 should be joining Wii at record low prices later this year. Stabilizing at about 155,000 per week, after the initial big push, would not be a bad result at all, given that Wii would have dropped below 100,000 units per week sometime in 2011 without this price cut.
The projection also takes into account the realities of each region. In EMEAA, Europe is likely to react very strongly to a PS3 price cut on the mainland, and very strongly to X360 price cut in the UK. Here in the Americas, a X360 price cut, particularly for Kinect, will limit the lift of the Wii cut - but the push should still be pretty substantial compared to other markets. In Japan, the projection calls for a 70% lift, but these days that is only a 5,000 unit push per week, down substantially from the 13,000+ per week push from the 2009 price cut.
In 2009, the initial month (October 2009) of 358,000 Wiis sold per week after the price cut resulted in a huge November and December, but average weekly sales remained at about 315,000 Wiis per week during January to March 2010 as well. Sales then fell off to pre-price cut levels pretty quickly. The June 2010 quarter was still ahead of the September 2009 pace on the price cut, but the September 2010 quarter trended below the September 2009 quarter (before the Sept 27 price cut) by about 40,000 units per week. For the current price cut, there should be a more modest initial spike in the first quarter that holds up for a longer time, since the impact will be less concentrated on Christmas sales.
If weekly sales for the month ahead of the price cut end up being slightly lower or higher than I have estimated, the push from the price cut could be 20,000 units higher or lower in the short term, and 15,000 units higher or lower per week over the next few quarters.
In any case, if Wii sales do jump back to 215,000+ units per week for a month or so after the price cut, with stabilization at 155,000 per week, we'll likely see Sony and Microsoft announce price cuts of their own pretty quickly - perhaps as soon as June 6th in Los Angeles at E3.
Contact VGChartz at jmazel@vgchartz.com
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LOL
[Innocent prediction] I feel the Wii won't go up by that much, possibly to just 126K-130K on price cut week. [/end innocent prediction]
Note. Where you read that pesky mess € there should be an Euro symbol.
The Source forgot one thing: that the real discount was less than $50 or 50€, as Wii bundles have already been priced 10 to 30 $/€ cheaper than their list prices for months.
Okay, maybe that was a bit over the line, but the effect hasn't kicked in yet. I'd expect a surge once some software releases.
LOL.
I can't believe Ninty announced Wii2 so early, with better timing , more SW launches, including high quality old titles at budget prices, like it's starting doing right now, and still at least two price cuts available (including the one going to happen this month), Wii could have surpassed PS2 lifetime sales, now it will be very hard to achieve it.
so definitely not hitting 100 mil this year? possibly not even by end of fiscal year? interesting...
I expect a 20% increase but really not more than that. The wii has lost the appeal as the it gift for the casuals so it's back to being just another console competing for the core market and it really doesn't have what it takes to win that battle.
bit optimistic I say sound of rain, no more than 140K,
I expect it to end up at 90K a week in America, 65K a week in Others, and 9K a week in Japan to make 164K a week worldwide.
or Game Stop which are 60% of the market together.
This idea that Wii is widely $170 in the USA is a bit of a myth. Its usually $200, but if you buy it you get a giftcard. Thats not quite the same - and those deals usually aren't at Walmart
I think the increase will be smaller. With news of the Wii 2, people will hold off buying outdated hardware.
It's still $150 that would otherwise go towards greater value.
@ KylieDog, Since UK retailers already sold the console at a lower price before the short cut, maybe they'll sell it even more cheap now let's say £99?
@ KylieDog, Since UK retailers already sold the console at a lower price before the short cut, maybe they'll sell it even more cheap now let's say £99?
I suddenly want a Wii again...What the hell happened there?
The bigger the price the least meaningfull the $50 cut is.
Scottie, $50 dollar cut is a $50 dollar cut, no matter how you paint the picture.
I am not sure we will see 100% lift in America, currently all retailers are selling Wii for $169 which is already $30 below $200 price which was used for this article. And Wii sales have not seen much of life from it. Yes with advertising and promotion of $150 price tag there will be a lift but I think it will be between 70%-90% in America. And it will drop down pretty fast soon after.
Huge lift on the way!
WWW average for those 4 weeks will be below 200k.
I agree with siphillis and kylie, it will do very little in the UK, where is already been sold at much lower prices, without that much of an effect as far as I can tell
amazon sells it already for 129 GBP, sold it for 99 before so why would it get any lift there ?
...why waste 150 euro?
I trust TheSource, personally.
If pessimis was a reason for baning,Nintendogamer would be permanbanned twice over.
Nice analysis, although I would like to point out that a price cut of $200-150 is actually a bigger cut than a cut of $250 to $200. To illustrate, which is a bigger - a cut from $1000 to $950 or a cut from $50 to $0?
oh this is gonna be fun
the lift will probably erase the gains made by either Sony or MS this year, which weren't drastic to begin with. A medium-level lift/response that should hold through till mid-late summer.
I expect a very small lift.
over 200K really? I only expect a lift to about 130,000 then drop back to about 100,000 every week, and has Nintendo confirmed wii is getting a price drop in Japan?
Hmm, you make it sound like MS.Sony will cut on the basis of Wii sales, they won't. MS will likely cut at E3 anyway, and that'll have been planned months prior. They don't do these things on a whim ...
