Evaluating the Worth of the Wii

In the weeks leading up to E3, nobody in the industry earnestly expected Nintendo to divulge the Wii’s final price point and launch date. The fact of the matter is that leaving these details deliberately ambiguous keeps potential customers buzzing and forces the competition to stay on their toes. This is the same sort of leverage that Sony recently employed against Microsoft for months on end, hoping to dissuade consumers from plunking down the scratch for an Xbox 360 and holding out for the PS3’s eight cores of visual ecstasy. Sony forfeited this advantage once they announced the PS3’s retail price, leaving Nintendo as the last to decide when to play its wildcards.

(And just why did Sony announce the PS3’s price so early, you ask? For the same reason that the Revolution became the Wii two weeks before E3.)

So now that the ball is firmly in Nintendo’s court, what’s their next move? Back in December, select developers with access to Revolution devkits suggested that the Wii would launch somewhere between $100 and $150. Since then we’ve seen that estimate slowly creep skyward, peaking at $250 in the days before Nintendo’s pre-E3 press conference. While nobody was too surprised at the lack of concrete data regarding a launch date and price, Reggie did promise the Nintendo faithful “more fun for less money,” effectively allowing the Xbox 360’s MSRP to dictate the Wii’s price ceiling. Fortunately for Nintendo’s bottom line, that ceiling isn’t guaranteed to fall any time soon.

In the weeks leading up to E3, many speculated that Microsoft would slash the 360’s price late in the year to keep it competitive with the newly-released PS3. However, consider that Microsoft already sustains a loss with each Xbox sold, and lowering its MSRP would only cause Microsoft to hemorrhage even more cash into its games division. Now that the premium Xbox is two-thirds the price of a premium PS3, Microsoft no longer needs to lower its prices to keep up the fight, allowing Nintendo to jack the Wii’s price ever higher while still remaining the cheapest alternative. This may sound bad at first, but trust me, it’s not quite as bad as you think.

Fact: the buzz surrounding the Wii’s presence at E3 was of sufficient magnitude to force the mainstream media to perk up and take notice. As long glowing press reviews continue to accumulate, the Wii is absolutely guaranteed to be a big item this holiday season. Whether or not it’ll be the big item is still a matter of contention. Nevertheless, if consumer demand reaches a frenzied pitch come launch day, Nintendo could likely sell the Wii for upwards of $300 and still manage to incur massive shortages. Furthermore, as evidenced by the launch of the Xbox 360, crazed early adopters and frantic gift-seekers are more than willing to pay double and triple a console’s MSRP on eBay when they’ve just got to have one now now now. And while historians will point out that every single one of Nintendo’s past consoles have fetched $200 at launch, when you adjust for inflation you find that a system comparable to the NES by today’s standards would sell for around $350. Taking these figures into account, a $250 Wii packaged with two sets of controllers and a game would be an absolute steal.

Finally, and most importantly, would the Wii’s sales suffer at all if it were released at a historically higher price point? Being the cheapest console on the market didn’t exactly propel the Gamecube to tremendous heights. Nintendo’s learned from the GCN that competing on differentiation is more lucrative than competing on price. The Wii’s line at E3 was a testament to that fact. Would that line have been any shorter if Reggie had revealed that the Wii would retail for $400? You can’t accurately judge the price of the Wii versus the price of the Xbox or PS3, because they’re in wholly different leagues. It’s up to Nintendo to set a precedent this generation, in price as well as in capability. Consoles can no longer depend on graphics to woo the unwashed masses. At the moment, it’s up to Nintendo to boldly lead us into the next renaissance of gaming.

Personally, I think they have a pretty good chance.