Nintendo takes on PlayStation, Xbox — Interview

September 14, 2006

wii_big2.jpgNintendo jumped back into the next-generation interactive game console battle on Thursday with the introduction of Wii, a hardcover-book sized machine that Nintendo hopes will be a must have holiday item to gamers and those who don’t know Super Mario from Superman. One important draw could be Wii’s price — $250 — which is about $50 less than the bare-bones version of Microsoft’s Xbox 360 and half of what Sony will sell its PS3 for when it debuts in November.

What is more, some games that sell for $60 on competing consoles will go for only $50 on Nintendo, the company said.

Nintendo of America President Reggie Fils-Aime spoke to Reuters reporter Franklin Paul about the company’s pricing strategy:

Reuters: At $250, will Nintendo turn a profit on Wii?

Fils-Aime: We will make a profit on the entire Wii proposition out of the box — hardware and software. That really is a very different philosophy versus our competitors, who have, frankly, invested profits, whether you are talking about Microsoft or Sony. We are a company that competes only in the interactive entertainment space so we have to make a profit on every thing we do. That’s what drives us to be on a whole different strategy than our competitors. That’s why we want to bring gaming to the masses, that’s why we are working very closely with third party publishers to make it affordable for them to publish on our platform. Frankly, that’s why we want to bring great value to the consumer, out of the box, to drive the number of units sold, so that we can sell more and more software.

Reuters: How did you develop your pricing strategy?

Fils-Aime: Our pricing is substantially lower than our competitors. Whether you look at Sony where we are essentially half their price, or look at Microsoft, this value equation is a core part of what we are trying to do. Do we believe that the Wii console will increase our market share? Absolutey. Do we think that this system can help drive us to leadership in this category. Absolutely. We do think we are on a major path to success.

Reuters: How much market share can you gain?

Fils-Aime: Trying to look into a crystal and predict market share is always challenging. It is the kind of thing that you can never get right. But I will say this; did we anticipate that with the launch of Nintendo DS that we would not only hold onto our leadership in the handheld space but actually drive significantly more installed base faster than what we did with with Game Boy Advance. Yes we thought that it would, and we made that happen. Do I think that the acceptance and growth of our Wii console will be faster than any thing that we have done before? I hate to say it but I think so. That type of value propostion is going to be tough for our competitors.

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