Wii price rise: consumers take £200 hit?

Nintendo announced this week that it is set to increase the trade cost of the Wii console to retailers by £19, with retailers still deliberating whether or not to pass this price rise on to the good ol' British gamer.

A Nintendo UK spokesperson told MCV earlier this week that: "The price that [retailers] then offer to consumers is, of course, up to the retailers. We are only - reluctantly - raising our trade price now to retailers due to unprecedented and sustained depreciation of the pound.

"This is a problem brought about by extreme currency fluctuations that are a symptom of the global economic situation."

Consumers to pay

Don McCabe, Managing Director of UK retailer Chips, told GamesIndustry.biz that Nintendo could well have sold the Wii from a £199.99 price point "from the very beginning".

McCabe added that the price increase of a gaming console in its third year on the market was "an absolute first".

McCabe added that the increase will "almost certainly have to be passed on to the consumer" because no "retailer has got the ability to soak up that sort of margin change."

And despite some reports from supermarkets claiming that they don't plan to pass on the price hike to the consumer, McCabe doesn't "think any retailer can take that sort of squeeze."

Digesting the announcement

While smaller independent retailers are already confirming that they plan to pass on the increased trade costs of Nintendo's Wii to the consumer, it is still unclear how the bigger specialist retail chains and supermarkets are going to react to Nintendo's announcement.

"We are still digesting this announcement, and are currently evaluating our response to it," a HMV spokesperson told TechRadar earlier today.

Leading online retailers Amazon and Play.com both had 'no comment' to make on the situation. It is clear that all the leading games retailers are playing a waiting game to see what their competition does, before committing to a price hike (or, in an ideal world, not raising the cost of the Wii to their customers).

While many gamers and industry pundits are unhappy with the move, accusing Nintendo of short-termism, considering the cash mountains the company is sitting on generated from the last few years of hugely successful sales of Wii and DS.

Completely sound move?

However, not everybody in the industry is critical of Nintendo for bumping up its prices. Speaking to Edge magazine, Ed Barton, Games Analyst for Screen Digest, believes that the move is "completely sound" adding that, "if you look at the Yen exchange rate over the Pound in the previous year it has changed by thirty to forty percent."

"We looked closely at Nintendo's figures in the last quarter and this exchange rate has absolutely murdered their operating profit."

Barton added: "When you look at all the data and financials it wouldn't surprise me if Nintendo raised the price of Wii Fit. The margin on games hardware and peripherals is a serious problem right now."

"I suspect that non-specialists, in particular the large supermarkets, will just swallow the margin head, simply to get the footfall," said Barton.