Nintendo UK Increases Wholesale Price
Due to current economic conditions, Nintendo UK has chosen to increase the wholesale price of its Nintendo Wii console to retailers. This could possibly lead to price hikes for Nintendo Wii consumers.
"Due to the severe and continuing depreciation of the pound, we are, unfortunately, having to raise our trade price to UK retailers of Wii hardware," a rep told GameSpot.
Keep in mind that a price increase for retailers doesn't necessarily mean a markup at the cash register. "The price that they then offer to consumers is, of course, up to the retailers," the rep continued. "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."
MCV stated "Retailers are being told that trade prices for Wii will increase by around £16.50, or around £19 including VAT." This price rise would virtually wipe out all profits made by retailers on each Wii sold at the current recommended retail price of £179.99, according to the trade publication. Although it's unclear if major retail chains such as HMV, Game, Gamestation, Amazon, or Play.com will increase their selling point from the current £179.99 price point, the new price will put increased pressure on smaller, independent stores.
Unlike the Xbox 360 and PlayStation 3, Nintendo has made a profit off all Nintendo Wii consoles sold to date. Nintendo of America president Reggie Fils-Aime told Reuters in 2006 that the company would "make a profit on the entire Wii proposition out of the box--hardware and software."
Reports are showing that Sony is on the cusp of generating profit from each PS3, although it was previously theorized to be losing hundreds of dollars on every console sold. Meanwhile, the Microsoft gaming division did not turn a profit until 2007.
The credit crunch's affect on high-street game retailers in the long term remains to be seen. The global economic turmoil has already chalked up a few victims. The hundred-year-old chain Woolworths filed for bankruptcy in late November; online retailer Shop Direct Group has since purchased the brand and is currently planning to relaunch Woolworth's online. Similarly, Zavvi (formerly Virgin Megastores) closed its doors for good in January, and its Web site was purchased by e-commerce provider The Hut and relaunched in early March. The impact of the price increase on Nintendo Wii sales in the UK remains to be seen.
