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Is Nintendo still a relevant home console hardware player?

Following the recent torrent of launch details for Sony Corporation’s (Sony) PlayStation 4 (PS4) and Microsoft Corporation’s (Microsoft) Xbox One, Nintendo Co., Ltd. (Nintendo) has taken to the Internet to reveal some new details of its own. Notably, the company has slashed the price of its Wii U home console, with the Wii U Deluxe model set to retail for $299 in the US from 20 September, 2013. Whether this will be enough to keep the company afloat over the next generation does, however, remain to be seen.

The decision to cut the price of the Wii U is no doubt a reaction to Sony and Microsoft’s impending next generation console releases and does, in fat, represent a pre-emptive strike on its competitors. The Wii U has had a rocky start to its life: unit sales have been significantly lower Nintendo’s original expectations, and software support has been uninspiring to say the least. Dropping the price of the Wii U will make it much more of a value proposition when compared to the PS4 and Xbox One. For instance, the Wii U Deluxe model will retail for $100 less than the PS4 at its launch, and a whole $200 less than the Xbox One. Significantly, this reduced price will come into effect nearly two months before the PS4 and Xbox One are expected to launch, enabling Nintendo to target consumers that are getting impatient and looking to invest in a new console as soon as possible.

This is all well and good for Nintendo, but software remains a significant obstacle to the Wii U’s ongoing viability as a next generation competitor. Although Nintendo has managed to release a handful of strong first party titles on its new machine, third party support remains fleeting. Nintendo has a history of overreliance on key first party franchises, such as Zelda, which is actually being utilized by the company to further increase the value proposition of the Wii U. In addition to announcing the price drop, Nintendo has also announced a limited edition of the console bundled with the upcoming The Legend of Zelda: The Wind Waker HD software title bundled in for the same $299 price and 20 September, 2013 release date. Nintendo will hope to attract core gamer fans of the franchise who have up until now resisted the urge to invest in the Wii U before the release of the PS4 and Xbox One. However, in order to preserve the longevity of sales, the company needs to remain focused on delivering quality software, both first and third party, in support of the Wii U.

In balance, the price at which Nintendo is now offering the Wii U in North America seems reasonable, and will likely tempt many consumers who had previously been on the fence about buying one. However, competition is about to heat up in the home console market, and the significant technical advantages held by the PS4 and Xbox One could mean that it falls behind in the race dramatically. Unless Nintendo focuses on bringing similar third party experiences to the Wii U, it could end up as a third party publisher itself on Sony and Microsoft’s machines in the future.

Read more on the Wii U in my case study, Nintendo Co., Ltd: Innovating in a reactive market

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