Wednesday, August 28, 2013

Wii U, Content and Pricing

Nintendo is lowering the price of its new 8th generation console, Wii U, from $349 to $299 after disappointing sales. They got a one year head start on the 8th generation competitors, Microsoft's Xbox One and the Sony's Playstation 4, to be released for the coming Christmas holiday shopping season. But at the time of its launch there were only 29 games for the Wii U (though there are nearly 200 now). In contrast, there are already 63 games expected for the launch of the Xbox One launch and 110 for Playstation 4. Why buy a Wii U if the game selection is limited?

Video game consoles are examples of two-sided markets (consumers and publishers). Consumer demand increases the more games that publishers write for it and more publishers will write for it the larger the customer base is. New games using the latest generation of hardware are an important complements to consoles. Nintendo writes a number of these games but most are written by a network of third party game developers and publishers. Nintendo works hard to keep a steady flow of games from this network available to console adopters, as does Microsoft and Sony. Perhaps not hard enough. Apparently, the lack of content has led to more elastic demand and, thus, price decreases.


  1. There are several variables influencing those who form the network of independent writers of the content, which are dedicated to writing programs for consoles. Expectations of consumption of their products is one of the main elements that influence these independent writers.
    The trends have been produced with computers or hardware sales in the previous versions, as well as in the current drives writers or computer programmers to focus their efforts on particular versions of equipment, since these understand to have opportunities to have larger volumes of outputs with these versions of these equipment, hence this could compensate low sales in another video game equipment or version.
    The boost in sales caused by various factors such as the market, prices, and labor market conditions where the product is promoting are factors, since these products are basically luxury or entertainment, or under precedence than its sales or consumption are made on certain dates, such as vacations and Christmas holidays.
    References: Froeb, McCann, Ward, Shor: (2014) Managerial Econonics. A Problem Solving Approach, Ohio: South Western Cengage Learning

  2. As expressed in the mid-section of this article, people have to make every effort for the compensation and/or feeling that can produce the pleasure of winning. In the case presented in this article, the way that prices in these businesses have been structured, this is not affected by the decision of customers in terms of their income, because their profit by operation is maintained unaffected by the decision of the format of payment from the customer.
    Now let's see what happens from the point of view of the customer, for them it can be highly attractive, the idea of rather than generate savings in the same expenditure, be able to beat the system. From the point of view of people who are regularly subjected to rules that have been imposed on the different structure of payments. As last element being the most vulnerable of all, can find a psychological escape, enabling it to change its position within "Lets cal it the food chain of the financial system" of the business cycle.
    This would help you feel that it would be located in a privileged position in relation to its psychological/emotional reference.
    I live in NYC, an acquaintance of mine, a weekend a month, at the start of the year two thousand (2000), between gas and bridge toll consumed around $19.31 dollars traveling to the mall in NJ, because he could save on certain purchases. Once we analyzed the marginal impact of his journeys, he would save $22.95, equivalent to 18.85%, or $3.64 after driving for about three hours. His wages per hour was of $45.00 per/hr before taxes. In other words, if he dedicated this time to work he would generate $135.00, or he would generated loss of gross income of $131.36.
    Sometimes emotional and/or psychological rewards are more important than the economic.
    References: Froeb, McCann, Ward, Shor: (2014) Managerial Econonics. A Problem Solving Approach, Ohio: South Western Cengage Learning

  3. There has been constant competition within the video game industry, each trying to keep one step ahead of the other. Nintendo believed that by getting the first new video game system released, it would give them a competitive edge on their competitors. What they did not account for the lack of platform in which their product needed to be able to compete within the market. As stated in the article, once the Nintendo system came out, it had the fewest game selections. They did not review the products complimentary products and make sure the product was able to survive once the competitors released their own gaming systems. Had they waited longer for when more games could be compatible with their system, they may have succeeded.