Why retailers are slashing Wii U prices

Over the past weeks, retailers in the US and in Europe have been slashing Wii U prices due to extremely low sales. We’ve hard time and again that Wii U sales aren’t up to expectations, and this hurts retailers more than anyone. They usually buy consoles from manufacturers like Nintendo and sell them on to the customers for a profit.

Wii U price cutLast month retailers in Europe started slashing Wii U prices by an average of 50 Euros, and this week the price cuts were found across many retailers, effectively creating an unofficial Wii U price drop in Europe.

If there is low demand for a console, the retailer is stuck with huge stockpiles of inventory they can’t move. The only way to clear the inventory is to sell the console for less and less, and they ultimately end up losing money on the transaction. In the US, Coscto recently started selling their Wii U consoles at $50+ off the MSRP, and they’re no doubt losing money on the deal.

Nintendo loses money on each Wii U made, and many retailers are now losing money on each console sold. That’s extremely bad business and can’t go on forever.

There are two reasons the Wii U isn’t selling. One is obviously that some consumers are finding it to be too expensive. Another is that most consumers aren’t even aware that that Wii U exists. Nintendo is in a position to fix this, either by cutting the price or making more attractive game bundles, and by ramping up Wii U advertising to the casual gamer and average consumer.

Wii U consoleWii U is now selling way below the sales of the Xbox 360 and PlayStation 3, and it won’t get any easier later this year when the Xbox 720 and the PlayStation 4 launch. The console sold just 66,000 units last month, way below anyone’s expectations.

Even publishers have called for Nintendo to cut the Wii U price and move more units. Ubisoft said earlier this month that they were optimistic about the Wii U, but that Nintendo needs the “Wii U to be at a lower price“. Realizing that their upcoming Wii U exclusive Rayman Legends simply wouldn’t sell enough copies to earn back the investment, Ubisoft made it into a multiplatform title.

And if you purchased a Wii U, the selection of games isn’t that great at the moment. Besides a few great first party titles from Nintendo and some decent third party launch titles, we don’t have much else.

Wii U price cutTo make matters worse, Nintendo isn’t talking about future titles on the Wii U. Besides Pikmin 3 and Zelda Wind Waker HD, there’s isn’t much to look forward to. If there were cool games on the horizon, more people would be buying consoles. Retailers know that demand is extremely low, and if Nintendo isn’t doing anything to boost sales, retailers can only do one thing: cut the price and sell it at a loss.

If you’re optimistic about the Wii U, you’ll buy the console at cheap now and wait for the great games later this year. If you’re pessimistic, you hold on to your money until Nintendo actually reveals some great games.

The retailers are clearly pessimistic about the situation and are therefore dumping their inventory, even if it means losing money.