Nintendo cuts prices - but why?

Nintendo has announced plans to shave $20 off the price of two versions of its best selling video game system – the Nintendo DS. Effective Sept. 12, the DSi will drop from $170 to $150 and the DSi XL will move from $190 to $170.  

The move follows price cuts in several other regions, but the timing could raise a few questions. We’ve got three theories as to why Nintendo decided to make the move now.

A) The 3DS is looming. Nintendo’s handheld gaming system featuring stereoscopic 3D (and no dorky glasses) was a hit at E3, stealing the show. To date, though, the company has not given a lot of insight on when the 3DS will go on sale. Nintendo of America president Reggie Fils-Aime let it slip on the Jimmy Fallon show that it was a 2011 release, but Nintendo backtracked from that afterward.

We’ll find out concrete details on Sept. 29, according to Nintendo – but if the company plans to surprise the market and launch the 3DS this year, it could be trying to get one last bump from the DSi (and salvage the DSi XL, which hasn’t been a barn burner) before consumer attentions shift.

B) Sales slowdown. While the DS still tops the monthly NPD sales charts, it’s not doing so in quite as dominating a fashion these days. Market saturation is starting to set it in at the current price point – and competition from the iPhone, iPad and Android-based phones is growing at a frightening level.

The price cut could be a move by Nintendo to stay competitive in an increasingly crowded field.

C) The holidays are a-comin’. Wander into any major department store and you’re likely to already find a Christmas tree or two on display. Budget-conscious consumers are starting their shopping earlier this year, in hopes of sniffing out notable bargains to make the holidays big on a small budget.

A price cut for the DSi was a certainty this holiday, given the system’s age. And a similar move for the DSi XL was nearly as likely, given its stumble out of the gate. Combine that with the stagnation in sales and Nintendo had nothing to lose by cutting now. If sales still don’t pick up, there’s plenty of time to put together a bundle featuring the system and a popular catalog game when the holiday shopping season really starts to heat up in November.