Video game console leader Nintendo says that U.S. sales of its Wii gaming system dropped 30% year-over-year to 550,000 for the week ending Nov. 28, according to numbers reported by Bloomberg. Nintendo cut the price of the Wii by $50 to $200 recently, while Microsoft (MSFT) dropped the price of its Xbox 360, and Sony (SNE) chopped the price of its PlayStation 3 console. Recent industry data shows that Xbox 360 sales and Sony PS3 sales have probably benefited from the price cuts.
Nintendo may have a problem that is not easy to address: The Wii may be reaching a point of market saturation. It's aimed toward the casual gamer, while the Xbox 360 and PS3 are marketed to more sophisticated players. Nintendo has tried to offer new game programs to increase sales, such as its Wii Fit, which is aimed at the exercise market. That initiative does not appears to have pushed sales up much.
Microsoft and Sony, meanwhile, are being helped by the launch of several new blockbuster games, including Call of Duty: Modern Warfare 2, which racked up over $550 million in sales in the first five days after release. Sales of Sony's PS3 rose 70% in October, according to market research firm NPD Group Inc. New releases like Assassin's Creed II are likely to give the Xbox 360 and PS3 ever stronger sales boosts.
The Wii has held a huge lead in sales over its rivals for two years, and investors in Nintendo believed that trend would continue -- until recently. It has posted weak earnings and revised forecasts, which led to a sharp drop in its share price. There's no reason to think that the Wii sales in the most recent week are not a trend that will continue through the holidays. If sales of rival PS3 keep rising, the Wii could even lose its crown as the No.1 console sold in the U.S.
Douglas A. McIntyre is an editor at 24/7 Wall St.