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Wii Joins XBox, PS3 in Price Drop

Across-the-board price reductions on console video game systems are expected to energize an industry that has lost its recession-proof luster in recent months.

Nintendo on Sunday will drop the price of its popular Wii game system from $249 to $199. This follows Microsoft and Sony's reductions last month of their game systems. Sony's best-selling PlayStation 3 now sells for $299 (down from $399), while Microsoft's high-end Xbox 360 model sells for $299 (down from $399).

As video game sales dropped for five consecutive months starting in March, game publishers have urged console makers to cut prices.

The price cuts mean that "consumers will buy around the same number of consoles overall as last year," says Michael Pachter of Wedbush Morgan Securities. That presents an opportunity "to grow sales year-over-year at holiday" and possibly match or surpass last year's sales of $21 billion.

Released in November 2006, the Wii has been the top seller in this generation of video game systems. Consumers have bought more than 21 million Wii systems, researcher NPD Group says, compared with about 16 million Microsoft Xbox 360s and more than 8 million Sony PlayStation 3s.

Still, Wii sales have dropped by more than 50% since the first quarter of 2009. This price cut will help Nintendo "maintain its position as the leading hardware platform in monthly sales over the short to medium term," says Jesse Divnich of Electronic Entertainment Design and Research.

Neither the competition nor the economic times were responsible for Nintendo's move, says Nintendo of America President Reggie Fils-Aime. He says the price cut was important for this holiday season and to drive software sales of upcoming releases Wii Fit Plus (Oct. 4) and New Super Mario Bros. Wii (Nov. 15). "Our focus is strictly on driving more and more consumers into the gaming industry," Fils-Aime says, estimating the potential U.S. Wii market at about 50 million total. "If the consumer sees value and innovation, they are willing to spend."

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