Game console price war ahead, analyst predicts

Gamers could become winners in a price war this holiday as console manufacturers slug it out for scarce consumer dollars, according to a report released this week.

With Nintendo due to release its next-generation Wii U game console on Nov. 18 at prices starting at $299.99, rivals Sony and Microsoft are under pressure to make their current-generation consoles more appealing to consumers who don’t already have one.

One way to do that is to lower the price, said P.J. McNealy, principal of Digital World Research.

McNealy, in a report entitled “The Business Model Impact of Video Game Hardware Launch Pricing and Price Cuts,” predicted that Sony Corp. will lower the price of its PlayStation 3 console, priced at $249.99, by about $50 this holiday. He also expects that Nintendo will trim the suggested price of the Wii from $150 to $129, or even $99.

Microsoft will likely refrain from cutting the price of its $200 Xbox 360, McNealy wrote, but will offer specials on consoles that are bundled with games or peripherals, such as the Kinect motion-sensing controller.

Why race to the bottom on pricing, especially if it means taking a hit on hardware profits?

“It’s a classic razor and razor blade business model,” McNealy wrote, “where the company loses money on the razor, but makes it up selling razor blades.”

ALSO:

Nintendo Miiverse social network unveiled at E3

Nintendo’s Wii U set to go on sale Nov. 18 for $299.99

Nintendo touts the Wii U console at E3, but CEO shuns spotlight

Follow Alex Pham on Twitter.