Not long after a regional Toys-R-Us store let wind of a possible price drop for Nintendo's Wii system by Spring of 2007, fans were seemingly up in arms. The problem? Many felt as if the possibility was too drastic, nay, illogical for Nintendo. I mean, after all the system has been selling out faster than $100 360s on Amazon.com, so why would they even think of dropping the price from $250 to $200? It's not like Nintendo has seen any heat for the $250 price tag, in fact, they've seen much praise for it. Heck, even one of my friends, who isn't an avid gamer let it be known: "That's so affordable." But could it really be possible? Well, many things are possible. But I think there's a very promising scenario out there that could make it even more profitable for Nintendo with the price drop, giving the idea much more legitimacy than seen at first glance.

To start things off, we need to know how much a Wii costs to make. Thankfully for us, Toyokeizai Online took the time to dissect a Wii and break down the market value of the unit. The results? A $158.30 pure unit production cost, with a wholesale price of about $195.99. Rough numbers, surely, but still enticing to the mind. We already know that in Japan the Wii is sold as low as $200 USD, so it's not like Nintendo would be bending over backwards to push out a $200 unit in the U.S, but we've yet to answer that key question - why would, why should Nintendo drop the Wii down to $200 if it has already proven to sell perfectly fine at $250, especially so soon? The answer, my friends, is in the games.

As everyone already knows, every Wii in the United States comes bundled with Wii Sports. Now, I personally don't think Wii Sports is the type of game that deserves a $50 price tag, simply because of the type of game it is, but it does indeed sell at full-retail price in some areas. But let's be conservative here, let's say that Nintendo could drop the price of the Wii down about $30 by unbundling Wii Sports from the system. All of a sudden, that $200 price tag seems much more approachable for Nintendo in terms of profit gain difference. By the time Spring rolls around for Nintendo, they're going to be known. Everyone will know what a Wii is, for sure. The only obstacle left one would assume will be getting those stubborn few to actually try it. A $50 cut could do that... and then some.

Consider that if Wii Sports were to be unbundled, and the system retailed at about $200, it would be safe to say more people would buy the system simply because of the lower price, correct? Simple business right there; if people like your product and you lower the price, even more people will buy it. We've already concluded that without Wii Sports the profit difference from $250 and $200 would be more like $200 and $220, so it's time to bring up the clincher here. While the margin of profit will be slightly lower for the $200 system, more people would buy the system, resulting in more games and accessories sold and overall higher net-gain, plus a larger fanbase - Nintendo's primary goal in this endeavor.

Nintendo would still be making a profit off of every system, like they had planned and have been all along, but this way they could make even more of an overall profit simply because of the larger fanbase, and more games and accessories sold. Not to mention, if the Wii were to see a DVD-playable system in 2007, as already confirmed in Japan, Nintendo could sell the DVD version for the current price of $250, instead of say... $300. The problem with $300 is once you reach that territory you could find yourself competing too much with Microsoft's Xbox 360, that is, assuming by Q2 of 2007 the 360 will see a price drop as well (which seems likely).

Nintendo wants to continue their plan of attracting more and more non-casual, non-gamers. If they shipped a system with DVD playback at $300, surely they would be excluding a portion of that demographic. By reducing the original system cost down to $200 (and unbundling Wii Sports, thus making the price difference negligible), they could keep both versions of their system in the eyes of the virgin gamer (so to speak), and make an even larger profit off of pure amount of games and accessories sold. Let's not forget either that Nintendo stated that the Wii will not exceed $250. Yes, this announcement was a long time ago by now, but if Nintendo wants to stick by that claim, and a U.S. DVD-enabled Wii ships, they will HAVE to cut the base system down in order to sell the DVD-enabled version for $250. Unless, of course, Nintendo wants to make all systems at that point DVD-enabled.

While it's entirely possible that the very foundation of this argument - the assumed production value of Wii Sports, and Wii hardware - could be inaccurate, I'm going to stand firm here and say the numbers are appropriate. Sometimes you have to think outside of the box. Regardless of whether or not this latest "rumor" about Spring '07 is true or not, I think it would be a dangerous mistake to underestimate the marketing prowess of Nintendo. After all, these are the guys with a Wii Bit of Muscle, remember?

Quite simply it appears as if there is a way Nintendo can sell their system for a lower price and make more money while attracting more customers. Is this really so illogical? Maybe the source isn't so credible, but on the business side of things it doesn't seem out of reach, much less out of pocket for Nintendo. For a price drop so early, perhaps it's a bit unlikely. It's definitely something different. But if Nintendo can actually make more money doing so, why not do so as soon as possible? The only real issue here could be that the value of Wii Sports transcends beyond the money game. Perhaps that first contact provided in the bundle is much more desired than a cheaper system for new players. Whichever you think is best, just don't rule this one out... not with Reggie Fils-Aime at the helm.

Check out the thoughts outline on page two of this article.