Nintendo Co. plans to announce today that it is dropping the price of its GameCube console, ratcheting up the stakes in the intensely competitive $27-billion global game market.
The 25% price cut to $149.95 to take effect Tuesday comes a week after Sony Corp. and Microsoft Corp. both sliced their console prices by one-third to $199.99.
Had Nintendo not reacted, it would have lost the price advantage that helped propel sales of GameCube since its U.S. launch in November.
"This is pricing to win," said Perrin Kaplan, a Nintendo spokeswoman. "Consumers win, and we win. This will keep us ahead of everyone else."
Nintendo has sold 400,000 GameCubes in Europe since introducing the console there May 3 at 199 euros, compared with the 299-euro retail price of Sony's PlayStation2 and Microsoft's Xbox.
Microsoft also began selling the Xbox in November before introducing the device in Europe and Japan this year. Sony introduced the PS2 in October 2000.
Console companies typically don't make money on their hardware; in fact, most lose money selling consoles. They make up for it by collecting royalties on games sold for their devices, creating an incentive to get as many consoles into consumers' hands as possible.
Sony estimates that it has shipped 30 million PS2s worldwide; Nintendo has shipped 4.5 million GameCubes. Microsoft estimates that it will have shipped 3.5 million to 4 million consoles by the end of next month.
Sales of software are expected to take off as more consumers buy consoles.
"The real sweet spot for the software industry will be holiday 2002 to holiday 2004," said Brian Farrell, chief executive of game publisher THQ Inc. in Calabasas.