Nintendo UK raises Wii wholesale price

As a result of current economic conditions, Nintendo UK has chosen to increase the wholesale price of its Wii console to retailers, which could possibly lead to price hikes for consumers. "Due to the severe and continuing depreciation of the pound, we are, unfortunately, having to raise our trade price to UK retailers of Wii hardware," a rep told GameSpot.

However, a price increase for retailers doesn't necessarily mean a markup at the cash register. "The price that they then offer to consumers is, of course, up to the retailers," the rep continued. "We are only--reluctantly--raising our trade price now to retailers due to unprecedented and sustained depreciation of the pound. This is a problem brought about by extreme currency fluctuations that are a symptom of the global economic situation."

According to MCV, "Retailers are being told that trade prices for Wii will increase by around £16.50, or around £19 including VAT." This price rise would virtually wipe out all profits made by retailers on each Wii sold at the current recommended retail price of £179.99, according to the trade publication. Although it's unclear if major retail chains such as HMV, Game, Gamestation, Amazon, or Play.com will increase their selling point from the current £179.99 price point, the new price will put increased pressure on smaller, independent stores.

Unlike the Xbox 360 and PlayStation 3, Nintendo has made a profit from every Wii console sold to date. Nintendo of America president Reggie Fils-Aime told Reuters in 2006 that the company would "make a profit on the entire Wii proposition out of the box--hardware and software." Reports indicate that Sony is on the cusp of generating profit from each PS3, although it was previously estimated to be losing hundreds of dollars on every console sold. Meanwhile, Microsoft's gaming division didn't turn a profit until 2007.

How the credit crunch will affect high-street game retailers in the long term remains to be seen, but the global economic turmoil has already chalked up a few victims. The 100-year-old chain and source of budget games Woolworths filed for bankruptcy in late November; online retailer Shop Direct Group has since purchased the brand and is currently planning the relaunch of Woolworth's online store. Similarly, Zavvi (formerly Virgin Megastores) closed its doors for good in January, and its Web site was purchased by e-commerce provider The Hut and relaunched in early March.