Strategy has always been a key element to gaming success and as the battle between competing consoles heats up, vendors are using price as their weapon of choice to gain the tactical advantage.
Hot on the heels of Microsoft's Xbox price drop, Nintendo dropped the price of its new GameCube, from $399 to $329, less than a month before the console was due to hit retail shelves.
While Nintendo will deal with the larger retailers on a direct basis, Brisbane-based All Interactive Distribution (AI) will handle independent dealers and smaller accounts. AI also distributes Microsoft Xbox and Sony PlayStation.
"We have existing customers that we have been dealing with for years, but some retailers also choose to deal with a distributor because they can buy a range of products and third-party software as well as our own products," said David Yarnton, director of sales and marketing at Nintendo Australia.
While Yarnton acknowledged the price review is designed to make the console more competitive, he is also confident Nintendo's pedigree in the games market will stand the GameCube in good stead for strong sales.
"It is not technically a price drop, because we haven't sold a console yet. But interest has been really good so far," he told ARN last week.
The price war leaves retailers operating on razor-thin margins, but that is nothing new in the console market, where software typically makes the dollars.
"I think we are all used to making very little profit, so the fact that there is a price war on now will make absolutely no difference to us, profit-wise," said Rob Beaumont, proprietor of Berlin Wall Software Supermarket. "I believe it will stimulate sales and our customers have said they now feel they will purchase more consoles as the price has dropped considerably across the board."
Yarnton admitted it was necessary to offer the Nintendo at a competitive price. "It is a bit of a catch-22," he said. "It is difficult to make money on the console, but you have to get the volume out there to get the game sales." More than 20 GameCube titles will be available when the console launches on May 17.
Based on pre-sales from Electronics Boutique, which is regarded as something of a yard-stick in the games market, demand for the new console will be high, Yarnton said.
"Our pre-sales are more than the PlayStation 2 before launch and almost the same as Xbox has sold in total. Based on that, it is going to be very tight as far as stock goes."