Nintendo fights back in price war

Nintendo's GameCube is competing against Sony's PlayStation 2 and Microsoft's Xbox in the $20 billion video games market

LONDON, England -- Nintendo shot back on Monday in the battle for dominance of Europe's video games market, cutting the price of its GameCube consoles by as much as 24 percent.

The move by the Japanese games giant -- just two weeks before the launch of the GameCube -- follows a similar price reduction last week by rival Microsoft, which is trying to lift sagging sales in Germany and France.

Nintendo and Microsoft share the $20 billion video games market with Sony, which makes the popular PlayStation 2.

Nintendo said GameCube, which hits the market on May 3, will sell in continental Europe for 199 euros ($177), down 20 percent from the original price. In the UK, the cost will fall 24 percent to £129 pounds ($186.7).

The GameCube consoles will now retail for less than both Xbox and PlayStation 2, although those two products also come with a built-in DVD drive. Last week, Microsoft cut the price of its Xbox consoles to 299 euros in Europe and £199 in Britain, in line with Sony's PlayStation 2.

Nintendo will initially ship 500,000 units of GameCube to Europe, followed by another 500,000 units eight weeks after the launch. The company has already shipped 4 million GameCube consoles worldwide.

Nintendo's decision to cut prices ahead of a produce launch runs counter to traditional marketing practices, whereby companies reduce retail costs within the first 12 months after a launch to spark renewed demand.

"To change the price structure two weeks from launch is incredible," Stuart Dinsey, managing editor of Games Trade Weekly MCV, told Reuters.

"Historically, there's only been room for two consoles, not three," Dinsey said. "Obviously, this is an attempt by Nintendo to put the pressure on Microsoft and try to squeeze them out."

But David Gocen, managing director of Nintendo Europe, told Reuters: "We wanted to tell consumers that if they buy GameCube on May 3 they will be buying it at the best possible price."

Gocen said Nintendo has taken 30,000 pre-orders for GameCube in the UK, and expects that number to reach 50,000 by the launch. He added that the European market represented more than 20 percent of global sales.