EEDAR's Jesse Divnich has said that Nintendo's Wii price cut is a "pre-emptive strike" to increase its hold on the mainstream and casual gaming market before Microsoft and Sony release their motion control add-ons for the PlayStation 3 and Xbox 360.
Divnich pointed out that even at a lower price Nintendo will still make a profit on its hardware sales, and is likely to continue to rule the home console market in the short to mid term.
"Nintendo is making a pre-emptive strike to capture as much of the mainstream and casual market as possible before Microsoft and Sony can release their mainstream targeted motion capture devices," said Divnich.
"By maintaining their position as the lowest cost option in conjunction with strong software support from both first and third party titles, EEDAR expects the Wii to continue to maintain its position as the leading hardware platform in monthly sales over the short to medium term."
Sales of the Wii in the US have dropped 57 per cent since the first quarter, compared to PS3 sales falling 9 per cent and Xbox 360 sales down 30 per cent.
However, despite the drop the Wii remains the market leader in the region, with NPD data showing that the console has outsold its rivals since February 2008.
Divnich also noted that if prices were to drop any lower, the price of games could tumble, putting pressure on publishers to make cheaper software by reusing assets and sticking to trusted IP rather than innovating.
"Given the current climate where even the best publishers are barely posting profits, a shift in the price points would only increase the risk for further loses.
"A more profitable environment will give the breathing room that publishers need to justify the expenditures on new intellectual properties as well as new technologies that are needed to evolve the feature sets to keep up with consumer expectations."