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3DS price cut: Nintendo’s Midas touch fails at last

Friday, 29th July 2011 07:56 GMT By Rob Fahey

Yesterday’s Nintendo Q1 release and accompanying 3DS price cut was a revelatory peek into a giant in peril. Rob Fahey takes a look at what went wrong.

Nintendo 3DS

Launched worldwide in February and March at ¥25,000, $250 and AU$350.

Nintendo announced a massive price cut yesterday, effective August 11.

4.3 million units sold since launch.

Failed to breach NPD’s top ten software sales until Ocarina of Time.

3DS has had clearly visible issues since launch.

The worm has turned. After the Wii launched, Nintendo refused to drop the price of the console for years, creating what many gamers saw as a ridiculous situation where Nintendo’s console ended up selling for more money than the significantly more powerful Xbox 360. It would have been madness to drop the price while the Wii was selling so strongly that they could barely keep it in stock.

Now we’re on the other side of the looking glass, and everything is topsy turvy. The 3DS has only been on shelves for a handful of months, and Nintendo is tripping over itself in its haste to slash the price. On August 11, the console’s price will drop by around a third – more, in some markets, with the Japanese price in particular making an astonishing tumble from 25,000 Yen (comparable to the cost of a PS3) to 15,000 Yen (more like the asking price of a PS2).

You don’t have to look far to see the reason, either. 3DS launched in late February in Japan, and one month later in the West. By March 31 the console had notched up 3.61 million sales – not quite the 4 million target Nintendo wanted to hit, but not really terrible either. The next three months is when the “terrible” kicked in – through the months of April, May and June, Nintendo only sold 700,000 3DS consoles around the world.

On paper, it looks like the console fell off a cliff straight after launch. In reality, it’s not quite that dramatic – those are “shipped to retailers” figures, not “sold to consumers” figures, so the chances are that a lot of those 3.61 million units were still sitting on store shelves at the end of March. Retailers wouldn’t order more until they’d sold the ones they already had, so although, the next three months were slowm we could be looking at a a gradual decline rather than a perilous dive.

It looks like the console fell off a cliff straight after launch. In reality, it’s not quite that dramatic – those are “shipped to retailers” figures, not “sold to consumers” figures, so the chances are that a lot of those 3.61 million units were still sitting on store shelves at the end of March.

On the other hand, that line of thinking means that the launch sales were even less impressive than first glance communicates, and that the figure of 4.3 million units sold that’s being bandied around at the moment isn’t as good as it sounds. Some of those units, too, are still sitting on shelves like sad puppies in abandoned dog homes, waiting for a gamer to come and pick them up. That definitely won’t happen until August 11, obviously, since you’d have to be quite mad to buy a 3DS between now and the price drop.

Doing this kind of rapid price cutting on a console is pretty embarrassing stuff – basically an admission that you’ve seriously botched your launch, and that your new platform is in a lot of trouble. It’s going to hurt Nintendo especially badly, since the DS and the Wii have made it into the golden boy of the industry – and of the stock market in Japan, where at one point in recent years its valuation made it into Japan’s second-biggest company after Toyota, and came close to number one.

To underline how ridiculous that is – Nintendo makes games consoles and software. Toyota is the biggest car manufacturer in the world, and the largest employer in Japan’s third-biggest city, Nagoya – where I live, as it happens. There’s an entire suburb city, about ten miles from here, officially called “Toyota City”, which mostly houses Toyota workers, and this region is responsible for 80% percentof Japan’s exports, largely because Toyota is here. Now I like Mario as much as the next man, but the idea that Nintendo could be worth as much or more than Toyota? No, just no. Yet that’s what the stock market thought a couple of years ago, which gives you an idea of just how crazy they were over Nintendo’s Midas touch.

Foundations trembling

What went wrong for the 3DS? There are several factors that you can point at. The 3D itself, for one thing, is a pretty good effect when it works – but the reports of it causing headaches and eyestrain were widespread enough to make people wary of it, and it doesn’t work very well in fast action-based games anyway. Besides, 3D in general has a bad rap at the moment; lots of cinema-goers I know have started deliberately avoiding 3D screenings of movies, for example, and that negativity rubs off badly on the 3DS, even though the technology is different.

Ocarina of Time, a remake, is arguably the 3DS’s sole “killer app”.

Then there’s the price – significantly more expensive than the DS was at launch, it’s worth noting, and pretty hard to justify when it’s only a few quid cheaper than a PS3, and actually more expensive than an iPod Touch. There’s the software issue, too. It’s a common complaint that the 3DS has no games – not an accurate assessment, in my view, but an idea so prevalent that it’s done some serious damage.

The marketing also didn’t help at all. Nintendo focused so heavily on the 3D aspect of the console that many people don’t realise what a significant upgrade it is from the DS even with the 3D switched off – in fact, many less hardcore gamers are still under the impression that it’s just a normal DS with a 3D screen, much like the DSi LL was a normal DS with a bigger screen. “I don’t like 3D so I don’t need it” has been a common line of argument, which is frustrating in ways (I really like my 3DS, personally, even though I usually play with 3D switched off) but totally understandable given that Nintendo has talked about nothing but the 3D effect for months.

Yet to be honest, the real problems the 3DS faces aren’t under those categories at all. Since the DS launched, the world has changed – and Nintendo has forgotten to change with it. Devices like the iPhone, Android phones and the iPod Touch (which, as mentioned, is cheaper than the 3DS’ original price) have pulled the rug out from underneath dedicated handheld consoles. We could argue until we’re blue in the face about whether iOS games are any good (and no matter which side of that argument you’re on, you have to admit that from a core gamer’s point of view, they’re definitely getting better all the time), but it makes no odds in the end – they’ve changed our expectations. Now we expect handheld games to cost less than £5 and run on devices that also play our music and movies, receive our emails, browse the web, and god knows what else.

The world has changed – and Nintendo has forgotten to change with it.

The final blow for the 3DS was probably the revelation that the PlayStation Vita, a much more powerful and fully-featured system, is going to launch at the same price later this year. Is it any wonder that 3DS sales collapsed after that announcement – falling so hard that even Ocarina of Time couldn’t help out much? Even Vita is going to have a tough time in the market, thanks to the rise of the smartphone, but the battle for the biggest slice of this shrinking pie turned into a massacre when it turned out that Nintendo wouldn’t even have a price advantage.

All of that being said, it’s probably still too soon to write off the 3DS entirely. It’s never going to rival the success of the original DS, but at the lower price, it looks a lot more attractive – especially now that games like Starfox and Ocarina of Time are out. With a new marketing campaign and a plenty more big-name titles on the shelves by Christmas, Nintendo could still turn this around. Everything the House of Mario touches may not turn to gold any more – but now that they’ve bitten the bullet and acted swiftly to help out the 3DS, maybe they could at least turn it to silver.

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21 Comments

  1. Freek

    Compelling software sells consoles and when the high point of the library is remakes of N64 titles, there’s bigger issues then price point.

    #1 3 years ago
  2. Lounds

    But smartphone gaming doesn’t have the same production value like you get with a 3DS or Vita, when you get a handheld console you’re buying a console, so you’re getting that level of production, although I think 3DS software is expensive (i don’t have one) I remember when PSP came out, the games were about £25-30 and they were bloody good.

    #2 3 years ago
  3. wishdokta

    This is complex news.
    You see, Nintendo put their numbers out a month ago. Them saying, 3DS is not selling that good at the moment. Since then, an amount of units of Zelda were moved. I guess the story is going more upstairs than downstairs at the moment.
    Price cut in most cases is two things: Reducing price to get to the consumer. Whether this is crucial for Nintendo’s money, you’ll see somewhere down the line – but not at the moment.
    We had a similar case with PS3 after release. Costly hardware with a minor of software isn’t going to be nice on early statistics.

    #3 3 years ago
  4. Stace Harman

    Convincing people that already have a smart phone, and are happily playing games that cost a couple of quid, to spend a couple of hundred on a dedicated portable games console is a tough challenge.

    My iPod Touch usurped my DS Lite last year and there are a couple of games I own (albeit ports – PvZ and Civ Rev) that work better for cheaper on the Touch than they did on the DS.

    This reminds me of the N64. If I remember rightly, the N64′s UK RRP was slashed by £100 just one month after launch. It didn’t go on to achieve tremendous lifetime sales (though did better than the GameCube).

    Rob’s bang on the money about Nintendo failing to push the rest of the 3DS’ features. Every advert focuses on the 3D element and that’s the feature about which a strong message cannot be successfully conveyed via 2D medium.

    Nintendo has a lot of people to convince with both 3DS and Wii U next year, two consoles that are eliciting excitement but also doubt. Hard to believe that Nintendo could slip from its lofty position, but then the same could’ve been said for Sony going from PS2 to PS3.

    #4 3 years ago
  5. Lounds

    I miss the days when everyman and his dog had a PS2.

    #5 3 years ago
  6. varsas

    Let’s hope that Nintendo learn their lesson with Wii U. The E3 announcement was botched since it was far less clear that it was an entirely new console until the end when they finally showed better than standard Wii footage via PS3/360 clips. If they don’t push the graphical improvements then that it will fail in a similar way and I am sure that the casual Wii owners are sick of buying peripherals so pushing the controller is definitely not the way to go!

    #6 3 years ago
  7. viralshag

    I have a feeling Nintendo will see similar sales with the WiiU as they have the 3DS. I’m not going to get into the whole hardcore vs casual thing, but I do think Nintendo will now see their true fan base that is willing is to buy everything they produce is relatively small compared to the ‘casual’ gamers that find their consoles somewhat less intimidating and possibly more accessible than their competitors.

    I just cannot see people shelling out more cash for something that doesn’t really look like it will be an improvement over the other consoles. And if anything, those ridiculous Wii sales could be where Nintendo gets bitten on the arse. I can see a huge number of people saying to themselves, “well I did buy the Wii, but I don’t really play it that often. So I will probably give whatever this new one is a miss.”

    #7 3 years ago
  8. tenthousandgothsonacid

    I reckon the Vita’s fucked too and I say that as a Sony fanboi. I’m not going to bother getting one, got a phone for games on the move now…

    #8 3 years ago
  9. rrw

    @8 i doubt that you are sony fanboy

    anyway i found this interesting

    http://i.imgur.com/AJSXD.gif

    #9 3 years ago
  10. tenthousandgothsonacid

    @9 I’m honoured to have lost the fanboi tag then. But there’s quite a few people who would disagree with your assessment :)

    #10 3 years ago
  11. SplatteredHouse

    “and Nintendo has forgotten to change with it. ”

    Nintendo’s online strategy has been thoroughly alienating, particularly in the advent and wake of connectivity advances and mobile platforms and stores. They’re also in danger from not other traditional games platforms but the rise of apps and social platforms.

    Vita’s an unknown quantity. I don’t think anyone can guess how that may end up, but there could be a pincer movement, if Sony Suite is more fully realised and this branching out differentiates itself in identity from the core Vita download store content, and makes impact in presence on mobile devices.
    The new aggressor though, also has the benefit of being able to boast all the names and familiar styles that any console fan can appreciate from the start, presented with a console-level sheen – and, of course, it’s no longer Sony’s first time to this particular dance.

    Nintendo have strayed square in the sights of Apple, now (and, unfortunately for N, I doubt Apple has needed to expend even a drop of sweat to date. They need take no action to engage, whereas Nintendo must move mountains) …But, Nintendo really are just a games company. Their games pricing and online strategies I just don’t think are compelling.

    #11 3 years ago
  12. ManuOtaku

    While i do agree with most of the points established in this topic, i think the situation was handled good by nintendo given 20 free games to the 3ds early supporters that did pay the 250$ price tag, i know this doesnt cost nothing to nintendo but it shows they want to entice their loyal consumers, that in my eyes is a great thing, and i also believe that nintendo even with this price cut is still making a profit, a lesser one for sure, but they are making a profit for sure.

    Having said that i think the main problem with the 3DS is the 3D, not that the effect is bad or badly implemented, i think is great and it adds a lot to the games, but i think a lot of people, me included suffer a lot with this tech, from eyestrain to headeaches, and that is a big barrier, i find the graphics great for a handled machine they are a big improve over the DS, and like i said the 3D asppect is great is a neat addition to any game when is handled in the right way like in the ocarina game, really neat, but is not for everyone and thats the key issue, regardless even if it is without any glasses.

    #12 3 years ago
  13. Clupula

    I must admit to looking forward to the Wii U tanking, only because I think Nintendo have gotten very arrogant, much like Sony did after the PS2. Releasing a system that only manages to match the PS3 and 360 is an incredibly arrogant move in this day and age. It’s a system that’s about two or three years too late, quite honestly, and I cannot see anyone except for the biggest Nintendo fanboys buying it, as the system currently stands. Just about EVERY game announced for it you can get already and that controller looks like a disaster.

    Personally, I feel, in a perfect world, Nintendo would go the way of Sega and just become a third party software developer. Which, btw, amuses me because I look at Sega’s lineup as a third party developer and I think, “If they went back into being a console maker and all those games were exclusives, I wouldn’t need another system besides the one they put out.”

    #13 3 years ago
  14. OlderGamer

    Gonna be interesting to see what Vita does. I am guessing it will fair better globaly. But I doubt it will do very much outside of JP. Same problems for 3DS mostly – too expensive and not a smartphone.

    This could be less of a Nintendo made problem and more of another nail in the coffen of dedicated handheld gaming.

    #14 3 years ago
  15. DSB

    The Vita might hurt Nintendo on the market, but in terms of sales, I think it’s just a question of the dragon finally devouring its own tail.

    Apple has some kind of weird cult-like image that means 50% of consumers are willing to buy an Apple product without even having seen it (!!!) and so those people will happily throw away their old Apple products to replace them with a tweaked newer edition.

    I just don’t think that sort of thing works for a handheld console like the DS. As far as I can tell it doesn’t have the same brand-lore to protect it, and it actually has to perform to earn those sales.

    I think that’s going to be Nintendos biggest problem. Obviously the Wii-U wasn’t big enough to top the Wii in terms of what people were expecting, and how would it be? The Wii changed the game, simply tacking on a tablet isn’t going to give the same effect.

    #15 3 years ago
  16. Dr.Ghettoblaster

    “Apple has some kind of weird cult-like image that means 50% of consumers are willing to buy an Apple product without even having seen it (!!!) and so those people will happily throw away their old Apple products to replace them with a tweaked newer edition.”

    Very well stated sir – I applaud you for this – it’s so true.

    #16 3 years ago
  17. Dannybuoy

    I just saw an ad on TV for 3DS. It touted NEXT GENERATION GRAPHICS, BREAKTHROUGH HARDWARE, GREAT GAMES LIBRARY. I did have a bit of a chuckle

    #17 3 years ago
  18. Gekidami

    I hate the 3DS ads we get over here. They’re lame, fake interviews with people going on about how awesome the 3D is… In fact they dont really talk about anything else. Just goes to show how much Nintendo want to sell the thing off that sole gimmick.

    Though to be fair, Nintendo do take the effort of making ads by country, rather than by region.

    #18 3 years ago
  19. DSB

    http://tech.fortune.cnn.com/2011/07/29/the-u-s-treasury-has-less-cash-on-hand-than-apple-inc/?hpt=hp_c2

    It’s official, after throttling Microsoft for the top spot, Apple is now richer than the worlds biggest economy. Although granted, they’ve gotten a little boost from the Republicans, who apparently want to finish what Bush started and run the country into the ground.

    I have absolutely no ill will towards Apple. I think it’s outstanding :P

    #19 3 years ago
  20. manamana

    Very well described aspects in this good report Rob. Thanks!

    #20 3 years ago
  21. Sini

    I hope 3ds flops hard, this outdated hardware bullshit that nintendo keeps riding every generation needs to stop.

    oh, sony needs to lower vita price to nice $200.

    #21 3 years ago

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