Nintendo 2DS: a good short-term idea, admission 3D was “under-used” by younger audiences – analysts

Wednesday, 28 August 2013 21:30 GMT By Stephany Nunneley

Analysts have weighed-in on Nintendo’s 2DS announcement today, and while it seems to make commercial sense for the younger market, the firm still lacks a compelling games lineup, and mobile will still continue to cannibalize the portable market.

According to Wedbush Morgan analyst Michael Pachter, 2DS and the Wii U price-cut may help the company near-term, but doesn’t address underlying problems within it.

“We expect the price cut to drive higher sales, but believe the Wii U will remain challenged by a lack of compelling first- and third-party content this holiday,” Pachter said. “By the time a significant number of high-profile Wii U games have been released, Microsoft’s Xbox One and Sony’s PS4 will have launched, creating direct next generation competition and impacting any potential lift from those titles.”

Pachter said he expects 2DS to help raise company sales by 25% and pad the firm’s original guidance on hardware shipments.

Nintendo’s annual 3DS system sales are expected to reach 17.4 million this year, according to Pachter, just below guidance of 18 million and software should hit around 72.9 million unit sales – short of Nintendo’s 80 million guidance.

For IHS director and head of games, Piers Harding-Rolls, the 2DS launch makes sense as younger handheld gamers are less likely to overlap with smart device users which are typically used by the 18-35 male demographic.

“Unlike Sony with its PS Vita, this younger consumer is Nintendo’s core user for its handhelds, and the 3DS, while performing better since 2012, is still relatively expensive and also able to display 3D, which carries a warning for younger children,” said Harding-Rolls in an industry note sent to VG247.

“IHS forecasts that Nintendo will sell-through just under 10 million 3DS devices in the second half of 2013. While we believed that Nintendo’s 3DS shipment forecast of 18 million units for this financial year was a stretch, the news of this 2DS launch makes that forecast for its handhelds much more achievable.”

He also believes that launching a cheaper, non-3D, “non-hinged product,” fills a hole left in Nintendo’s portfolio created by the decline of its original DS platform, and removed the pricing pressure on the higher-end 3DS and provides an up-sell.

“Launching a 2D version of the 3DS is also an admission that for many younger users the 3D aspect of the device was under-used and not of that much interest,” Harding-Rolls continued. “Overall, this move allows Nintendo more flexibility to engage a wider audience while protecting its hardware margins across its handheld devices.”

Nintendo will launch its new 2DS system in North America on October 12, the same day as Pokémon X and Pokémon Y, for the suggested retail price of $129.99.