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.
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.
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.
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.