The 3DS was billed by Nintendo (obviously) and quite a large segment of the press as the “next big thing”; 3D without glasses was the way of the future, but when it released in March, consumers weren’t exactly enthralled. Since release it has sold 4.32 million units worldwide, but sales have been particularly slow this past quarter, shifting only 710,000 units since April. When coupled with declining Wii and DS sales it has resulted in Nintendo making a net loss of ¥25.5 billion ($330 million) this quarter.
In response, Nintendo downgraded it’s yearly profit forecast by 82% from ¥110 billion to ¥20 billion ($257 million) which caused it’s share price to plummet by 21% in a single day, on top of the drop to a five-year low after the Wii U announcement in June. To fix the situation, Nintendo took drastic manoeuvres; apart from Nintendo’s President Iwata taking a 50% pay cut – which is really nothing more than a PR stunt – they announced a global price drop for the 3DS of around 40% from ¥25,000 to ¥15,000 or $249 to $169.
Many believe that the price cut will save the 3DS, and to a lesser extent, Nintendo, but it fails to even stratch the surface of the 3DS’ fundamental flaws. It is true that a price drop will drive sales, that’s just simple Supply and Demand economics, but whether or not this will actually solve the many problems that the 3DS and Nintendo face in the long run is very unlikely. As I hinted at earlier, the 3D part of the 3DS was a bit of a let down. The technology itself is still primitive, only being viewable by one person at a specific angle, and has been reported to cause headaches.
Moreover it hasn’t been implemented that well by developers; the general consensus from players is that, while 3D is a novelty, it is nothing more. It simply isn’t an essential part of games and many gamers prefer to play without the 3D turned on at all. So, as it turns out, the unique selling point of the 3DS isn’t that special, and that’s something which a price cut will never fix.
Nintendo, to compensate the early adopters of the 3DS (and boy do they deserve compensation) is going to give away 20 free games. Ten games are classics from the NES, including: Super Mario Bros., Donkey Kong Jr., Balloon Fight, Ice Climber and The Legend of Zelda. Ten more were originally on the GBA, they include: Yoshi’s Island, Mario Kart: Super Circuit, Metroid Fusion, WarioWare, Inc and Mario vs. Donkey Kong.
The offering above may seem great to some, and you can’t complain about free games (even if you did have to buy an expensive system with few good titles) but it is indicative of the most basic and crippling problem that Nintendo faces: it’s lack of new IPs and 3rd party support. It is offering game from the 1980s, four generations ago, because that is all it has to offer. Nintendo is perfectly happy to rest on it’s laurels, the classic IPs: Mario, Zelda, Donkey Kong. It is true that many are still high quality titles but that leaves the rest of us – those have either moved on from Mario, or never liked him in the first place – at a loss.
Where are Nintendo’s new first-part IPs? Microsoft, and especially Sony, seem to have no trouble coming up with fresh and interesting worlds, characters, and ultimately games. It is critical for Nintendo to move on, or at least expand it’s portfolio for those who don’t get a nostalgic tingle when we see the green tip of Zelda’s cap. Microsoft owns many IPs, but relies more heavily on third-party support. Which is, again, something Nintendo doesn’t have and badly needs. The third-party line-up for the 3DS is simply abysmal; developers and publishers seem reluctant to invest in Nintendo after the Wii , which saw many quality third-party titles flop, and this is something that Nintendo hasn’t been addressing. It will take more than a simple price drop to restore confidence, and apart from posturing, Nintendo doesn’t seem to be doing much else to remedy this.
The success or demise of the 3DS is more than ever down to how software performs. The price drop means that the 3DS is being sold at a loss, a risky strategy that depends on software sales, and if the limited menu isn’t enlarged it could spell disaster for Nintendo. The next year will be tough for Nintendo, and 2012 could be even worse unless they wake up and begin to put emphasis on good quality, fresh games, of both first and third-party origin. Time is running out faster than ever, accelerated by the coming release of Sony’s PS Vita, for Nintendo to win back portable gamers. Can they do it? Of course, but is the price drop enough? Not by a long shot.