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Editorial: Nintendo's Internal Price War

by Matthew Kato on Jul 28, 2011 at 09:30 AM

Today's price drop for the Nintendo 3DS is a big win for consumers, but it's also the acknowledgement of a mistake by Nintendo. After stepping out with the 3DS's fancy, glasses-free 3D tech at a $249.99 price point, the company has retreated back to familiar territory by dropping to a more appealing price. With the holiday season just around the corner, Nintendo is taking a calculated risk that is borne out of increasing desperation.

This is a great move for Nintendo to make. It sets them up for a potentially big holiday season, where the handheld's sales can finally take off along with help from holiday games like Super Mario 3DS and Mario Kart 3DS. But given the need to kick-start sales, did the company have any other choice? More interestingly, this strategy assumes that the higher price tag and software library are the only factors standing in the way of more people buying the system. But there may be other obstacles standing between the handheld and unqualified success.

As initially impressive as the 3DS' glasses-free 3D tech is, it remains to be seen how much of a lasting impression it has beyond the novelty factor. If the public wanted a handheld 3D experience, wouldn't they have paid for it in the first place? Looking at the slow sales of both the 3DS and PlayStation 3 over the past year, the sad truth may be that 3D simply isn't a selling factor for consumers.

I could see a situation where Nintendo platforms – including home consoles like the Wii – bring along fewer fans as each system comes out with increasingly smaller time gaps between iterations. Many people already have the DS, and with the 3DS still costing $169 – not an insignificant amount of money – asking consumers to buy a new platform when they'd rather just enjoy the system they already own is a gamble, considering the small technological leap forward the newer handheld offers. Nintendo could also face this problem in migrating the Wii owners to the Wii U, particularly the more casual users.

We are no longer in the day and age where even young kids will necessarily buy whatever Nintendo is selling. With each day, mobile titles are chipping away at Nintendo's stronghold, and I wonder how many more times a casual Nintendo fan will continue to buy the company's systems with the knowledge that a new iteration may be just around the corner (like the DS Lite), the first-party software support can be spotty, and third-party offerings lackluster.

I have no doubt that the 3DS will sell plenty of units. Jesse Divnich, vice president at video game research firm EEDAR, told me that the holiday season is where the vast majority of a year's sales take place, and that "Nintendo has consistently dominated every holiday season over the last five years." But this price reduction has more of an effect on Nintendo than just 3DS sales. If they can't recoup the money on each system with increased sales, this could put a lot of pressure on the Wii U to more than pull its own weight. Furthermore, will Nintendo now have to second guess that price tag too? If the 3DS never takes off, does that make the Wii U's interoperability with the 3DS function less of a selling point?

With the fate of the 3DS currently up in the air and the problem of how to convince the huge number of Wii owners that the Wii U is for them weighing large, Nintendo is in the interesting position of leading its competitors in sales, but having perhaps the most clouded future.