Nintendo Rethinks Strategy After Sales Plummet – Price Drop, New Features & Release Dates Inside

A few years ago Nintendo was the go-to company in the gaming industry.  It seemed like everything they touched went to gold.  A decade earlier the situation was dire.  The company had a rough time towards the middle of the N64 all the way up to and including the GameCube.  Their luck changed with the release of the Wii.  Some would say the DS also changed their fortunes, but the truth of the matter is that they always had impressive portable sales.  Apparently, that’s no longer the case.

Today Nintendo’s financials were released for the April to June 2011 calendar year and sales of their new portable, the 3DS, are anything but impressive.  Before we get there let’s look at everything else.  The original DS sold 1.4 million, that’s down from the 3.4 million sold during the same quarter last year.  Meanwhile the Wii is down 50% from 3 million last year to 1.5 million this year.  All of that wouldn’t matter if their new hardware was picking up the slack, but it’s not…not at all.  The 3DS only managed to sell 710,000 units during the quarter…worldwide.  People like to say the 3DS is starting like the DS before it, but we can now put those rumors to rest.  These sales are the lowest of any Nintendo hardware during any quarter since before the original DS launched.  Bottom line, Nintendo has to do something quickly in order to change the fate of their new hardware, and they’ve done just that.

Starting on August 12th the Nintendo 3DS will retail for $169.99!  That’s the quickest and deepest price cut Nintendo has done for any hardware since the Virtual Boy.  Clearly Nintendo doesn’t want their new portable to fall by the wayside.  That’s not all.  If you buy a 3DS before August 12th you will be entitled to 20 free games from the 3DS’ eShop.  That’s right, 20!  Ten of those games will be from the new NES Virtual Console, and 10 from the Game Boy Advance Virtual Console.  The NES will be added on September 1st for the general public, but earlier for anyone with a 3DS before August 12th.  Games include Super Mario Bros., Donkey Kong Jr., Balloon Fight, Ice Climber, The Legend of Zelda and more.

The GBA Virtual Console will include games like Yoshi’s Island: Super Mario Advance 3, Mario Kart: Super Circuit, Metroid Fusion, WarioWare, Inc.: Mega Microgame$ and Mario vs. Donkey Kong.  Nintendo says they have no plans to make the GBA VC games available to the general market and will be kept as a gift to all the early adopters.  We’ll see about that.

Finally Nintendo confirmed that Super Mario 3DS will be released in November, Mario Kart 3DS in December, and Kid Icarus something this holiday as well.

Looking to the next quarter Nintendo cut their profit forecast by a whopping 82% from $1.41 billion all the way to $257 million.  Nintendo has been unable to regain investor confidence and this new isn’t helping anything.  Nintendo shares are currently selling at a five year low.

So there you have it everyone.  I’ll be really honest, this seems extremely desperate if I do say so myself.  Nintendo has never made so many bold moves at a given time.  We’ve been talking about the lacklustre sales of the 3DS for some time now and it’s obvious that Nintendo felt they needed to do something drastic in order to move more systems.  The question I have is this.  Is the 3DS not selling because of the lack of killer software?  Is it not selling because of customer confusion towards the platform?  Or is it not selling because of the increased interest in smartphones like the iPhone and Android-enabled devices?  To compare, Apple sold over 20 million iPhone 4s during the quarter from April to June, which is a far cry from 710,000.  We also have to take into consideration that Sony will be launching their new portable, the Vita, sometime later this year.  Do you think that will have just as much trouble selling as the 3DS is having?

Let us know what you think below.  We always love a good discussion, and clearly these moves merit one heck of a conversation.

13 thoughts on “Nintendo Rethinks Strategy After Sales Plummet – Price Drop, New Features & Release Dates Inside”

  1. Desperate and bold? Sure. But it’s an awesome thank you for the early adopters. 20 free games from Nintendo’s incredible back catalog is great, especially the GBA games. Metroid Fusion? Yes please.

    I think the 3DS failed to pick up simply because of the selection of games. The games out there just aren’t enough to entice people to pick up the system. Had the system launched with some of the games that are coming out by the end of this year (Super Mario Bros, Resident Evil Revelations, etc), there would’ve been a far greater push. It didn’t help matters that Nintendo delayed the eShop and other features of the handheld until much later, so the launch crowd was really let down.

    It’s really difficult to think that Nintendo is cutting the system, because they just don’t do that…I can’t think of any other system having a price drop that quickly. For Nintendo to do something this drastic does show that they are concerned, but on the other hand, it’s a bit reassuring. It shows they’re not going down without fighting. I hope this makes Nintendo re-evaluate their portfolio of software, and encourages them to get more third-party developers on board with their consoles so they have a more steady stream of content.

    I still like my 3DS. I got it at launch beacuse I expect by the end of its lifespan, I’ll amass a sizeable collection of excellent games that only Nintendo can bring, just like every Nintendo handheld before it. I’m not really upset by the price drop though, I’m still ok with it. I’m just happy that Nintendo is actually considering the early adopters and rewarding us with something cool. I hope this is a sign to come…with Nintendo doing more to recognize their core fans. After NOA completely dismissed Operation Rainfaill, I’d say it’d help them regain some credibility.

  2. Tim this situation is much more dire than people realize. For the first time EVER Nintendo is going to take a loss on every system they sell. That goes to show just how concerned they are. The 3DS started off so strong, but like you said it was the lack of compelling software that did them in. All systems start off like this, but this time around it really hit hard for some reason.

    Along with this price drop comes news of these 20 free games, and that’s being done with good reason, not to completely tick off everyone who already has a 3DS. Let’s face it, it costs Nintendo nothing to give players these games. Am I thankful we’re getting them, heck yes I am, but it’s only being done to soften the blow. Had Nintendo done nothing at all, I’m sure more than a few people would have sold the system right now to cut their losses. This way, there’s incentive to stay.

    I’m very pleased with my 3DS, but I am wondering if the portable landscape has indeed been changed. We can talk all we want about how the mobile market is different, but if the Vita suffers the same fate as the 3DS did initially than what does that mean? Did the whole planet simply lose interest in portable gaming? Somehow I think not.

    This news will directly impact Sony more so than anyone else. Suddenly Nintendo is in a position where while they might look weak right now, are once again cheaper than the competition. Sony already had a challenge in front of them with the new smartphones being released towards the end of 2011, but now they have a cheaper 3DS to be concerned with and three AAA software titles as well.

    This is going to be very interesting to see play out. Nintendo has proven they’re taking this extremely seriously and now the ball is in Sony’s court. What say you Sony?

  3. Well i agree with you guys on most of your points pretty accurate, but i dont think nintendo is making the 3DS at a lost, even with this price cut, remember they told in the past that the price point tag was established before the strong Hands-on reception the 3DS did had on E3, therefore i think nintendo it is still making a profit, a little one but a profit.

    1. The reason why we say that is because of how drastically they have cut their profit forecast. They already lowered their 3DS sales expectations, but with the price cut it now appears they will be losing a small bit of money per system sold. We’ll know for certain next quarter.

  4. Wow, stunning new here! Never thought the sales were that low? So, the system hasn’t even sold a million portables yet?

    Still though, 20 free games for me? Super awesome! Also, NES games on the go, nice! Exciting new for me, not so exciting for Nintendo.

    The system has been out for 6 months, so never mind my first comment.

  5. Steven the 710,000 units sold is only from April to June 2011. The scaring part is that those are worldwide sell through numbers. The system went on sale in North America on March 27th so it must have sold over a million overall. That said, this is still worrisome news for the big N, which is why they’re doing what they’ve just done.

    Manu, on second though you may be right. I had read earlier that the 3DS only cost Nintendo $120 to manufacture so if that’s true, then they’ll still make a profit just not as much as they were making.

    This brings up another interesting point though. Were Nintendo simply arrogant with the 3DS, thinking they could charge whatever they wanted and people would buy it? Something like Sony did with the PS3. Think about it.

    1. Yes i agree they were arrogant in the same vein as Sony, if that 120$ information is true, the thing is if this happened to the PS3 why in the world you make the same mistake having a prior example of the exact same thing, i can understand sony because it was the first time, but i cannot understand nintendo, is like the old saying fool me once is your fault, fool me twice is my fault

  6. I knew a price cut was going to happen this year!!! No one listens to me damn it. The 3DS was WAY overpriced to begin with. Anyway, I returned mine and I will rebuy once the system is cheaper. As for the 20 games free /yawn I’ll pass thanks. I rather have the $80 bucks myself!

  7. I’m pretty surprised largely because I expected NIntendo to wait out the holiday season and see where things ended up before considering a price drop. They definitely have at least two games during the period with the potential to sell systems. The biggest surprise for me though isn’t that they cut the price but by how much they cut it. From $249 down to the price of a DSi XL at $169 is pretty massive. I do like the sound of the ambassador program though.

    As for sales the 3DS has definitely sold over a million. Heck, in Japan alone it will hit over 1.3 million sold come next week’s media create. And according to NPD the LTD for 3DS in the US is over 830k. Between those two regions alone that at least puts it at just over 2 million. No idea how it has fared in Europe but I know a while back Nintendo expected to meet their target of 4 million shipped which I’m sure they hit but it says a lot about actual sell through if global replenishment shipments for the quarter were less than one million.

    I’m not too worried where things stand right now. For the most part, the biggest criticism about the 3DS is the lack of compelling content which is pretty obvious considering the immediate slowdown in both hardware and software sales a couple of weeks after launch with the most successful game since then being the Ocarina of Time remake. (Capcom even commented recently that Mercenaries met their expectations as well) This holiday and early 2012 should be more telling once a more consistent stream of titles people are earnestly looking forward to are released.

    With that being said I don’t think Nintendo should leave third parties the window of opportunity to lead their platforms because it seems obvious everytime they do this they fumble. At least launch with one big first party title in case the worst case of scenario rears its head again.

  8. I’m very surprised about all this, too. Loving the perks for us early adopters (GBA games WOW), but that price drop is insane! I really thought that we’re all blowing this out of proportion because the DS was in a similar if not worse situation when it first launched. Am I right? It wasn’t exactly a hit until Brain Age and Nintendogs were released, followed by Mario Kart and New Super Mario Bros. Apparently, Nintendo is just as skeptical as the critics and analysts. My guess is the drop in shares really scared the crap out of Nintendo, hence their quick acting.

    So what’s the difference between the DS and 3DS launches? The former was just as slow but picked up later. The first couple of months aren’t enough to analyze the whole system, but with the PS Vita on the way this new strategy is definitely helpful.

  9. What we all tend to forget with the original DS is that the initial sales were slow, but only for a very short time. It took four weeks to sell a million systems for the DS and 13 weeks to do the same for the 3DS. The original DS sold 13.1 million in the first year alone and the 3DS is extremely far from that goal and slowing down each week. That’s where the DS was different as it increased over time.

    I think Marcus is right, Nintendo needs their first party lineup ready and willing from day one and forget giving third parties time to shine. It’s a double edged sword but it’s quite apparent it needs to be done.

    I think this whole situation is hitting closer to home mainly because it’s so similar to the PS2 to PS3 situation where everyone expected the 3DS to be unstoppable from day one. When it became obvious that it wasn’t going to play out like that, the world freaked out.

    1. Makes sense. Thanks for jogging my memory. I guess I didn’t feel the sense of urgency until the recent string of cancellations and delays of certain titles. I honestly didn’t think that the sales were that bad because it’s still really early in its life-cycle. The system is by no means a Virtual Boy dud. At least it has a lot of things going on for it. Sadly though, it seems that 3D didn’t exactly give that big of an impact with the general audience, because I don’t see them emphasizing it with their recent string of announcements. Instead, they’re falling back on downloads, hence trying to send a message to all the Apple/Android users out there.

  10. Oh this is clearly no Virtual Boy. That poor system was dead on arrival. I think Nintendo just needs to rethink their overall strategy and everything will fall into place. Everyone said Sony was finished once they had all their initial problems with th PS3, but look at them now. I’m sure the same will be true for Nintendo. I think they simply got a little cocky and thought the world was their play thing. Now that they’ve received a wake-up call I think we’ll see everything fall into place.

    I just want to see how this holiday season will play out. Will Vita make an impact? Will the iPhone 5 and other big droid phones shake things up? These are also very big reasons why Nintendo did what they did. Imagine going forward with only a few million head start. That’s virtually no head start at all.

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