Nintendo’s Tough Times: What Will Happen Now?

In a stunningly revealing announcement last week, Nintendo stated that on August 12 it will reduce the price of its 3DS from $250 to $170. Though it was spun as an event as important as the Royal Wedding in a press release, the news reverberated throughout the game industry in a decidedly different way. The price drop was seen as a failure on the part of the Japanese company to sell what originally had been seen by some journalists as the most major of steps forward for video gaming: 3D without glasses.

The reasons for the poor sales of the device are many. Soon after the machine was released in Japan, the terrible earthquake and tsunami hit the country. While I pointed out on NPR’s Morning Edition that manufacture of the 3DS didn’t occur in Japan, people working at Nintendo’s Kyoto HQ were certainly hit by the sad situation, if not directly, then, emotionally.

More, sagging sales of the 3DS had to do with an unreasonably high price. Nintendo had succumbed to the same kind of rampant hubris that had hit many game companies over the years, from the 3DO company in 1993 to, more recently, Sony in 2006 with its overpriced PlayStation 3. Especially in a sluggish world economy with a possible new recession looming in the United States, $250 for a new DS was an outrageous price – even though the 3D on the handheld gaming device was spectacular.

When you could see it. The 3DS has an extraordinarily limited viewing angle. If you don’t look at it straight on, you can’t see depth. Instead, you see a double image. And if you play without moving your neck, your reward is stinging neck pain or a pounding headache. Sony itself had contemplated making a 3D version of its PlayStation Portable, but, according to Sony insiders, decided against it because the technology wasn’t quite there yet. It’s not. That viewing angle is the bugaboo.

And how can you hold to that precise viewing angle when playing shooting games or even platformer games like Mario? Most games are made to be exciting, visceral experiences that take you from the real-life mundanity to a world where everything moves like rides at an amusement park. So holding steady is very difficult, to put it mildly.

The 3DS is best suited to a role playing game like the recently released The Legend of Zelda: The Ocarina of Time 3D. In that terrific, artful game, you move at your own pace and talk to townspeople as you level up – until you need to kill an enemy. That’s the time when you turn down the 3D with a small lever and shoot away in more traditional 2D.

Nintendo executives were taken aback by the poor sales of the DS (and the Wii as well) to the point of awed shock. In fact, they agreed to cuts in pay. In addition to getting the 3DS on track, they have a long, hard slog ahead in proselytizing to the world’s gamers that they need the new version of the Wii (which will be coming next year). WiiU is influenced by the iPad. In fact, it looks like an iPad with a console addition. Marketing this will be won’t be as easy as selling the Wii and its wireless, motion controller.

But there’s a zeal for WiiU to succeed because Nintendo’s worldwide president, Satoru Iwata, told audiences at the March Game Developers Conference that games for the iPad and iPhone were being sold too cheaply. Iwata would prefer to keep his $39.99 price for the 3DS games (and $49.99 (or more) for the upcoming version of the Wii).

The 3DS is generally a fine device beyond the 3D aspect. Among other features, it sports wireless functionality and a store in which you can purchase old school Nintendo games. Yet the success of Infinity Blade and Angry Birds for the iPad proves that many games (certainly not all) for the DS are overpriced. If that’s true, and if the 3DS doesn’t sell well at $170, Nintendo executives will be taking more than a pay cut. They’ll be shown the door. After all, it’s one thing to ride the wave of sales for a device like the Wii, which was so easy to play and understand that it sold itself. It’s another thing entirely to take a company on the downswing and make it the next big thing again.

Nintendo isn’t going anywhere. It’s not dying. Yet it’s wounded. Now’s the time for Sony and Microsoft to make their moves in the ever-evolving console wars. And even if one company does win, the winner may no longer take as much as 80 percent of the market as Atari, Nintendo and Sony have in the past. That’s because Apple is so successful with its little downloadable games. Apple’s not going to put the big three out of business. But they are taking a very healthy slice of the pie.

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