The historic price drop of the 3DS announced overnight by Nintendo is a transparent acknowledgement by the most successful company to ever make video games that it is struggling.
Nintendo cut the price of its flagship gaming handheld by an extraordinary 32%, while making some dramatic turns. It appears to be pivoting to deemphasize 3D and is amplifying its downloadable lineup to put the 3DS on track to have more games on sale through download than in physical stores—a likely first for any dedicated piece of video game hardware, be it handheld or console.
There is no doubt that miserable sales of the 3DS spooked Nintendo into action. Prior to the release of the 3DS skeptics wondered if Nintendo was rushing into a repeat of its Virtual Boy mistake, creating a 21st century version of the 1995 virtual reality headset that had previously been Nintendo's loftiest flop.
Nintendo's 3DS Struggles: A Chronicle
• Nintendo 3DS Buyer's Guide The 3DS launches in March, with plenty to like about it.
• Is The 3DS Going To Be Okay? By April, worrying signs of soft sales in Japan.
• So I Took My 3DS To The Eye Doctor… Eye doctors dismiss concerns that the 3DS' 3D might be unhealthy.
• Nintendo Worried People Aren't Buying 3DS' Magic By late April, Nintendo begins acknowledging there's a problem.
• The 3DS E-Shop Has Been Delayed Nintendo struggles to get its download service live already two months since the 3DS launched.
• Luigi's Mansion 2 Proves the 3DS Can Handle Sequels To GameCube Games In June, Luigi's Mansion 2 debuts alongside new Super Mario, Mario Kart and other mega-franchise games to signal that a soft 3DS line-up will be strengthening in the next year.
• Nintendo Believes the 3DS' Two Big Problems Have Been Fixed In late June, with a Zelda released and the eShop running, Nintendo says its 3DS problems are fixed.
• Maybe 3D Isn't Essential for the 3DS After All, Nintendo Hints Nintendo backs off the 3DS' selling point a tad.
• What's with All the Cancelled 3DS Games? Nixed 3DS games abound.
• Where Are the 3DS Games? By mid-July, game publishers aren't pushing many 3DS games for the fall.
• Nintendo 3DS Gets Sudden, Massive Price Drop Nintendo cuts the 3DS' price by $80, effective August 12.
Nintendo's crisis, however, is more like the one its rival Sony has spent the last half decade trying to recover from. The 3DS has become Nintendo's PlayStation 3. It is in Nintendo's interest to invalidate that analogy in under five years. Nintendo has reached its PlayStation 3 Moment.
Like the PS3, the 3DS launched at a questionably high price, $600 for Sony and $250 for Nintendo.
Both machines followed juggernauts, Sony's succeeding the competition-obliterating PS2, Nintendo's the twin powers of the DS and Wii.
Each quickly confronted its stiffest challenge from competitors it didn't previously have to sweat, the PS3 from the wimpy, wacky but wonderful Wii rather than the presumed number one contender of the Xbox 360. The 3DS has not battled Sony's PSP but the accidentally important Apple and Android digital swiss army knives of entertainment, machines that empowered the makers of Angry Birds and hordes of other cheap games to turn smartphones into the premiere aspirational portable gaming devices, gamers who desire buttons or control sticks be damned.
A foolish Nintendo would not have reacted as it did last night. If the 3DS were another Virtual Boy, it could not.
The Virtual Boy was a boulder. Its graphics were always going to be only red; it was always going to have to be worn on its player's head. The 3DS, with its 3D effects merely being optional and its innards malleable with firmware and virtual storefront updates, is at least a shrub, and it is now getting a new pruning, as the PS3 did.
Sony slowly transformed its too-expensive PS3 from the inside out, dropping support for PS2 games while building its online store, repeatedly revising its operating system, drip-feeding new features, dropping price, restoring rumble to its controllers and eventually slimming the console. It adopted the Xbox 360 strategy of changing the console from within, perhaps too slowly, which is one reason it still lags behind its competitors.
Nintendo is now revising its 3DS, chopping its price from the stratum of home consoles to that of previous gen iPod touches. The 3DS is now no longer more expensive than an Xbox 360; it's now cheaper than an iPod Touch. Nintendo is amplifying its digital plan by expanding its downloadable lineup to include legacy Nintendo Entertainment System and Game Boy Advance games, a move that is likely to continue to swell the digital download line-up far beyond the paltry three-dozen-and-counting cartridge games currently on sale for the 3DS. The bolstering of the 3DS' download library, filled with games that Nintendo will doubtless charge $10 or less for, will continue to make the purchasing of $40 games for portable systems seem like a freak act. The offer to current 3DS owners of 20 free downloadable games won't only reduce the sting felt by early adopters who paid $250 for a $170 machine but will push those early adopters into the Nintendo eShop, compelling them to be digital customers, a major shifting in how Nintendo consumers buy their games.
Through all of this, there is little talk of 3D, which was boosted by Nintendo, as it was by movie companies, as the next big thing gamers would flock to. Hollywood studios are suffering from consumers' own disinterest in 3D and now Nintendo, in its newest 3DS commercial in Europe (see it on the left), isn't even promoting the feature. This follows Nintendo's own top personnel saying last month that it would be fine for 3DS owners to play the system with the 3D effects turned off.
Nintendo's 3DS is in dire straits today, and Nintendo is reacting drastically. Some will say the company is doomed and we may indeed see the limit of the dedicated handheld gaming market now in sight, but the drastic moves of last night allow for a rebirth. A humbled Nintendo gets a do-over next month when the price drop kicks in. The 3DS will finally be affordable, finally be a bargain compared to an iOS device and, as its digital shop grows, may finally be a player as a device for downloadable games.
Nintendo needs to avoid Sony's mistakes and slow recovery of the PlayStation 3, as the 3DS era may not be over, but the era of untouchable Nintendo handhelds is now a thing of the past.