Reuters: Nintendo Faces End of Era after 3DS Flop

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Nintendo's attempt to rescue its failed 3DS handheld games gadget failed to dispel market gloom, triggering a 5 percent share slide and stoking deep worries for an iconic brand desperate to win back users.

On Tuesday, President Satoru Iwata introduced what he said was an unprecedented range of games, aimed at attracting everyone from hardcore gamers to fashion-conscious girls and fans of the long-running Mario series.

The Japanese company also announced on its website a new 1,500 yen ($19) slidepad accessory needed for certain games.

But analysts and investors dismissed the line-up as lackluster and largely irrelevant in the face of cheap or free games played on the likes of Apple's iPhone and iPad and Google-powered Android devices.

Nintendo has been criticized for sticking rigidly to its own hardware, meaning it has no access to the new generation of mobile devices.

"I don't think the new games will make any difference," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment.

"Nintendo succeeded by pulling in people who weren't gamers and their needs now are no longer being filled by Nintendo, they are happy playing games on their mobile phones,"[ he said.

Nintendo's shares ended 5 percent lower in a strong market. The Kyoto-based company's shares have plunged nearly 50 percent so far this year, hit by the 3DS flop and doubts that it can replicate the success of its Wii home console with the next generation WiiU, announced at the E3 games show in June.

Nintendo, which means "Leave luck to heaven," was forced to announce price cuts of up to 40 percent in July to try to boost slumping demand for the glasses-free 3D version of the DS, but this only temporarily spurred sales.

In July, Nintendo slashed its outlook for the business year to end-March to its lowest in 27 years as it braced for losses from the 3D gadget and a stronger yen.

In a subdued Tokyo conference hall on Tuesday, an appearance by the company's star game designer, Shigeru Miyamoto, wielding a toy sword and shield raised a laugh, but a series of 3DS game images depicting Miyamoto and Iwata as a pair of young lovers was met with silence.

LINE-UP OF GAMES

"From the end of this year to the beginning of next, we are planning the kind of extensive line-up that has probably never been seen before in the history of video games," Iwata told reporters and guests.

"We will make an all-out effort to see that the 3DS sells enough to become the successor to the DS," Iwata said.

That will be no easy task, given that earlier models of the DS had sold a cumulative total of about 148 million units by the end of June this year. The gadget, along with the motion-controlled Wii home console, enabled Nintendo to dominate the industry for years.

In Japan, 3DS sales leaped to more than 200,000 units in the week of the price cut, but swiftly fell back to about 55,000 units, according to research firm Enterbrain.

That leaves only the secretive company's famed content, never made available on other firms' hardware, to revive sales.

"The only possible way for Nintendo to revive would be to stop concentrating on mobile games and switch to Wii-type games for the whole family," said Makoto Kikuchi, CEO of Myojo Asset Management. "However, at the moment, I can't see this change coming."

Iwata took a 50 percent pay cut, and other executives took 20-30 percent cuts to take responsibility for the poor performance.

Analysts have cut their full-year operating profit forecasts for Nintendo by an average of 45 percent in the past 30 days and the stock is now trading at 45 times its estimated forward 12-month earnings, according to Thomson Reuters data.

Shares in software provider Capcom slumped by 8.3 percent after the company said it would be developing the next generation of its hit Monster Hunter game for the 3DS.

Nintendo slashed the price of the 3DS after sales shriveled to just 710,000 units in April-June from 3.6 million in the first month after its launch, and a tiny fraction of the 16 million unit target for the year.

Macquarie Securities analyst David Gibson said he still expected the 3DS gadget to sell about 14.5 million units over the year. ($1 = 77.000 Japanese Yen)

Source: http://uk.reuters.com/article/2011/09/13/us-nintendo-idUKTRE78C0PF20110913

[Rudy]

I would call it a flop, but the DS did set the bar pretty high for NIntendo and they didn't manage to get the same hype that's for sure

[FMH]

Too bad....

Now this may be end for Nintendo hardware, it may still live on. There are unconfirmed reports of Nintendo putting their unique gaming line-up on iOS App Store.

Or even if they are not, this is an option still open for them.

[threetonesun]

Too bad....

Now this may be end for Nintendo hardware, it may still live on. There are unconfirmed reports of Nintendo putting their unique gaming line-up on iOS App Store.

Or even if they are not, this is an option still open for them.

The main issue with non-Nintendo handhelds is the lack of input. I have some of the Square and Capcom games on my iPhone, and they're not great. Turn based RPG, sure, Mega Man, no way.

[Jason S. Global Moderator]

this article sounds like opinion more than fact-based.

3DS sales have surged now w/ the price drop. there are good games on the system, albeit not many yet. with any luck, some big games will be released before the holiday season to help sales even more.

sure, there are a lot of people that want to play stupid, mindless games on their iphone, but there are still a lot of gamers that want to play real games on a handheld. phones just arent there yet.

and, in the 1st 6mo of the Nintendo DS's lifespan, according to wikipedia, nintendo sold 6.65mil units. from what i can gather, the 3DS has sold b/w 4.5-5mil units in <6mo.

[Astra.Xtreme]

What they should have done is give both the DS and Wii a huge graphics update and keep everything else basically the same. That's honestly what everybody wanted anyway.

[Charisma Veteran]

this article sounds like opinion more than fact-based.

3DS sales have surged now w/ the price drop. there are good games on the system, albeit not many yet. with any luck, some big games will be released before the holiday season to help sales even more.

sure, there are a lot of people that want to play stupid, mindless games on their iphone, but there are still a lot of gamers that want to play real games on a handheld. phones just arent there yet.

and, in the 1st 6mo of the Nintendo DS's lifespan, according to wikipedia, nintendo sold 6.65mil units. from what i can gather, the 3DS has sold b/w 4.5-5mil units in <6mo.

Yeah, the poor economical situation and the original price of the 3DS didn't lend itself well to sales. That and I don't like the 3D thing, I know a lot of others feel the same way, be it personal preference or sight/health-related limitations. But Nintendo still has some of the best, most well-thought-out and brilliant games out there. I play my DSi more than any of my other consoles/devices these days.

[~Johnny]

Why are they acting like the 3DS is completely done all ready? Most of it's big games are only just starting to come out this holiday, and it's sales have picked up a big momentum with the price drop. A false start to be sure, but it's still got plenty of life.

And anyone who even suggests that this blip is going to make Nintendo magically drop their hardware business is rather insane.

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[Blackhearted]

I dunno what makes these investors/analysts lose any credibility they had more. The fact they think the rather strong lineup of games announced/shown at the conference last night is lackluster, or the fact they really think low quality phone games can replace good games on a real gaming device.

Why are they acting like the 3DS is completely done all ready? Most of it's big games are only just starting to come out this holiday, and it's sales have picked up a big momentum with the price drop. A false start to be sure, but it's still got plenty of life.

And anyone who even suggests that this blip is going to make Nintendo magically drop their hardware business is rather insane.

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I agree. It's not dead yet, far from it in fact. People should remember that the original ds had a bit of a slow start too. And look where it got to today.

[remixedcat]

nintendo is just pitiful bloody pitiful.

[Amarok]

When you play with something gimmicky like 3D you may get burned. I'm sure they'll bounce back with something awesome.

Love the opinion piece disguised as a news article though. Faulting them for sticking to their own hardware rather than playing with platforms like Android? *boggle* I don't know, the dedicated handheld gaming platform may be croaked, I'm not really inclined to buy ANY handheld since I can just play half-decent games on my Android phone. :/ Although ... I have to say that if the 3DS were to go on sale I would probably buy one just to play around with it and see what it can do. If anything Nintendo's handheld division may be in danger, but Nintendo itself isn't going anywhere.

[The Teej]

The DS had an awful line up, save 1 or 2 good games, and sales were average for the 1st year of its life, and was even getting tanked by the PSP until about 2 years into the DS's life. So... early market sales don't mean very much IMO.

The PS3s sales tanked big time at the beginning, and now they're almost neck and neck. Same thing, really. It's all about the long haul.

[_neutrino Veteran]

if the Virtual boy did not destroy them i do not see the 3DS destroying them either however, if the Wii U keeps rolling down the road in the form that it currently exists then i think Nintendo might be ending its Era rather quickly

[Jason S. Global Moderator]

Why are they acting like the 3DS is completely done all ready? Most of it's big games are only just starting to come out this holiday, and it's sales have picked up a big momentum with the price drop. A false start to be sure, but it's still got plenty of life.

people, these days, have the shortest attention spans. all these people think the 3DS is dead already even though it's only been out for 6mo. these days, if a product isnt a huge success in 1 month, then it's a failure (according to them)

what i tried to point out is that the original DS had a rocky start too. it wasnt until the Lite that sales really took off. heck, 6+ yrs later and there are still a lot of games being released for the DS. i just bought Professor Layton last month.

also, people think the 3DS is just a regular DS w/ 3D. that cannot be more wrong. the 3DS is much more advanced.

[majortom1981]

These articles predicting the end of nintendo come out with every nintendo hardware release since the n64.

[Fred Derf Veteran]

As much as my kid loves Nintendo, I think it will go the way of Sega, Coleco and Atari before that. Once upon a time, each of those companies had consoles that dominated the market but it is tough to stay on top continually as one mistake (like the 3DS) combined with bad timing (the rise of smartphones and personal tablets) can knock you off your perch.

[Sir Topham Hatt]

I wouldn't say Nintendo hardware is finished at all :s

Their hand-held console, maybe so but they need to concentrate on the Wii replacement.

They have had a good few technological advances in gaming, so this is what they need to do to win business back.

[Rudy]

The main issue with non-Nintendo handhelds is the lack of input. I have some of the Square and Capcom games on my iPhone, and they're not great. Turn based RPG, sure, Mega Man, no way.

Even RPGs are better with real controls, I have FF1 for both my PSP and my iPhone and I barely touched my iPhone one (I think I got to the ship and that's it) while on the PSP I actaully beat the game with 2 different party

[Fred Derf Veteran]

Nintendo took a step away from hardcore gaming and begun to focus on casual gamers and that was an approach that worked for a while. The problem is that those casual gamers are also the ones that are least affected by the lack of proper controls on smartphones and personal tablets. Thus it will be hard to get those people to come back to a future handheld product. Nintendo could refocus on the hardcore gamers by offering better controls but that is a market that they have largely ignored recently meaning that it won't be so easy to win them back either.

Things are different on the Wii front but they've rested on their laurels for some time and thus the next product had better be sensational. Early reports on the WiiU are less than impressive.

Edit:

The French Canadian keyboard setting has to die on this notebook. If I switch it to English-International I can still get the accents without totally killing my keyboard layout. Actually, it must be the "Auto Adjust" that it causing me the most grief.

[Blackhearted]

As much as my kid loves Nintendo, I think it will go the way of Sega, Coleco and Atari before that. Once upon a time, each of those companies had consoles that dominated the market but it is tough to stay on top continually as one mistake (like the 3DS) combined with bad timing (the rise of smartphones and personal tablets) can knock you off your perch.

Except in sega's case, they had atleast three failures back to back.The sega cd, the 32x, and the sega saturn. Which helped to eventually lead to the dreamcast dying prematurely. Nintendo hasn't had that problem. The DS and Wii(whether you like the wii or not), have been very successful, and have been making them alot of money during the past 5+ years. Something that couldn't be said about most of sega's last products. And while the 3ds may not have had he best launch, the issues are being corrected and it's getting on a path to be successful, not to doom nintendo to sega's fate

[Xilo]

Except in sega's case, they had atleast three failures back to back.The sega cd, the 32x, and the sega saturn.

I enjoyed my Sega Saturn... Lot of good games on it.

[remixedcat]

I hated when nintendo abandoned us hardcore gamers!!!!

all they care about is casual suzy and tommy.

RIP nintendo we will miss you.

[neufuse Veteran]

I hated when nintendo abandoned us hardcore gamers!!!!

all they care about is casual suzy and tommy.

RIP nintendo we will miss you.

I felt like the gaming companies abandonded nintendo which caused them not to focuse on it.... when N64 was coming out everyone was like OMG YES! then it came and 3rd parties seemed to be like eh.... Square went to the playstation basically and ruined one of their key RPG players..... thats when I felt like nintendo made a wrong turn with 3rd parties...

but then when N64 was out everyone said it was the end of nintendo, since it didn't do so great.... but their key argument then was cartridge vs CD ROM

[oceanmotion]

That analogue stick add on for the 3DS shows how out of touch they have become.

The majority of people that bought a Wii are not going to be lining up for Wii U. It was a fresh idea that grabbed everyone by surprise and was the hot toy for a few years with those select games like Wii Sport, Fit etc. but few ventured out from them.

Nintendo are in trouble but they have enough cash in the bank to change but I think competing against phones, tablets, Sony and MS, low cost apps, games, online services way beyond them, it will be extremely tough.

[Chasethebase Veteran]

I think the main reason that the 3DS has not been successful is the branding in my opinion. Many people still see it as a DS console, to the extent that supermarkets are mixing the 3DS games within the DS section. This means that many are not buying because they 'already have' a DS, not thinking that it's the next generation device, a-la PS2 to PS3 etc.

If it were named something separate from the DS branding, then maybe it would have had more of an initial sales surge, but not at the moment. Also take note that the DS' original success didn't come immediately after launch, in fact it came with the DS Lite a while after, around the time both it and Nintendogs/Brain Training came out, this is what caused the huge success.

I think it's best to bide our time. If Nintendo were to make a 3DS Lite and price it aggresively like the original DS Lite was (?99 was the DS Lite's launch price) and have the games to back it up, it'll be a roaring success just like its predecessor.