Has Mobile Killed the Video (Game) Star?

When Nintendo announced the replacement for their portable DSi gaming device, the 3DS at the 2010 E3 show, bloggers and industry journalists wrote about the amazing glasses-free 3D technology and how it could revolutionize the portable gaming market. Initial adoption looked on-track, with Nintendo reportedly selling nearly 400,000 units within just one week of launch.

So why is the House of Mario suddenly hacking the 3DS price point from US $249.99 down to just $169.99 only 4 months after launch? Nintendo cites sales figures that have fallen below expectations, but does that warrant such a severe price reduction after so little time on the market? Sure, third party publishers have delayed or cancelled a few of the more exciting titles planned for 2011, but there has to still be games on the horizon that could spark consumer interest, so what else would prompt such a move?

A few of the more popular guesses:

• Simply being out of touch with the market, especially during a recessionary period.
• The warning label advising parents that any children under the age of seven should not view games in 3D because it could damage their still-developing eyes.
• The online eStore is generally considered underwhelming and too expensive.

And the most compelling guess I have seen:

• Games cost $40 each, and I game on my phone more often at a fraction of that.

If that last bullet is indeed the primary reason why adoption has slowed, then not only is Nintendo’s handheld in trouble, but Sony has something to think about as well with their Vita portable releasing in Q1 2012. Also, take into consideration that Android, iOS, and Windows Phone 7 devices all have access to games that range in price from FREE, to just a couple dollars. Perhaps these titles don’t deliver the same long, immersive experience as a console game, but as Penny-Arcade and others pointed out, at 99 cents each, you can play 40 different games for the price of a single 3DS game.

Further, the current generation of smartphones really is no slouch when it comes to gaming. For example, users of the Samsung/Sprint Epic 4G with its 1GHz Hummingbird processor and Super AMOLED screen can play cell-shaded versions of Tom Clancy’s H.A.W.X. and Assassin’s Creed. These “cell phone games” certainly do not feel like the clunky phone games of just two years ago. Is this perhaps the reason why Microsoft has not jumped into the portable console market? Sony hedged their bets by releasing the Xperia under the Ericsson banner, a smartphone with Playstation controls and an online game store where owners of the device can download full-featured Playstation titles.

A screenshot from GT Racing: Motor Academy HD for Smartphones, courtesy of Gameloft

So children under seven years old should not use the 3DS as intended, and tweens are playing 3D modeled PS3 and X-BOX 360 ports on their smartphones for 99 cents each. Where does that leave the market for the 3DS? Is the new price of $170 still too expensive? How do early adopters of the 3DS feel about this price drop? Nintendo has tried to rectify any dissatisfaction by offering these customers 20 free downloads from their eStore. However in a survey of 4500 Japanese gamers conducted by the gaming site 4Gamer, the outlook looks grim, even in Nintendo’s backyard.

Some snippets:

• 49.4% of owners are disappointed in the current software lineup
• Of those that didn’t own a 3DS, only 5.4% said they intended to buy one, 15.3% said they would never buy one.
• There was also grumbling that the 3DS Ambassador Program, which qualifies current owners for the free downloads, does very little to make up for the price drop and lack of a compelling software library.

Still, in the face of those results it is difficult to count Nintendo’s handheld consoles out when they have simply dominated the market since the late 1980’s. Further, the Sony Vita was pushed out to Q1 2012, so Nintendo will have this holiday season all to themselves to see if their strategy can get the 3DS back on track.