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Slow 3DS sales force Nintendo to lower profit forecast, slash price

Visitors try out the new Nintendo 3DS handheld gaming device with a 3D display at the Nintendo DS stand at the CeBIT technology trade fair on March 2, 2011 in Hanover, Germany.

Sean Gallup/Getty Images

The Nintendo 3DS hasn't generated the sort of sales that Nintendo anticipated prior to its launch five months ago. According to a Nintendo earnings release, the system sold a paltry 0.71 million units worldwide between April and June. That's bad news for a company whose previous system, the Nintendo DS, has sold nearly 150 million units in less than seven years. According to the release, the DS is currently outselling the 3DS by a factor of more than two to one.

Some retailers have come up with their own method of moving the sluggishly selling handheld console: Mark it down. Both FutureShop and BestBuy Canada have temporarily knocked $50 off the suggested retail price, meaning you can pick one up for $199.99 through the end of July.

Nintendo, meanwhile, has announced an upcoming permanent price cut of $80, which will drop the system's tag to a much more palatable $169.99 as of August 12th.

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To bolster sales before the price reduction Nintendo also announced an "ambassador" program. Anyone who owns a 3DS and connects it to the system's online eShop prior to midnight on August 11th automatically become eligible to download 20 free classic games later this year. The first batch, including Super Mario Bros., Donkey Kong Jr., The Legend of Zelda, and others, will arrive September 1st, with the rest set to come before year's end.

But while price cuts and free games are well and good, they won't address the root problem-unless, of course, the root problem is simply that the system costs too much money (which it does). But I think the issue is much larger.

The current backlash against 3-D-evidenced by the poor sales of stereoscopic televisions and lower than expected box office performance for 3-D films-could be partially to blame. Kids might think the world of 3-D (I know my daughter does), but it seems clear that grown-ups-the people with the money-have grown disillusioned with the technology. It doesn't matter that the 3DS' 3-D effects can be switched off. That "3D" is part of the system's moniker is itself a turn-off.

However, a bigger problem is simply a lack of compelling software. The 3DS' launch window line-up contained no original games headlined by Nintendo's greatest icons. Pilotwings Resort is fun but hardly a system seller. The popular Super Street Fighter IV hits a large niche, but doesn't have the all-ages, both-genders, all-gamers appeal of, say, a Mario title. The remake of The Legend of Zelda: Ocarina of Time is fantastic, but a hard sell to folks who have already spent money on one or more of its earlier incarnations.

Thankfully, the system's library will receive a much needed boost this fall. Nintendo is set to roll out an impressive collection of top-tier first-party games in the coming months. It starts in September with a reboot of a fan favourite series in Star Fox 64 3D, then continues on with the likes of Super Mario 3D, Kid Icarus: Uprising, and Mario Kart 3D. And the spate of triple-A titles won't end in December. Come 2012, 3DS gamers can expect entries in other popular first-party franchises, including Luigi's Mansion, Paper Mario, and Animal Crossing.

Indeed, one wonders whether Nintendo ought not to have held off launching their handheld until the fall, when more quality titles would be available and parents would be looking for holiday gifts (instead of still being in recovery mode from last Christmas).

There's no doubt that times are gloomy for Nintendo. In a notice of financial forecast modifications, the company cut its profit projection by 81.8 per cent for the year ending March 2012. Plus, Nintendo will face stiff competition in the handheld space in just a few months via Sony's impressive-looking PlayStation Vita.

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Still, cheaper hardware and better games tend to bring with them the potential for a happily ever after ending. It's too early to count the 3DS out.

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