Thursday, July 28, 2011

3DS Price Drops! What Does It Mean?

The 3DS price has dropped from $249 to $169! But what about us early adopters? Nintendo hasn't forgotten about us. Here's a quote from their press release:

"Starting Sept. 1, Nintendo 3DS Ambassadors will be able to download 10 NES™ Virtual Console™ games at no charge and before they are available in the Nintendo eShop to the general public. These games, including Super Mario Bros.™, Donkey Kong Jr.™, Balloon Fight™, Ice Climber™ and The Legend of Zelda™, are slated to become paid downloadable games, but Ambassadors get them early for free. Once the paid versions of the games are posted to the Nintendo eShop later in the year, the updated versions will be available to Ambassadors for download at no cost.

By the end of 2011, Nintendo will provide Ambassadors with 10 Game Boy Advance Virtual Console games. These include games like Yoshi’s Island™: Super Mario™ Advance 3, Mario Kart™: Super Circuit, Metroid™ Fusion, WarioWare™, Inc.: Mega Microgame$ and Mario vs. Donkey Kong™. These games will be available exclusively to Ambassadors, and Nintendo currently has no plans to make these 10 games available to the general public on the Nintendo 3DS in the future."
Not a bad deal, I guess. First, let's get the snark out of the way, courtesy of ArsTechnica:
So there you go. If you already own a 3DS system, you'll be able to download a number of classic games for free, including Game Boy Advance titles that won't be made available to the general public. Isn't this why we all bought a 3DS to begin with, to play previous-generation Nintendo games in 2D?

This move may not have the effect desired by Nintendo. A quick price drop of this size sounds more like desperation than confidence and growth. A suite of free games that people may or may not want also doesn't do much for customers who will now feel like they overpaid for the system by a third. Yes, this is one of the risks of being an early adopter, but early adopters are a group of people you annoy at your own risk.

First of all, let's all calm down. I'm one of those early adopters, and one of the 3DS' selling points was the ability to play on the Virtual Console. Therefore, GBA and NES games make me incredibly pleased.

Nintendo is handing us a good deal. If you assume that each NES game generally sells for $5 on the Wii Virtual Console and every Super Nintendo game sells for $8 (which is equivalent to the power of a GBA), we're essentially getting $130 worth of games for free. Even if you only like half of those games, you're still getting $65 worth of games for nothing.

But what about the size of the price drop? That's actually kind of troubling, no doubt about that. According to Iwata, every 3DS after the drop will be sold at a loss. That means that Nintendo realizes what a dangerous position they're in. Nintendo NEVER sells hardware at a loss. Ever. They even turned a profit on the Gamecube.

You can read this one of two ways.

1) Nintendo saw that the 3DS wasn't selling and games were getting cancelled and made a panic move. They're slashing the price and hoping that people buy it, and if they don't they're screwed.

2) Nintendo saw that the 3DS wasn't selling and identified one of the core issues with the system. They had two choices: Incremental price drops over a period of a year or so that would lead people to REALLY wonder what was wrong with the 3DS or one MAJOR price cut that would make people worry about it once and then stop worrying.

Either way you look at it, Nintendo feels that they're in a desperate position. They usually know what they're doing, but this seems really early in the 3DS' life to pull a Hail Mary like this.

Look, I love my 3DS as a piece of hardware. The 3D effect is awesome. I haven't had any battery life problems. The eShop is good, despite what some might say. My main problem is that there are no games yet. This is directly tied to the price issues.

Nintendo knows that as long as the price is high, there will be no adopters. No adopters means companies won't make games, meaning fewer adopters. Nintendo has decided to try to break the cycle the only way they can. Don't get me wrong, it's still a little nerve-wracking, but their reasoning at least makes sense.

So, there are a few ways this can go.

1) Nintendo sells a crazy amount of units, early adopters are appeased, developers go crazy and throw out their Vita dev kits. The cost of making the 3DS goes down to the point where Nintendo is making money again. Everyone is happy everywhere. A thousand years of peace cover the globe.

2) The 3DS sales spike. Early adopters are a little cheesed off, but the games coming down the pike help keep them from burning down Nintendo's headquarters. Developers start coming back tentatively.

3) The PS Vita eats the 3DS for lunch. Early adopters burn their systems in the street and murder Reggie Fils-Amie with pitchforks. Developers wear sackcloth and sing dirges about Nintendo's corpse.

Of these scenarios, result number two is the most likely. At this point, we have to downgrade the 3DS' ceiling from "DS/GBA level success" to "reasonably decent sales." Time will tell.

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