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Nintendo's core handheld market is stable Exclusive
Nintendo's core handheld market is stable
November 1, 2012 | By Matt Matthews

November 1, 2012 | By Matt Matthews
More: Console/PC, Smartphone/Tablet, Business/Marketing, Exclusive

Last week Nintendo released information about the first half of its current fiscal year, and as a numbers kind of person, I always enjoy adding the latest shipment figures to my personal trove of data. When I last looked at the state of Nintendo's handheld business back in June, we were looking at how the imminent launch of the Nintendo 3DS XL might affect the company's handheld sales.

Now, four months later, we have an answer of sorts.

This time last year, when the Nintendo 3DS had been out for less than three quarters, Nintendo had shipped 6.68 million systems worldwide. That includes shipments after the August 2011 price cut. By the end of 2011, the company had shipped 15.04 million systems in essentially 10 months.

During the past 12 months, which also includes the October - December 2011 period, total shipments for the Nintendo 3DS and 3DS XL combined reached 15.51 million systems. That's a rather modest 3 percent increase from the system's former peak shipment figure.

So, the upshot is that 3DS shipments are at their highest volume ever, but it took the introduction of the 3DS XL and the rush of sales created by that launch to reach that level.

In terms of the health of Nintendo's overall handheld hardware sales, we can look back over the past 11.5 years for some perspective. Starting with the Game Boy Advance, which shipped at the very end of March 2001 in Japan, the company's handheld system sales over any 12-month period have ranged from just over 14 million units during calendar 2002 to a peak of 32 million systems in calendar 2008.

That spans three systems - the Game Boy Advance, the Nintendo DS, and the Nintendo 3DS - as well as their many revisions.

The graph below shows this history as a trailing-twelve-month moving average. Each point on this graph represents sales from the previous 12 months of sales.

(Note: During the early years of the Game Boy Advance, Nintendo provided its hardware sales figures every six months instead of quarterly, so while the data there is correct, it is also at a lower resolution than the quarterly data I have starting in late 2003.)

Viewed as above, we can see the magnitude of the phenomenon that was the Nintendo DS. Even when Game Boy Advance shipments went to zero, sales of the Nintendo DS were still nearly twice the size of its predecessor's peak sales.

This is also important perspective against which to measure Nintendo's handheld business. Prior to the success of the Nintendo DS, Nintendo's handhelds were shipping around 14 - 18 million units every 12 months. Since the launch of the Nintendo 3DS, they've been shipping around 19 21 million units every 12 months.

I don't believe every Nintendo handheld is going to be a Nintendo DS and the enormity of its success skewed my perception going into the launch of the 3DS. Now, over 18 months on, it looks like the company has a fairly stable business, one that happens to be a 20 to 30 percent larger than it was prior to the Nintendo DS.

For the moment, I'm willing to take the view that Nintendo had an unforeseen hit with the Nintendo DS, the kind of success that simply cannot be reproduced on demand even by a company like Nintendo with deep pockets and a stable of strong brands. Now it's back to a successful business, just not on the scale of four years ago.

Just compare the LTD sales graphs below for the Game Boy Advance, Nintendo DS, and Nintendo 3DS. The last two Nintendo handhelds were undoubtedly successful, so it seems natural to apply the same label to the 3DS, given its performance so far. And remember: The Nintendo DS had the benefit of two holiday seasons in its first 21 months, a luxury that the 3DS has not yet had.

So the big picture here is that the rise of the mobile gaming market, the segment of the video game market that is now dedicated to smartphones and tablets, is largely the emigration of consumers who stopped in briefly to play Nintendo's hardware but had no long-term interest in that kind of platform.

Nintendo's core market is still intact, and that they are still growing their market. The explosive growth of gaming on mobile platforms could mostly be additive to the overall market, without threatening Nintendo.

(In this column I don't want to discuss the other big handhelds in the market, the PlayStation Portable and PlayStation Vita, but I think if anyone has suffered at the hands of Apple and Google it is Sony, not Nintendo. The Vita has finally passed 800,000 units here in the U.S., a full eight months after it launched.)

Obviously, Nintendo would have liked to have kept as many of those transient consumers as possible, but they've still made a difficult transition and kept their business intact. That kind of experience could come in useful in the coming couple of years. In many ways the Nintendo Wii was for the home console business what the Nintendo DS was for the traditional handheld business.

And with the Wii U waiting in the wings, comparisons will be inevitable. If you look carefully at the statements that Nintendo is making about their business plan for the Wii U, I think you can see that they're doing their best to learn from the weaknesses of the Wii and the stumbling transition from DS to 3DS. The courting of third-party publishers and long-term planning of first-party and third-party software releases evident in the latest investor Q&A is evidence enough that Nintendo is determined not to make the same mistakes again.

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Michael Pianta
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Excellent post. I've been saying for a while that mobile gaming would not have the kind of impact on handheld systems that some have predicted. At least, not immediately. The people who are going to play primarily on mobile platforms are likely not seriously interested in games. Anyone that develops that interest is going to gravitate towards one of the dedicated handhelds because the user experience is so much better.

Richard Ellicott
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this all good and well but my Nintendo 3ds hasn't been a success... i can't get myself to buy anything for it it's all too expensive..

or if it's "cheap" it's some shitty original game boy yes ORGINAL GAMEBOY game they're charging 3.99 for

is it me or handhelds should be CHEAP... like appstore cheap...on this console there's such a trickle of titles nothing actually ever comes down in price

Merc Hoffner
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Blame Super Monkeyball for the expectation that games can be sustainably sold at these prices. As far as I remember, it was the first app released on the app store on July 10, 2008. Sega set it at a fraction of the price of their previous outings as an experiment, knowing that development was limited to cheapo porting costs and there was no competition. The game was of course wildly successful and set an instant precedent for price expectation and price competition towards zero that has transformed the face of software and consumers. Cheaper is always preferred by the consumer. It doesn't make the business tenable, or the products better. Who did it? Sega. Who's going out of business? Sega. Of course I could be wrong on the details: Googling this era is hazy, what with iOS not even being named as iOS and all.

Adam Bishop
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On the contrary, I think one of the key reasons the 3DS is selling so well is because there are a lot of people who want to play self-contained, fully-featured games and will gladly pay $35-$40 for that experience.

Just because the race-to-the-bottom smartphone mentality has worked for some people doesn't mean it's right for everyone.

Toby Grierson
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I'd pay 3.99 for Final Fantasy Legend right now and I can't say the same for nearly anything I've played on my iPad - except for Civilization and a few other things that (lo and behold) cost more than 3.99.

Steve Fulton
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I've been drifting back to my DS over the past few weeks. I like my iPad, but gaming on it is not satisfying for me.

Daniel Campbell
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Anymore "stable" is about as much as a portable gaming manufacturer can hope for. They honestly should have delayed a bit and launched with a stronger lineup, but anyone with a decent amount of business acumen knows that's not realistic.

Merc Hoffner
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I actually think they should have gone the other way around, and had originally intended to: Launch during Christmas 2010. The dollars were flying, the hype was still hot, Kinect was yet to steal dollars and momentum and Kotaku hadn't gotten the fangs in to pillory all manner of stereoscopic vision. March is a crummy time to launch for any system, and the rest of the year ain't much better. Moreover, it gave Apple alignment time to launch the iPad 2 on the same day and dominate the world's press, and it reduced lead time on Vita - not that Vita sales were troublesome but it built momentum for the core naysayers.

Not that this is something they could control, but launching in Japan just before the devastating Tsunami and literal resulting fallout was just about the worst time to launch in videogame history, save the launch of the Gamecube on 14th Sept 2001 - Not that it 's any kind of real suffering by comparison, but Nintendo has been more unfortunate in launch timing than anyone I can remember.

As for the lack of games, well, yes, launching earlier would have been even worse, and reminds me, yet again, that Nintendo's REAL weakness is that they still only have 5000 employees. To get advanced games out faster and at a high quality they need more staff (after all they can certainly afford to scale), but cultivating employees with the right skills and the right teaming is difficult and years in the making. I believe this is what Miyamoto has recently been on about. Strategies they might have taken to ameliorate this? For one they could have pushed Japanese 3rd parties to port all their PSP games with 3D makeovers. Those studios however were incredibly slow on the uptake, and their platform choices have been unpredictably retarded for a generation. Case in point; At Sega's last strategy outline they had 17 games on the slate for Vita, 3 on the 3DS.

Raymond Grier
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The LTD graph says to me that they are pretty much on par with where they should be.

Bob Johnson
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It is doing really strong in Japan though which means not as well in the west or not as stable in the west.

Nooh Ha
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Opinion Vs Fact: .....FIGHT!

wes bogdan
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I wish they had started with the xl size rather than the ds lite touchscreen and small top screen of the original 3ds.

I put a 32gb sd card in my system and even with full games,ambassidor titles and music i still have over 100,000 bloc