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Nintendo's lagging 3DS sales present a 'chicken and egg' conundrum
Nintendo's lagging 3DS sales present a 'chicken and egg' conundrum
January 31, 2013 | By Mike Rose




While Nintendo is still firmly on top in its domestic Japanese retail video game market, it's having trouble cracking the overseas markets with its Nintendo 3DS.

"Sales are largely behind our target overseas," admitted Satoru Iwata, Nintendo president, as part of the company's latest earnings briefing -- and he put this down to a lack of diversity in its software lineup.

"In the overseas markets, Nintendo 3DS has not yet solved its chicken-and-egg problem as a platform," he noted.

"To put it another way, we do not yet have a virtuous cycle where hardware sales and software sales drive one another. Because of this, our lineup lacks diversity, and as a result, Nintendo 3DS does not have as wide and diverse an appeal as Nintendo DS. As a consequence, software sales, which should ideally grow in proportion to hardware sales, did not grow as expected."

Says Iwata, Nintendo is now looking at how to replicate its success in Japan everywhere else. "This problem did exist with Nintendo DS, which gained momentum in the order of Japan, Europe and the U.S.," he notes. "The U.S. and Europe certainly have much larger populations, so the market potential for us should be larger than the Japanese market. This year we will strive to bring out the market potential that we could not achieve last year."

Digital front

Part of this assault on overseas markets will no doubt focus on the Nintendo 3DS' digital offerings.

Iwata explained that the number of 3DS units that have been connected to a network in Japan and the U.S. has now surpassed 80 percent, up from around 60 percent a year ago -- online levels the likes of which Nintendo has never seen before.

In Japan, the release of Animal Crossing: New Leaf has seen somewhat of a breakthrough for Nintendo's digital sales. The game has sold more than 700,000 digital copies via the 3DS eShop, accounting for a quarter of all New Leaf sales -- "an unprecedented achievement," added Iwata.

Again, U.S. and Europe is lagging behind Japan when it comes to digital sales. "In the overseas markets, there has been no packaged software title which marks such a high ratio of download sales," Iwata said. "The reason we made it in Japan is that, in addition to the unexpected shortage of supply and the nature of the game... we have diversified the sales methods of download versions including selling POSA (Point Of Sales Activation) cards."

As a result, Nintendo plans to step up its digital game in 2013 in all regions.

"This year we will try to diversify the sales methods to raise the ratio of download sales overseas with the aim of increasing our business opportunities and profitability," he added.


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Comments


A W
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the 3ds lack diversity? I'm guessing he means that the software he thinks the west should be interested in is not reaching its mark. He also believes that pushing DL games may be the way to get better distribution? IDK, DL games are great and I am looking forward to DL lots of games on the Wii U if I feel that they are games I don't mind keeping forever, but that term forever is a term that I myself am unsure of in the digital distribution market of console simply because of the change in standards each time a new hardware surfaces.

What makes me unsure is the factor of owning the content you buy. It seems that when it comes to games on consoles, the only way to keep enjoying those games is to keep the old hardware even when its outdated and supported. This is in stark contrast to Apple which a some point forces the owner to update the hardware while keeping the specifics of the software one DLs as continuously usable. Nintendo will have to decide if they want to be like Apple, or just look like Apple when it comes to their business of game content. I could see Nintendo making it a standard to offer games as both e-shop and retail, cutting the e-shop prices down 10 dollars less or so, and later offering minor upgrades to the hardware, like more memory and features, maybe even offering a disc-less model of either hardware.

Andrew Chen
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First we had the chicken-and-the-egg, now we have the Retail Catch-22.
Its certainly been frustrating for a lot of 3DS customers to see the digital version of games priced the same (actually in many cases HIGHER) than retail versions. The reason why Nintendo (nor Sony for that matter) can undercut those digital prices is because they must tread carefully with their retail partnerships. They NEED those outlets for hardware distribution and promotion.
BUT, dangerous competitors are undercutting prices, some of them even have a thoroughly built-out network of their own stores for distribution and everyone knows a digital version of Mario Kart should not in fairness be the same as the retail cart.
What is a traditional video game console manufacturer to do? :\

...Probably give in to market pressure if sales really hit the fan and grudgingly cut prices :)

Eric Geer
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"Its certainly been frustrating for a lot of 3DS customers to see the digital version of games priced the same (actually in many cases HIGHER) than retail versions. The reason why Nintendo (nor Sony for that matter) can undercut those digital prices is because they must tread carefully with their retail partnerships. They NEED those outlets for hardware distribution and promotion."

I believe if they cut the price by just $5-7 dollars digitally they would see the digital purchases skyrocket- I personally won't buy full games from Nintendo digitally because I can buy them at the same if not cheaper price in a physical form that can be used/played/resold--unlike the digital one that you are stuck with even if you no longer want it. I understand the need to keep the prices high, but if they are promoting it, they need to drop the price--even the smallest amount. The incentive to by digital is not there yet--convenience sure that's one...but there are 3-4 more reasons to buy the physical copy.

Bob Johnson
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Their digital price points aren't attractive. They are fully priced and never on sale. The physical product is occasionally on sale and has a ~50% resale value.

And western developers have never been quality Nintendo handheld game developers. There was mostly garbage on the system from western developers. That garbage now costs $1 or is free on iOS and some of it isn't even garbage.

And do you think anyone that bought garbage on the DS cares if their games on iOS do not have button or stick controls? Nah.

And of course really casual types like those that bought only Brain Age are lost forever to iOS. Btw Brain Age is a game that would work very well on iOS. Maybe they could release it on iOS without undercutting their brand since the experience would be intact and the audience for that game is different than the audience for Mario.

as for lack of diversity on the 3ds in the west ..... Only thing Nintendo can do is make the games themselves or help fund partners to make those games and to make those games real quality efforts not cash grabs.

The system needs a racing game. Some sort of shooter. A sports game. And rpg. All with western images. And reeking of Nintendo 1st party quality. Then again not sure the teen is going to buy a 3ds to play these games. On the go he will have an iOS device. At home he would be on the console.


John Flush
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The RPG comes out Monday... Fire Emblem. I would have pre-ordered the bundle if it would have been an XL edition of the 3DS. It is still really hard convincing me to spend $200+ for one game, but Fire Emblem is one of those games with me.

Bob Johnson
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Yeah Fire Emblem not a big western rpg though. And not even sure its an rpg.

I took the lack of diversity to mean lack of western titles from 3rd party developers.

lack of titles from anyone other than Nintendo.

Joe Zachery
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I agree with every one of the current post made. The current digital prices are the same as the retail copies. They can't lower the price with out damaging a relationship with retailers. Japanese Developers are responsible for all the current content on the handhelds. While Western Developers have drop all support even thought they didn't do that much to begin with. Nintendo may need to even pull out of the west a little. Making their system a device that only hardcore fans or gamers can have access too. Similar to the the Wonderswan device in Japan. That lived side by side with the GBA in Japan. I don't see things changing in the West due to the western developers. Who never wanted to create games for smaller devices anyway. They want to make big budget games on home consoles, and small type games for a phone. In the west there is no room for the middle man.

David Gonzales
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if they had ported minecraft to the 3DS they would have sold way more, also give us more of the classic games we loved, im still waiting on mario world, donkey kong country, mario RPG etc. basically all the best selling super nintendo games why arent they doing that for the 3DS?

Kujel Selsuru
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Minecraft on 3DS would be a great fit :D

John Flush
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If they had minecraft on the 3DS I could finally get my kids off the X360 edition...

AJ S
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I recently bought a 3DS for myself. The only digital downloads I would consider would be older games. Why would I spend $40 on a digital copy of mario kart when I can go to Target, have them match Amazon's price, and get a physical game cartridge? For new games I want to own the cartridge.

Andrew Chen
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And this is exactly why Nintendo agreed to price their digital game versions at no discount. They needed to offer the option and, just as key, build out the infrastructure. At the same time they had to play nice with their retail partners and not undercut them...everyone wins! :D
Oh wait.. :\

Jimmy Albright
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Isn't the 3DS absolutely destroying the Vita in sales?

I read a figure recently that it was outselling the Vita like 44:1 or something, although that might have been limited to Japan.

Alexander Symington
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That was a particularly extreme week, but it's typical to see 3DS outsell Vita by between 10 and 20:1 in Japan. Indeed, it currently shifts about twice as much hardware as every other format combined.

A W
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He wants America and EU. He want the sales to destroy them in the west as well.


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