I've been on a bit of a roller coaster with
(OTCMKTS:NTDOY) this summer.
I hated it
I loved it
, I bought the stock, I sold the stock, and now we're walking
into news that has me scratching my head.
To rewind a bit, in early summer, Nintendo aggressively talked up
newfound momentum of its 3DS handheld, which was propelled by the
release of blockbuster title
Animal Crossing: New Leaf
. Analysis of publicly available
3DS sales data
supported that idea.
Subsequently, on July 31, Nintendo released a disappointing
earnings report, marked not only by very underwhelming Wii U
sales, but by 3DS sales that weren't quite as exciting as I would
have expected given the supposed
-driven revival. Not long after, I dumped my position, as noted
in real time on Minyanville's
Buzz & Banter
Now the company has made two announcements that could indicate
Enter the 2DS
Nintendo unveiled a new handheld gaming device called the 2DS,
which is a stripped down, less expensive version of the 3DS.
The 2DS does not have 3D graphics capabilities, loses the 3DS's
clamshell design, and sports a $129 price ($40 less than the
You can watch an intro video here:
The timing of the 2DS announcement is a bit puzzling. If the 3DS
was rebounding, why would a cheaper version need to exist?
It's possible that Nintendo was conservative in regards to the
potential impact of
and was building this device as a hedge if sales didn't get off
the ground. It's not like they threw 2DS together over the
weekend, so it had to have been, at the very least, planned ahead
The 2DS's lower price may help Nintendo better fight off the
smartphone gaming boom
we flagged as a threat back in 2010
, but nonetheless, the mere need to so aggressively defend
against that threat is a bit worrisome, especially since Nintendo
has some big games on the way.
are due out October 12 in conjunction with the 2DS, while
The Legend of Zelda: A Link Between Worlds
comes on November 22.
If quality games sell hardware, why is now the time to introduce
By the way, did you see the thumbs up/down ratio on that video?
A Cheaper Wii U
The Wii U has struggled mightily since its November 2012 release,
like the 3DS back in July 2011
, is having an unnaturally early price cut.
Nintendo had introduced two versions of the Wii U: a $299 basic
set and a $349 Deluxe/Premium bundle.
Now, the basic set is going away and the Deluxe/Premium one gets
slotted in at $299. Nintendo will also release a limited-edition
Wii bundle which includes
The Legend of Zelda: The Wind Waker HD
and some other swag for the same price of $299.
Interestingly enough, while the Wii U definitely needs some help
in getting off the ground, like the 2DS announcement, this timing
Circling back to that July 31 earnings report, Nintendo kept its
previous gudiance for full-year Wii U sales, as it has held that
upcoming titles like
(released in early August),
Super Mario 3D World
Donkey Kong Country: Tropical Freezer
would move Wii U hardware.
Additionally, note that in its earnings release, Nintendo noted
in reference to the Wii U that it would "strive to improve
hardware profitability by reducing its costs."
If Nintendo was striving to improve profitability, why would it
Adding It Up
This picture does not look pretty, especially since
) is due for refreshes of the biggest threats to handheld
dedicated gaming devices -- the iPhone and iPad Mini.
Additionally, while I have doubts about the long-term prospects
of the soon-to-be-released
) Xbox One and
) PlayStation 4 consoles, in the near-term, they'll be taking
back an awful lot of market share Nintendo won with the original