Wouldn't you know it… the night after I post about Nintendo's woes with the 3DS, the company announces a huge price drop which will kick in less than five months after the launch of the platform. As of August 12th, 3DS units will drop to $169.99, which is a 33% price cut. This is likely going to work out well for Nintendo as price drops are usually the best course of action to take when a platform's sales numbers are weak, but this same move also leaves those who bought the 3DS before the price drop looking pretty silly—and leaves Nintendo looking pretty bad.
Early adopters are getting a gift of apology– errr… "loyalty" from Nintendo by way of 20 Virtual Console downloads. 10 of the downloads will be NES games, including Super Mario Bros., Donkey Kong Jr., Balloon Fight, Ice Climber, and The Legend of Zelda. The other 10 will be Game Boy Advance games, which is a platform that had not yet been announced for the Virtual Console program. Some of those titles include Yoshi's Island: Super Mario Advance 3, Mario Kart: Super Circuit, Metroid Fusion, WarioWare Inc., and Mario vs. Donkey Kong. The kicker about the GBA games is that Nintendo alleges that there are "no plans" to release these games to the general public, so if you bought the 3DS early, you get some unique games. (Honestly, I don't buy the "no plans" line. I expect at least some of these to be available in 2012.)
That's a nice gesture, but the damage is already done. Nintendo has done the unthinkable and not only dropped the price of one of its platforms within the first year (again, FIVE MONTHS), but the price drop is pretty severe. $80 is a lot of cash to have overpaid and have your purchase depreciate in value so soon. It's hard not to argue that early adopters look pretty foolish, given these new developments. (And yes, I am one of those fools.) As it was, early adopters arguably overpaid by some $50 at launch; dropping the price another $30 below that just pours salt in the wound. Sure, free games are a convenient way of trying to make nice with consumers, but they don't necessarily repair bad faith or shaken confidence in the company.
That's really the potential disaster here. The Wii U is not too far away, and now there's a precedent out there that buying early can come back to bite consumers. Why buy the Wii U for $350 when weak launch sales can force Nintendo's hand and generate a price drop for that platform after a few months? Considering that many believe launch software lineups to be weak anyway, these events now add another reason to stick to common sense and wait for a price drop before committing to new hardware.
That's not what Nintendo wants or needs. The company needs to duplicate the lightning in a bottle that it caught with Wii back in 2006. Stock prices are down, sales of the Wii are way down, and Nintendo has consistently fallen behind Microsoft in terms of domestic sales from month to month. Shareholders expect Nintendo to right the ship with Wii U, but if consumers choose the wait and see approach, it's possible that another 3DS-like situation will develop. Third-party publishers will begin to lose interest, affecting available software. Slow sales will alarm retailers. The cycle would begin again, and then an unwanted price drop would be necessitated.
It's unfortunate that the 3DS situation was dire enough to require a price drop of this magnitude to try and right the ship. The good news for Nintendo is that chances are good that this drop—as well as much-needed games that will finally be arriving for the 3DS in Q4—should lead to markedly improved hardware sales numbers in Q3/Q4. It also puts the 3DS in a much better position to defend against the PlayStation Vita, which now will look much more expensive to the average retail consumer.
What Nintendo must hope for now is a short memory for early adopters. Nintendo must now also commit itself to making sure that the Wii U launch does not suffer from the same lack of judgment and questionable planning and decisions that caused the 3DS to look as bad as it did. While this price cut may pay off in the short term and save the 3DS, the long-term effects of such a hasty and potentially desperate decision may hurt Nintendo more when Wii U lands.
The lesson to be learned here is that the early bird may catch the worm, but he also pays an unnecessary premium for it. I will remember this lesson well next year when Wii U arrives.
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