2DS/3DS/New3DS, the clueless strategy

New3DS released in Japan this week. 4th iteration of a handheld of which we were promised in 2012 that there were no other version in the works, that doesn’t feel right… Why all those versions so fast? I think they translate a deep-rooted issue at Nintendo HQ, which is that they haven’t got a clue about today’s game industry.

You have to consider the numerous sudden changes of strategy made by Nintendo since the end of the Wii. In 2011, Nintendo is financially unrivaled, and intends to stay so in the generation to come. However, they lost the core gamers in the process. The launch of the 3DS is the occasion to address them with games like Dead or Alive Dimensions, Street Fighter IV or Tales of the Abyss. Convinced that casual gamers will rush for 3D without glasses, they set a 250€ price-point for what will later end up being a sub-PSP. The result is a vast disaster. In summer 2011, Nintendo slashes the price to make it affordable to casual gamers. The Kyoto-based firm then believes it completely owns the casual market.

Success finally comes : during several months, 3DS sells faster than DS at its time and Nintendo didn’t hesitate to boast about it. Unfortunately for them, 3DS sales started to slow down at the point of time when DS skyrocketed. In summer 2013, Nintendo’s management must admit that the casuals are gone. But they assess that there’s some room for growth in the children market. Thus comes 2DS : kiddy design, no 3D and even cheaper, it’s clearly meant to be sold to parents and offered to children between 6 and 10. The strategy fails once more as 2DS sells only 2 millions or so. Not a bad launch, but far from enough to revive the golden age of the DS. The same year, the 3DS misses its annual forecast by 30%, and has actually never met any since launch. During the first quarter of 2014 fiscal year, 3DS sales fall by almost 50% compared to the past year.

Struck by this setback on the casual side, the manufacturer hurries to seduce the core gamers. Miyamoto’s declaration on the “passive audience” is of course part of this U-turn. Nintendo wants to dissociate itself from casual gaming. Summer 2014, Nintendo announces the New3DS. Enhanced 3D, second stick, high-end design and retro-gaming touch with the Super Nes colors, the new version is a crystal-clear message to the core of the core. The strategy is totally overhauled too. While 3DSXL and 2DS were thought to expand the user-base, New3DS clearly aims at the replacement of existing 3DS.

The reason is simple. Any further expansion is difficult for 3DS. Figures have been showing saturation for months, especially in Japan. And more important, 3DS doesn’t have a line-up efficient enough. Right now, there are almost twice more Vita games than 3DS games in development in Japan. The decreasing interest of developers in 3DS should hinder a definitive rally. Look at the demographics : casual gamers won’t boost 3DS because smartphones have made dedicated platforms obsolete, and no room for massive sales on the core gamers’ side either because the system is notably underpowered. The only means that remains is to stimulate to envy for a “sexier” version of an existing system (that strategy having been around for a while given the zillions of special editions of the 3DS). No problem so far, the New is a wonderful object, and phone makers do that all the time after all.

But there’s a snag. Nintendo has posted operational losses for some time and needs immediate revenues. The manufacturer boosted the processor of the New3DS to make it a different hardware, create exclusive games and ask everyone to open their wallets again (note that on the product description, there is no information on the new processor, which suggests that the improvements might not be very big). Now imagine a Monster Hunter 5 exclusive New3DS : they just have to give a call to their Capcom friends and they’ve instantly sold 3 million New3DS! This being of course detrimental to the consumers, whose “old” 3DS would have lasted only 2 or 3 years. And that can work with any series that has a high level of costumer loyalty : Fire Emblem, Ace Attorney, Shin Megami Tensei, etc. All those could have entries exclusive to New3DS, and fans would have to shed 160€ again (myself included). Nintendo is so clueless that they’re ready to blackmail their long-terms fans.

How New3DS will co-exist with her older sister remains to be seen. 3DS not even being 4 years old, why would publishers start from scratch with a zero install-base? While core IPs could succeed even exclusively on 3DS, games meant for a mainstream audience would probably suffer a lot. Hard to imagine a Yôkai Watch or a Tomodachi Life exclusive New3DS : given the Wii/WiiU confusion, how do you explain to hockey moms that they have to re-buy a 3DS to play new 3DS games? Generally speaking, smaller publishers have everything to lose in cutting themselves from a 45-million user-base, which would thwart the rise of the “New”.

New3DS is Nintendo’s latest attempt to save an ailing economic model. The (large) 3DS family illustrates the confusion at Kyoto HQ right know. Nintendo has stood firm in past strategies for too long, refusing to see what happens in the present. That leaves an erratic 3DS history, and increasingly desperate measures, as if they were magic spells that could instantly revive a glorious past.

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