Game Marketing Tips, Analysis, and News

Wednesday, October 13, 2010

3DS Too Pricey For Japan, Survey Says

Apparently the 3DS connects to your bellybutton.
A recent survey of 1,000 Japanese consumers by showed that 80% of them felt the 3DS, priced at 25,000 yen for its release in Japan ($299 at current exchange rates), is too expensive. One would think that this feeling would make them less inclined to buy the unit. But Nintendo isn't buying that idea; Iwata-san says that the device will still be cheaper than purchasing a home console, as they do not require add-ons such as screens.

"You do not need any other hardware devices to be connected in order for you to play with it," he told investors recently.

Nice try, but I'm afraid the judges will have to score that one as a miss. I think it's pretty safe to say that everyone considering buying a videogame console already has a TV set of some sort, so you're comparing apples to horse apples, so to speak.

Nintendo is feeling pretty cocky right now about the 3DS after all the nice things that were said about it at E3. In fact, they used that as justification for charging a premium price for the device. On the heels of that came word that 3DS software will likely be priced higher than current DS software.

The really fascinating thing is how disconnected from reality Nintendo appears; are their marketing folks not reporting properly from the field (gathering intelligence about the market is one of the tasks of marketing)? Let's look at the points of disconnect one by one:

The people at E3 who liked the 3DS were industry folks with a vested interest in seeing it succeed. Yes, there were magazine reviewers there who liked it a lot and their jobs don't depend on it's success directly. But all of the retailers and publishers and their employees have some very good reasons to hope Nintendo's new hardware succeeds. If it does, they stand to make more money. You weren't putting the device in front of consumers in proper focus groups; you were showing it to people who are desperate for something, anything to turn around the industry's sales trends of the last two years. Nintendo, you've confused those guys with the actual market that buys or doesn't buy your product. Your marketing team should be interviewing potential customers, not inhaling their own press releases.

The entire DS line is tanking. Sales are down 20% over last year, which should be a hint that things are not all rosy. Even after you dropped the price by $20, sales didn't recover. Software sales are even worse. Everybody's sales of traditional videogame hardware and software is down, many by double digits, for the second year in a row. The economy worldwide is still wounded, and the consumers in your core demographic of 15- 25 are hurting the worst for jobs. Your response: $299 for the console and higher prices for the software. That sure would be nice for your bottom line, considering Wii sales are also dropping, but only if it actually works. If people don't buy it, you'll have to drop the prices... and price-protect the inventory already out in the channel, and hope like hell that the early high price hasn't permanently branded the console as too expensive.

The competition is tough and getting tougher. Nintendo may like to think that with the PSP only hitting about 25% of DS sales currently that they've won the console war and it's all over, everybody who wants handheld gaming will just buy whatever Nintendo puts in front of them. (Have they not seen The Jungle?) While the current PSP is weak, Sony is likely to introduce the PSP2 soon, and it will certainly offer some additional mojo over the current one. But the real threat is the iDevice (iPhone, iPod Touch, iPad) and Android markets; together they represent over 10 million units sold every month (and growing!) with over 50,000 games with an average price of $3, and tens of thousands of free ones. Downloadable, carry your whole library of games with you at all times, plus you have an incredible array of other functions at your fingertips... and they are cheaper than a 3DS (depending on the unit and how you buy it). With this competitive reality, you're going with a premium price and no new initiatives in downloadable content?

The 3DS may well have a good initial sell-in, and do pretty well for a while. But every month that passes will see the DS market fall further behind the handheld gaming curve as the inexorable math of 10 million units per month beats down on Nintendo's sales numbers (1 million per month, perhaps, after a few months... if they are lucky). A year of that math and it's pretty clear where all the developers will be headed.

 And it's not in Nintendo's direction.

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