Analysts: Nintendo 3DS has “turned the corner”
Following a troubled start, the Nintendo 3DS has at last “turned the corner” according to Wedbush Morgan analyst Michael Pachter.
News earlier in the week confirmed that the handheld had soared past four million unit sales within North America, a figure that it achieved faster than the Wii.
“It’s very successful, but ran into a headwind given its relatively high price – which I incorrectly thought was the right price – and lack of third party software support,” said Pachter. “Now that we are seeing more first party titles at a lower price point, sales have increased. It’s definitely turned the corner.”
“I was surprised that it sold so few at the $249 price point, and its sales to date are exactly what I originally forecasted at that price.” he added.
EEDAR Vice President Jesse Divnich agreed with such comments, although warned of Nintendo needing to ensure that key software releases continued.
“With the strong rebound in 3DS sales, I think Nintendo is clear of the woods for now,” Divnich stated. “Going forward, however, we will closely be paying attention to software attach rates. Selling hardware is great, but it is only the first step. The health of any hardware is directly correlated to the amount of software consumers buy.
“The 3DS’s slow start surprised us all, but once they announced the steep price cut we had little concerns that they would rebound,” he added. “At such a great price, backed by strong first-party content, it shouldn’t be of any surprise they were able to turn the corner.”
Piers Harding-Rolls, of research, publishing and consulting firm Screen Digest, was also keen to warn of complacency.
“2012 will be crucial for the platform, as its sales momentum will decide how third-party investment in content development will be prioritised,” Harding-Rolls stated. “We expect the 3DS to continue selling, but Nintendo faces an increasingly competitive landscape and the hurdle of convincing third-parties to invest in the platform.”
However, all three were unanimous in saying that it would be unlikely that the handheld would be able to achieve the dizzy heights of the Nintendo DS’ lifetime unit sales, which are currently over 150 million worldwide.
“I think anything catching the Nintendo DS will be incredibly difficult,” Divnich commented. “The key to catching the Nintendo DS would be appealing to the ultra-casual consumers, those who originally bought the Nintendo DS for games like Brain Age and Sudoku, which are now prevalent and cheaper on other platforms – tablets and mobile.
“But I don’t believe topping DS sales is Nintendo’s goal for the 3DS. Their goal, however, is to create a sustainable and healthy third-party environment which, as I alluded to earlier, means having high software attach rates that are generally driven by the core audience.”
Pachter echoed such comments, explaining: “The emergence of smartphone games is eroding the casual market’s support for dedicated gaming devices, and I’d guess that 30 per cent or more of DS sales were to casual gamers. That makes it tough to compete.
“At the high end, we have renewed competition from Sony with PS Vita, so they should nibble away at the hard core, leaving Nintendo an addressable market for 3DS that is around 60 per cent as big as the addressable market for DS.”