It’s time for the entire gaming community to have a long hard rethink about where it is headed. Nintendo has just been savaged by the continuing recession, the competition from Apple and its inability to get its revolutionary portable gaming sensation to market in time for Christmas. It revealed this as it announced a change to its forecast revenues and profits, and delayed its new DS replacement until late February. If it misses that date by a month, all the 3DS revenue will fall into the following financial year creating further red ink stains on the finances of Nintendo.
The damage is clearly to be laid at Apple’s door, something that is made clear by the design ambition and direction of the new 3DS which was to be refreshed in time for Christmas and reincarnated as a new touch screen device, incorporating motion and gyro sensors, two cameras and the ability to project 3D images without the need to wear special glasses. IN other words a 3D iPod.
It achieves the 3D by splitting the 800 by 240 screen into two sets of pixels 400 x 240, for each eye. The 3D image is then adjusted using a 3D slider to match your head position. The new device was to have downloading of games and swapping of gaming data between devices, using automated WiFi services.
We would expect that the the continuing success of the Apple iPod Touch and the launch of the iPad, combined with the sense of expectancy from new Tablets devices, has halted all but the most fervent demand for the existing Nintendo DS and DSi ranges.
The DS series of devices is the most successful handheld gaming device ever, and shipped 130 million since the first model was launched up to June of this year. The new 3DS will come to market now on February 26th next year in Japan and cost around $300.
The result is that Nintendo has cut its revenue target for the year ending March 2011 from $16.7 billion shaving off a massive $3.6 billion, taking it down to $13.1 billion and it said it would more than half its net income to around $1 billion, which would be negative in the first half up to September 30.
But this is perhaps just the first in what might be a long line of re-adjustments for the gaming industry, similar to those it had to make when PC gaming came along ‘ Sony has never had the same success as Nintendo with its PSP and successors in handhelds, but then again its handhelds have never been responsible for such a large percentage of its revenue, but further shocks may be expected as other gaming businesses issue their figures.
According to market researcher NPD the video game industry in August posted its worst Summer sales results in four years with the Nintendo Wii said to be shockingly low. But the revised Nintendo forecast barely touches the Wii sales, saying they may drop from 20 million shipped last year to 17.5 million. In its original forecast Nintendo had already set expectation at just 18 million.
One analyst commented that overall games sales in the US were only $5 million higher than the industry posted in 2006. Yes but perhaps he’s not counting sales of Apps on the iPod Touch, the new paradigm for games.
A variety of factors have been blamed for the weak games sales, from the lingering economic slowdown, high console games prices (when compared to App store prices), increased take up of online multiplayer features of games such as “Call of Duty: Modern Warfare 2,” and consumer fatigue with the Wii. For the first time in some years software sales across all the consoles and handheld platforms were also down.
Whatever the problem – recession, and the incursion into gaming from the Apple iPod Touch and iPad ‘ the answer for Nintendo was the arrival of its new 3DS, which will now not arrive until 2011, missing the critical holiday season.
Nintendo now expects to sell some 4 million 3DS and 15 million games for it n the month or so that it will be on sale in 2011, an unspecified reduction from its previous forecast as the DS numbers were all lumped in together.