Earlier this week, Nintendo announced that its 3DS handheld gaming system turned in, to the surprise of many, stronger numbers in the US than its predecessor and the US’s best-selling game console, the DS. Total sales exceeded $1.2 billion and hit 4.5 million units for the first year compared to the DS’s first year of $540 million on 2.3 million units. It sold more than 9 million units of software, about 80% better than the 5 million sold for the DS.
Looking at Nintendo’s track record of awesome might have you saying, “So?” But the 3DS was initially a hiccup in that string of stellar domination when it hit the market. So much so that Nintendo had to drop the price, a tactic usually reserved for its competitors, and had its first quarterly loss since 2003. A measly 110,000 units were sold in its second quarter on the market. By contrast Sony’s newest handheld console, the PlayStation Vita, sold more than 300,000 units when it launched in Japan and those numbers were considered a mild disappointment.
Even with the question mark of how enjoyable (or even tolerable) the no-glasses 3D experience is on the 3DS, Nintendo still managed to turn around the console’s fortunes with strong content — not only Nintendo franchises such as Mario and Zelda, but signature third-party games such as Capcom’s Resident Evil, Namco Bandai’s popular Tekken fantasy martial arts fighting game, and nemesis Sony’s Metal Gear Solid stealth action mega hit.
Despite a smattering of hit titles at launch, such as EA‘s FIFA Soccer and Sony’s popular and acclaimed Uncharted adventure series, content may be the Vita’s biggest hindrance at this point. Its surprise hit Little Big Planet, for example, won’t bounce its way onto the console until the end of 2012. Like the 3DS, then, the hardware price tag may have to take a bullet for the team. The base model of the system (lacking 3G connectivity) comes in at the same price the 3DS asked at launch, $250. The 3G version comes in at $300. With its more sophisticated gaming experience and bevy of other selling points such as a brilliant OLED touchscreen, GPS, front and rear cameras, and home console-like controls, it would seem to offer better value.
Consumers haven’t taken the bait, though, despite many reviewers talking of the machine in glowing terms. Sony claims it has shifted 1.2 million units globally since last December’s launch, but sales continue to wane, even coming behind its predecessor the PlayStation Portable. Margins are typically at the straining point on console hardware anyway, though the Vita is reportedly in better shape there than its big brother, the PS3. So Sony would loathe cutting the price, particularly as it hasn’t had a string of rosy fiscal quarters like Nintendo has to cushion the blow.
Nintendo had to slash its console price to $170 to get it moving at the levels hoped for. If Sony can’t bolster its software catalog for the handheld more significantly, it may have to shave its Vita margins even thinner. That would be painful, but in a world flooded with more and cheaper mobile gaming options, it may have little choice as it tries to regain the dominance it enjoyed in its PlayStation 2 days.