Vidgame giant struggles to sell new tech

Just four months after the high-profile launch of its 3DS handheld gaming system, Nintendo is acknowledging that it’s got a problem.

The videogame giant announced plans Thursday to slash the price for the 3DS by one-third — from $250 to $170 — effective Aug. 12. The move came as the company reported fiscal first-quarter revenue down more than 50% from the previous year and a $328 million quarterly loss. It also cut its projected earnings by 82%.

Nintendo hopes the price cut will lay the groundwork for a better holiday season for the game device, which lets users play games in stereoscopic 3D without needing special glasses. It also plans to release several high-profile games over the next few months to drive momentum, including “Super Mario 3D Land” and “Mario Kart.”

The 3DS got off to a strong start in the U.S., but sales quickly petered out. In the company’s fiscal first quarter, Nintendo sold just 710,000 3DS units worldwide — with only 110,000 moved in the U.S.

“It is now clear that the combination of these new features is not necessarily easy to understand,” said Nintendo CEO Satoru Iwata in April. “The value of 3D images without the need for special glasses is hard to be understood through the existing media. However, we have found that people cannot feel it just by trying out a device.”

To avoid a backlash from the system’s early adopters, Nintendo also announced it would give existing owners of the 3DS 20 free downloadable games from the Nintendo eShop — 10 upgraded games from the Nintendo Entertainment system in September and 10 Game Boy Advance ports by the end of the year (these, it says, will be made available only to consumers who bought the 3DS at its original price).

Nintendo was criticized for the 3DS’ $250 launch price, which was too high, many thought, given consumers’ shifting habits when it comes to mobile gaming. The iPhone and other smartphone devices have been stealing away audience as consumers are embracing “snack” gaming at 99ยข per title versus the $40 a 3DS game costs.

Iwata attacked this pricing philosophy earlier this year at the annual Game Developer’s Conference in San Francisco.

“Game development is drowning,” he said. “Until now, there has always been the ability to make a living (making games). Will that still be the case moving forward?”

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