Nintendo to Add Features, Target Women to Spur Sales of 3DS

Nintendo to Add Features, Target Women to Spur Sales of 3DS
Nintendo Co.'s 3DS handheld video game player. Photographer: Kimimasa Mayama/Bloomberg

Nintendo Co., the world’s biggest maker of game players, will add functions to its 3DS and target women to spur demand, after sales of the device slumped and led the company to slash its profit forecast to a 26-year low.

The upgrades will include a feature to allow users to record movies in 3-D, President Satoru Iwata said at a briefing in Tokyo today. The Kyoto-based company also plans to unveil a pink version of the product next month to attract female customers and introduce a tennis game next year starring Nintendo’s flagship character Mario, he said.

The features may test Iwata’s ability to restore investor confidence in a stock that’s tumbled more than 80 percent since its 2007 high as users turn to Apple Inc.’s iPhone and Facebook Inc.’s online service to play games. Sales of the 3DS will probably miss Nintendo’s annual target this year even after prices were slashed by as much as 40 percent last month, according to analysts surveyed by Bloomberg News.

“Today’s announcements were disappointing relative to what the market was hoping for,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. “The new Mario titles and the additional movie-camera function aren’t enough for the company to meet its targets during the Christmas shopping season.”

Nintendo fell 5.1 percent to 12,320 yen at the 3:10 p.m. close in Osaka trading, extending this year’s drop to 48 percent. The stock, which climbed to as high as 71,900 yen in 2007 when the motion-sensing Wii console was selling out in stores, fell to a seven-year low of 10,900 yen last month.

3DS Target

3DS sales will probably be 16 percent shy of the company’s annual target of 16 million units even after Nintendo cut prices, based on the average estimate of four analysts surveyed by Bloomberg News. The game maker may only sell 2.5 million 3DS players halfway into the fiscal year, which ends March 31, according to Macquarie Group Ltd.

Yasuhiro Minagawa, a spokesman for Nintendo, declined to comment on the possibility 3DS sales will miss the target.

Analysts at Macquarie and Cosmo Securities Co. said before today’s event that the creator of the “Super Mario Bros.” franchise should introduce more major titles or consider developing games for social networks.

’Monster Hunter’

The game maker showed 43 titles for its 3DS and other consoles at the conference. Among titles to be released for the handheld include Capcom Co.’s “the Monster Hunter 3 (Tri) G” in December and the "Paper Mario" in 2012, Nintendo said. Capcom said it will also develop the “Monster Hunter 4” for the 3DS.

Nintendo will introduce a slide pad to allow users to play the “Monster Hunter” easier for 1,500 yen in December, it said on its website today.

Nintendo’s 3DS conference precedes this week’s annual Tokyo Game Show in Japan, where about 200 game-related companies plan to showcase their products. Sony Corp. plans to unveil details of its sales strategy for the new PS Vita handheld player on Sept. 14.

The company, which sells the 3DS for $170 in the U.S. and 15,000 yen ($195) in Japan, is also losing customers because smartphones offer cheap and good enough titles to attract adults who play games occasionally, said Michael Pachter, an analyst at Wedbush Securities Inc. in Los Angeles. Nintendo 3DS games start at about 4,000 yen, while games for the iPhone sell for a fraction of that price and are sometimes free.


“They can’t compete with free or $0.99 downloads,” said Pachter, who has a “neutral” rating on the stock. He estimates 3DS sales will only reach 10 million units this fiscal year and Sony’s introduction of its next portable player, the PlayStation Vita, outside of Japan in 2012 will probably further erode Nintendo’s market share, Pachter said.

The 3DS didn’t start out as a flop. On its launch in Tokyo late February, the product drew lines of as many as 2,000 people outside Yodobashi Camera Co.’s store in the electronics shopping district of Akihabara. In March, Nintendo said the 3DS’s first day of sales in the U.S. were higher than the day-one results of any previous Nintendo handheld. The result: 3.6 million units were sold worldwide by the end of March.

Then demand collapsed, with sales tumbling 80 percent to 710,000 in the following three-month period, prompting the company in July to announce price cuts and an 82 percent reduction in its full-year profit forecast. Iwata said at the time the company cut the price so soon after its introduction because of lower-than-expected demand for the 3-D device.

Wearing Off

The boost from the price cuts may be wearing off. In Japan, the company sold 55,264 units in the week ended Sept. 4, down 74 percent from three weeks earlier, when the price cuts went into effect, according to research firm Enterbrain Inc. In the U.S., Nintendo’s biggest market, August sales were estimated below projections for Japan, according to research firm NPD Group.

“It’s difficult to achieve 16 million, especially considering” the sales figure in the U.S., said David Gibson, a Tokyo-based analyst at Macquarie, who has a “neutral” rating on the stock. He expects Nintendo to sell 14.5 million units this fiscal year.

While Nintendo plans to release the “Super Mario 3DLand” and “Mario Kart” for the 3DS later this year, the lack of bestselling titles starring Nintendo’s iconic Italian plumber or Pokemon characters may have undermined demand, said Satoru Kikuchi, an analyst at Deutsche Bank AG. The 3DS is unlikely to repeat the success of Nintendo’s DS handheld because adults are more likely to play games on smartphones now, Kikuchi said.

“Nintendo should consider embracing social networks, even though it’s going to be a latecomer,” Koichi Ogawa, a portfolio manager at Daiwa SB Investments Ltd. in Tokyo, said before today’s event. “Even with the price cut, it’s hard to lure consumers as various platforms including the iPhone and iPad are available now. Those people won’t use 3DS to play cards or mah-jongg.”

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