3DS Demographic Changed After Price Cut, Nintendo Chief Says

Since the price reduction, there was an increase in the number of purchases by kids, as well as by females, Iwata said. The changes were reflected in the company’s Club Nintendo data, he said. Females were also spurred to buy the 3DS when Nintendo shipped a new “misty pink” SKU in Japan late last month, he said. More males have registered for Club Nintendo than females, but those who registered with the new pink SKU were “predominantly female” -- more than 75 percent, he said.

The shift in 3DS customer demographics was also reflected in what games they're buying, Iwata said. The title bought most often with prior 3DS hardware SKUs was Nintendo’s Legend of Zelda: Ocarina of Time 3D, but its nintendogs + cats has been the No. 1 title among buyers of the pink system, he said.

Nintendo was seeing a similar shift to female consumers and kids in Japan, the U.S. and Europe, Iwata said. But he said “there are typically only a few opportunities for” most kids to get a videogame, including birthdays and a small number of holidays, he said. Therefore, Nintendo had “yet to see a massive purchase movement by that age demographic,” he said. But he said research indicated that the number of kids who would like a 3DS as a Christmas gift is “rapidly increasing."

The company decided that for this fiscal year ending in March 2012, “driving the sales” of 3DS hardware is “our main priority,” Iwata said. In the process, Nintendo has “sacrificed our profitability for this fiscal year,” he said. For the fiscal year ending in March 2013, however, Nintendo expects the profitability of 3DS hardware “to improve significantly,” he said. The company is “not anticipating a situation where we must expand the hardware by generating a large loss on the sales of the hardware,” he said.

Iwata conceded that Nintendo “failed to offer strong software titles without long intervals in the first half of this year” for the 3DS. It was “planning to launch software in the first half of this year without too many intervals,” he said. But Nintendo wound up “delaying the launches of multiple software titles, and we could not make up for it,” while third-party 3DS titles “did not become huge hits either,” he said.

The 3DS game release slate is much stronger for the back half of this year than it was in the front half. But Iwata said Nintendo “intentionally delayed the launch of some software titles to early next year.” That’s because when the company looked at the software lineup for the year-end sales season, it was “so dense that, if we added any more software, the total sales would not increase,” he said.

Nintendo executives have disputed claims that the games that sold best for the Wii were mainly its own first-party ones. But in the new Q&A comments, Iwata conceded that Nintendo “could not show a good sales record for third-party Wii titles,” and because of that third-party developers “did not sustain their passion to create software” for the console. While there were several third-party titles that became hits outside Japan, “there was also a challenge that the Wii was not fully capable of catering to the needs of, for example, first person shooter games, the users of which prefer platforms compatible with HD TVs,” he said. Nintendo intends “to improve the situation with” the 3DS and coming Wii U console, he said.

The company’s need to gear up for the coming Wii U launch also hurt its ability to have adequate 3DS game support, Iwata said. “The period when we needed to shift from” the DS to the 3DS “overlapped with the period when we had to prepare for” the Wii U, he said. “If there had been no overlap, or if there had been a three or four year interval, Nintendo could have focused upon just one new hardware system while also taking care of two existing platforms,” he said. But because Nintendo “had to take care of two existing platforms and two new ones, it has been more of a challenge,” he said. “The longevity of the Nintendo DS has created this challenging aspect for us today,” he said.

Nintendo is confident there will be strong sales of its new 3DS games Super Mario 3D Land and Mario Kart 7, Iwata said. Nintendo “cannot disagree” with people who asked why the company didn’t release those titles at the 3DS launch, he said. “We needed at least one” such title then, he said. By failing to have such title releases, Nintendo wasn’t able to effectively show to consumers the appeal of glasses-free 3D gaming, he said. The system’s appeal “cannot be understood unless people have hands-on experiences,” he said. Comments such as “I hear it is tiring on your eyes” and “I hear it gives you a headache” ended up prevailing “more than the real appeal of the product,” he said. “We could have done a better job in this regard,” he said.

The 3DS “will have a more substantial installed base after the upcoming sales season,” Iwata predicted. As a result, “the chances for” Nintendo’s StreetPass feature on the device “will increase at an accelerated pace,” he said. Nintendo was, however, aware of “concerns that StreetPass communications could be rare” in the U.S. compared to Japan, he said. That’s due to the “vast national territories” of the U.S. and its greater dependence on cars compared to Japan, where more people use public transportation including trains and buses, he said. StreetPass enables the 3DS to communicate with other 3DS devices via Wi-Fi.

Iwata also said he had “no definitive information on whether” Nintendo will “sell the Wii U in the red” to prevent the sort of weak sales it saw with the 3DS after the initial launch. Nintendo will try to make sure that whatever “caused the weak sales” of the 3DS “after the initial launch period … will not happen again” with the Wii U, he said.

Nintendo still has no intention of making games available for smartphones, Iwata also said. “When it comes to experiencing Nintendo software, we want people to do so only on our platforms,” he said. But he said the company will use social media more than it has to help promote its products. “Smartphones are quickly spreading as a means used mainly by the younger generations,” he said.

Iwata’s comments were made after Nintendo slashed its 3DS software shipment forecast for the fiscal year ending in March and said it expects to report its first fiscal year loss ever, of 20 billion yen (CED Oct 28 p4).