Nintendo Co. has slashed the price of its 3DS portable video game device from 25,000 yen to 15,000 yen, following sluggish sales of the hand-held game console since its release in February.
The poor sales performance of the 3DS is seen as partly due to a shift in the video game market from traditional consoles, in which Japanese firms once had an advantage, to smartphones.
On Thursday morning, when the price cut went into effect, about 30 people had formed a line outside major electronics retailer Yodobashi Camera in Akihabara, Tokyo, to buy the discounted 3DS devices.
After selling 3.61 million 3DS devices globally from its February launch through March, Nintendo sold only about 710,000 units between April and June.
Domestic sales have also been sluggish and are much lower than sales of the Nintendo DS, which was released in December 2004.
Industry analysts said the slow sales of the 3DS are due in part to a lack of games on the market that showcase the beauty of 3D graphics.
The poor reception of the device may discourage game makers from developing new titles. If this happens, Nintendo will find itself on the ropes.
Nintendo President Satoru Iwata said, "We want to regain market share by lowering the price."
Nintendo's operating profit for the April-to-June quarter of fiscal 2011 fell into the red for the first time.
Nintendo's stock price, which was in the 25,000 yen territory prior to the release of the 3DS on Feb. 26, fell to 11,430 yen on Thursday.
The dwindling sales of the 3DS may negatively impact sales of the Wii U video game console, the next generation of the popular Wii system. Industry analysts said the deep discount is timed to coincide with the year-end shopping season.
According to video game magazine publisher Enterbrain, Inc., domestic sales of home-use video game hardware and software in 2010 totaled 493.6 billion yen.
The figure fell in the past three years and is about 30 percent lower than the peak sales posted in 2007.
Nintendo has increasingly targeted its products, such as the DS console, to light gamers who enjoy easy-to-play games. But the move might not be enough.
Eiji Maeda, senior analyst at SMBC Nikko Securities Inc., said, "It's possible that many users are shifting to smartphones, which users can play an increasing number of cheaper games on."
Later this year, Sony Corp. will release the PlayStation Vita, a next-generation portable device that will succeed Sony's PlayStation Portable.
The two models will be priced at 29,980 yen and 24,980 yen, nearly double that of the marked-down Nintendo 3DS.
Kazuo Hirai, executive vice president of Sony, said, "Some people praised [the PlayStation Vita] as being reasonably priced, considering its many functions. We don't feel a price cut will be necessary."
Depending on how well the device performs on the market after its release, Sony may also be forced to review its sales strategy.
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