economics

May 11, 2010

Nintendo Readies Portable Device for 3-D Games, Without Glasses

Filed under: Uncategorized — ktetaichinh @ 1:25 pm
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By DAISUKE WAKABAYASHI

TOKYO—Aiming to rejuvenate sales of its hand-held game machines, Nintendo Co. plans to sell a new portable 3-D gaming device that won’t require special glasses.

For months, Nintendo has been rumored to be working with chip makers on a new portable gaming device to succeed the DS, the best-selling portable videogame system ever, with more than 125 million units sold since its launch in late 2004.

Smartphones such as Apple Inc.’s iPhone have started to emerge as a threat to portable gaming devices like the DS, especially among casual videogame fans who are satisfied with simple and easy-to-play games.

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Bloomberg

A woman tries out Nintendo’s DSi LL hand-held game console, known as DSi XL in Europe and the U.S. at a game store in Soka City, Saitama Prefecture, Japan, on March 1, 2010.
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Kyoto-based Nintendo said the new device, which is temporarily being called the Nintendo 3DS, is scheduled to launch during the coming fiscal year ending March 31, 2011. The new system will also play current Nintendo DS games.

In a brief and unexpected statement, Nintendo released no additional information about the coming device’s price or functionality. The company said it would provide more details in June at the videogame industry’s annual E3 convention held in Los Angeles.

Shares of Nintendo soared 10% in Tokyo trading Wednesday morning.

From televisions to digital cameras, electronics companies are targeting 3-D technology as a way to revamp existing products. Sony Corp. plans to upgrade its PlayStation 3 console to play 3-D games with a free software upgrade, but consumers will have to buy a new television and glasses to play 3-D games at home.

Nintendo President Satoru Iwata told analysts in January that 3-D is “suitable” for gaming and that the company had interest in it, but expressed some doubts about whether everyone would want to wear glasses to play games in 3-D. The requirement of glasses to view 3-D images is often cited as a hurdle to the technology’s widespread adoption.

“Nintendo has a track record of incorporating new technologies to make its products pretty interesting,” said Jay Defibaugh, director of equity research at broker MF Global FXA Securities.

At the same analyst meeting, Mr. Iwata said Nintendo has been working on 3-D technology for years, secretly adding a feature into the GameCube, the predecessor to the Nintendo Wii, to display graphics separately for the right and left eye for the possibility of 3-D gaming. It was never introduced as a feature in the GameCube

Among all the potential applications of 3-D technology, videogames are placed at the top of the list because the graphics are already created in 3-D. What’s more, videogame fans are considered more likely to spend for a new technology like 3-D.

Almost all 3-D technology available now requires either battery-operated or color-filtered glasses. Most glasses-free 3-D technology are prototypes that require the viewer to stand in one location and keep their head perfectly still.

While Nintendo’s past track record with home game machines has been hit-or-miss, the company has always maintained a dominant position in hand-held gaming. Ever since it broke into the category with its original Game Boy portable game system in 1989, Nintendo has remained on top by appealing to its youth audience with game franchises such as Pokemon.
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When the DS was released, it was considered a step forward for portable gaming because it came with two liquid-crystal-display screens, one of which was touch-sensitive. It hit the market at the same time as Sony’s PlayStation Portable, a rival hand-held game machine, but Nintendo has sold twice as many DS units as Sony has sold PSP hand-helds. The PSP has sold about 60 million units.

The new 3DS comes at a time when existing DS sales are starting to slow.

Nintendo DS sales are expected to decline slightly this fiscal year from peak demand in the fiscal year ended March 31, 2009. The company is forecasting sales of 30 million units in the fiscal year ending March 31, down from last year’s 31.2 million units.

Even though more consumers are turning to the iPhone for casual games, Mr. Iwata has asserted that the iPhone isn’t a direct competitor to the DS, because they appeal to different customers. However, Apple has openly targeted the DS and PSP by saying those portable game devices don’t stack up to the iPod Touch or iPhone.

While Nintendo has maintained the same basic features of the DS, it has tried to refresh the DS line-up with new models. It launched the Nintendo DSi, which comes with a built-in camera, in November 2008. A year later, it added the Nintendo DSi XL, a larger-sized model that is targeted at older users.

Software sales for the DS are forecast to fall more dramatically, with an estimated 24% decline in the year ending March 31. Nintendo has suffered as piracy of DS games continues to eat into demand. Over the lifetime of the DS, the company has still managed to sell a staggering 688.3 million units of software.
—Juro Osawa contributed to this article.

Write to Daisuke Wakabayashi at Daisuke.Wakabayashi@wsj.com

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