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3DS

My 3DS Price Drop Reaction

by Mike Sklens - July 28, 2011, 8:21 am PDT
Total comments: 21

For me, this is 2007 all over again. In the summer of 2007, I bought an original iPhone (the 8GB model) for $600. A few months later, in September, Apple dropped the price to $400. The Internet exploded. It wasn't good. Apple's customers were furious that in just a few short months their phone was now available for two-thirds of its original price.

Apple responded almost instantly, by offering up a $100 Apple Store gift card to everybody that paid the original price. It seemed to quell things for them pretty well. Even though the gift card was only for half the value of the price cut, I felt fine. We all knew the iPhone's price was going to drop eventually, and that we would be paying more by buying it first. We just didn't expect it to happen so soon. By thanking us with the $100 gift card (essentially making the price cut only $100 in our minds) it made things OK.

When I woke up this morning to news of a price cut to the 3DS, it flashed me back to the summer of '06. The situation is almost identical, with the 3DS getting a 33% price cut within a few months of its launch. But Nintendo learned something from Apple's mistake. Rather than offering up the 20 free games as a reaction to customers' negativity, they did it up front in an effort to prevent the negativity from even setting in. I think it's a rather smart move. At the very least, it worked on me.

Take a look at the average price of NES and SNES games on the Wii Virtual Console. They are $5 and $8 respectively. Nintendo is giving us 10 of each. That's $130 in games, half of which are "exclusive" to the Ambassadors (though I seriously doubt that will last). $130 in games in reaction to a $70 price cut is a pretty good deal. Apple's $100 gift card was 50% of the iPhone's price cut. Nintendo's gift-of-games is almost 200% the value of their $80 price cut.

To be honestly, I don't really care about the NES games. They're good, but they've all been played to death. The GBA games on the other hand, are 5 of the absolute best. Even though I own all of them except Yoshi's Island (which I have on SNES), it'll be nice to have them all on one system. As for the NES games, I would have preferred a $50 eShop credit. But I'm not going to scoff at free games. Even if I only play half of the free games, that's still $65 worth of content, which is about the amount of the price cut.

I say good on Nintendo for being smart enough to handle this price cut about as well as they possibly could. It's nice to see them really backed into a corner and responding with some aggressive tactics.

Talkback

CericJuly 28, 2011

On the iPhone, thing.  I  bought a Windows phone when they first came out for $150 dollars,  the Very next month... They dropped to a penny.  I wasn't very happy but, its the early adopter tax.  I am very excited about the ambassador program because I think overall I've gotten my Money's worth out of my 3DS.  The fact that they are also going to give me 20 games that I probably consider buying to was going to buy anyways is excellent.  I may have played LoZ to death but having it on the go especially where I can just play in little chunks will be much appreciated.  Maybe I'll actually get through the Second Quest now.

oksodaScott Thompson, Associate EditorJuly 28, 2011

Maybe I'm just an ignorant caveman, but before I even read about the Ambassador program, I wasn't upset about the price drop so soon. I love the 3DS and I play it a lot more than I expected I would these first few months into launch (thanks, ironically enough, to the virtual console). I'm just glad more people will be able to get it now, and after the Vita price announcement, I knew this had to be coming.

But yeah, free games. That's pretty rad.

While I'm not the most qualified to talk of cost (I've got our review unit), but I've gotten enough fun out of the system to not be bummed about the $80 drop. Free games make me not give a shit at all, especially when it's a laundry list of awesome games on the GBA and classics on the NES.

CericJuly 28, 2011

Quote from: NWR_Neal

While I'm not the most qualified to talk of cost (I've got our review unit), but I've gotten enough fun out of the system to not be bummed about the $80 drop. Free games make me not give a **** at all, especially when it's a laundry list of awesome games on the GBA and classics on the NES.

NoA has successfully done there job.

StrikerObiMike Sklens, Podcast EditorJuly 28, 2011

I was going to comment on the Vita in the blog, but I felt like it was a separate topic. I'm really interested to see how Sony responds to this. They were in an amazing position coming out of E3 with a system that, to the average consumer, looked far superior to the 3DS at the same price point.


Nintendo has to blame themselves for the price and poor lineup affecting 3DS sales, but they also have to blame Apple. More and more people are playing games on their smartphones, thus negating the need for a dedicated portable gaming platform.


Nintendo has returned to their traditional loss leader strategy with this price drop. They are undercutting Sony and there is no way Sony can drop the Vita price any further (it's pretty obvious they are already taking a loss). They no longer have an advantage here. It's looking like PSP all over again.

Killer_Man_JaroTom Malina, Associate Editor (Europe)July 28, 2011

Quote:

It's nice to see them really backed into a corner and responding with some aggressive tactics.

What a line! It's hard to deny that Nintendo, for better or for worse, are usually very stubborn in their business practices. So yeah, it is great that they are adapting to market realities quickly and without annoying catches.

And to think, everybody was chuffed with the price of the Playstation Vita - I believe the common phrase at E3 was that Sony was "taking one for the team." But now Nintendo, even after taking $80 off the price tag, are still making a profit on each unit sold (the breakdown of component costs apparently put the 3DS at just over $100 to make).

Quote from: Killer_Man_Jaro

But now Nintendo, even after taking $80 off the price tag, are still making a profit on each unit sold (the breakdown of component costs apparently put the 3DS at just over $100 to make).

Actually, they're apparently selling it at a loss now, which makes the move even more surprising.

Killer_Man_JaroTom Malina, Associate Editor (Europe)July 28, 2011

Quote from: MegaByte

Actually, they're apparently selling it at a loss now, which makes the move even more surprising.

Is that right? I can't remember where exactly, although I think it was on these forums, but I could've sworn there was a table that broke down the costs of everything and it totalled at $102 or something like that.

CericJuly 28, 2011

Quote from: Killer_Man_Jaro

Quote from: MegaByte

Actually, they're apparently selling it at a loss now, which makes the move even more surprising.

Is that right? I can't remember where exactly, although I think it was on these forums, but I could've sworn there was a table that broke down the costs of everything and it totalled at $102 or something like that.

BnM has it quoted to easily find in the Price drop 3DS because of Vita thread.  It works out to being 100 and he give 50 for R&D to get it to $150.  I don't think Nintendo would cut to a loss.  Their is some speculation that the Translation has been misinterpretted  from Iwata meaning a Loss in Profits.

There are a lot of others costs, manufacturing, shipping, etc.

CericJuly 28, 2011

Quote from: MegaByte

There are a lot of others costs, manufacturing, shipping, etc.

That being said, I still don't think Nintendo would cut to a lost.

BlackNMild2k1July 28, 2011

Quote from: MegaByte

There are a lot of others costs, manufacturing, shipping, etc.

I believe it factored in manufacturing, but I don't know if that includes the actual assembly, which on a per unit basis should be relatively cheap (pennies). But I used the extra $50 per unit towards packaging (pennies), shipping (nickels) and R&D(dollars).

iSuppli's accuracy has never been verified, and you need to factor in retail cost.
Also, the Bloomberg translation has been confirmed. http://www.neogaf.com/forum/showpost.php?p=29653567&postcount=79

CericJuly 28, 2011

Quote from: MegaByte

iSuppli's accuracy has never been verified, and you need to factor in retail cost.
Also, the Bloomberg translation has been confirmed. http://www.neogaf.com/forum/showpost.php?p=29653567&postcount=79

I'm puzzled on why they would cut THAT hard and what the actual cost of a 3DS for Nintendo really is.

ThePermJuly 28, 2011

My reaction...Good! Now I will buy one!

to those early adopters
Be lucky you played it first, i still haven't even touched a 3ds, or seen one in person.

For myself (and the third parties), I'd rather have eShop credit, even at a much lower equivalent value, as I own most, if not all of the games on offer. Nintendo did offer credit with the early DSis, after all, and the Apple example in this post was also a credit offer. That said, I was very surprised by the extent of the move, and the offer is generous.

It's interesting that they're using the Ambassadors name. If you recall the Wii Ambassadors program, it was a much more active program, but was limited to Europe. Wii owners who got other Wii owners online got 500 points each time. Getting 10 people online gave every first-party Nintendo Virtual Console title. And at 20, all NES, SNES, and N64 games were available for free!

CericJuly 28, 2011

Quote from: MegaByte

For myself (and the third parties), I'd rather have eShop credit, even at a much lower equivalent value, as I own most, if not all of the games on offer. Nintendo did offer credit with the early DSis, after all, and the Apple example in this post was also a credit offer. That said, I was very surprised by the extent of the move, and the offer is generous.

It's interesting that they're using the Ambassadors name. If you recall the Wii Ambassadors program, it was a much more active program, but was limited to Europe. Wii owners who got other Wii owners online got 500 points each time. Getting 10 people online gave every first-party Nintendo Virtual Console title. And at 20, all NES, SNES, and N64 games were available for free!

That is generous.

Mop it upJuly 28, 2011

I now regret buying a 3DS, though I don't necessarily feel ripped off since that's just the nature of products. Prices drop over time, some sooner than others. What I regret is my decision, because I knew there was a possibility this would happen due to the slow sales and poor software lineup. I made a bet in which I should have taken more consideration, and it didn't work out for me.

Also, I don't think the comparison of $100 credit to $130 in VC games is very apt. VC games cost Nintendo next to nothing, so the real value of them is very low.

StrawHousePigJuly 28, 2011

Store credit would have been rad because there aren't many (*any* really, but only because of the way the eSHop payment system works) of the freebies I'm very interested in.

iSupply is a joke. A bad one at that. Oh really? It costs that much? Well make one, jackass!

So I had Matt do the translation on the Bloomberg statement, but it was still ambiguous, so he had a Japanese co-worker look at it, and they said it sounded like a hypothetical, not a confirmation that they're losing money. I guess we'll have to wait for further statements or the Q&A session to clarify.
Update: Q&A session seems to confirm the original assumption (this guy is at the investors' meeting): https://twitter.com/#!/gibbogame/status/96756408770498561

ThePermJuly 29, 2011

economy of trade

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