Smartphones not to blame for sluggish 3DS sales, says Iwata

By Steve Watts, Aug 03, 2011 9:15am PDT

Between a hefty price cut, generous make-good offer for current users, and an executive pay cut, Nintendo has made no bones about its 3DS sales woes. But company president Satoru Iwata objects to the idea that smartphone competition is the driving factor, instead blaming slow sales on a lack of software.

"We have repeatedly investigated whether social games, as well as smartphones, are actually affecting our business," Iwata told investors (via CVG). "We got the same results in our latest research that there are no causal correlations. On the other hand, it is the fact that a great variety of games are available at very low prices for smartphones. Naturally, consumers will choose more affordable ones if the video games we provide do not have much more value than those available for smartphones."

Iwata went on to suggest that consumers recognize the "unique value" of Nintendo's retail games. "The biggest reason of the sluggish sales in this first quarter is that there were no big hit software titles in this period," he said. "With the just-announced markdown, we intend to drastically change the situation toward the end of this calendar year, to realize a situation that a number of you cannot imagine today and to have many people acknowledge that there are no causal relationships between our business and either smartphones or social games."

Even if the price cut leads to higher 3DS adoption rates, the price of smartphone games seems to be the elephant in the room. Many 3DS titles cost roughly $40, while the iPhone market saw a race to the bottom with many titles being offered for 99 cents, or free with microtransactions. Nintendo has a strong stable of first-party games on the way, but is counting on consumers to put stock in games with higher production values.

"The keyword 'social' has rapidly become very popular in these last two years and some say that Nintendo may be behind the social age," he said, directly addressing the growing sector. "They might mean that Nintendo, uninterested in so-called social games from a business standpoint, fails to ride on the boom of social games," Gamasutra overheard.

"However, I have a totally opposite view - Nintendo has been a company attaching a high value to human relationships for a long time. We have our roots in the playthings connecting to people, as the company's original business was playing cards. Therefore, we have always been aware of the human connections created by each of our products."

Iwata insists that while social networking facilitates player relationships over long distances, he says "there has been no best answer yet to the relationship between a real network and a virtual network." He says Nintendo's goal is to provide both in-person experiences and virtual networks, including a mixture of the two with features like the 3DS StreetPass.

Nintendo has been somewhat reluctant to embrace smartphones, which is unsurprising since the company is so keen on developing for its own platforms. However, when the company announced a Pokemon-based app for iPhone and Android devices, their stock value ticked upwards -- before settling back down upon comments that Nintendo wasn't investing seriously into the smartphone market. Analysts took this as a sure sign that Nintendo should look more seriously into developing for these platforms, but the company seems to be sticking to its guns.

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