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July 31, 2011 / Ryan Robba

The 3DS Price Drop – Nintendo’s Genius Plan

Nintendo’s recent announcement of a 3DS price drop just months after launch has left fans wondering whether they were excessively arrogant and idiotic in thinking that the Nintendo 3DS could sell like hotcakes at a $250 price-tag with very few must-have games.  However, was this really arrogance, or was it a stroke of genius in what is actually a master plan from Nintendo?

Early reports suggested that the 3DS costs Nintendo $100 to make – and even though later reports suggested that number was actually higher, many analysts agree that $100 is a fairly realistic figure. Now, Nintendo launched the 3DS with a hefty price-tag of $250 – enough to generate heaps of profit. Perhaps, Nintendo intended to cut the price all along – they simple priced high in order to extract a lot of money from pure, loyal fans who would buy the system at launch regardless of the price – this worked, considering over 4 million people have already bought the 3DS.  Then, they could offer 20 free game downloads to early adopters – these require few costs on their part, but are sufficient enough to please the fan base and early adopters.  So, financially, a $250 launch was a stroke of golden genius.

On a strategic side of things, the $250 price makes even more sense. Despite many people stating otherwise, Sony’s Playstation Vita is a major competitor of Nintendo’s 3DS system. The Vita incorporates far more advanced features (sans glasses-free 3D) and much more powerful processing power – this means it’s production costs would be far higher than those of the 3DS. Sony knows the Vita costs far more to make than the 3DS – so they know they will need to sell at a loss to compete with Nintendo’s pricing. Nintendo had picked up on this – so they chose a price they knew Sony would be willing to drop to – $250. If Nintendo had launched the handheld at the new $170 price, then Sony would not have been able to match their price and would have simply gone for a higher price to reduce loss (probably $300-$350 – as most analysts initially predicted). Launching at $250 meant Sony would try and replicate Nintendo’s pricing, and sell at considerable loss – which they did. Then, just months after Sony announced the Vita’s price, Nintendo reduced the 3DS’s price to what it could have been at launch, leaving Sony with a console selling at a massive loss, and still costing a potentially decision-changing $80 more than the 3DS.

All things considered, could Nintendo really have had a master plan all along? A $250 price tag ensured that they got quick money in their pocket, and lured Sony into competitive pricing, which, in turn, could result in them losing millions of dollars. Now, Nintendo are left with a $170, extremely affordable handheld which only loses Nintendo several dollars, and is now set to be the must-own gadget of Christmas 2011.


One Comment

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  1. WEL / Jul 31 2011 19:49

    if their master plan was to screw up early adopters then they can go fuck themselves in the ass for all I care. They are doing bussiness at the expenses of the fans.

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