The Last Strong Part of Nintendo’s Business Is In Trouble

Be it free-to-play mobile games or the Nintendo NX, the company will need a boost soon.
February 28, 2016, 2:00pm
Image: Nintendo

The common refrain when it comes to Nintendo's economic troubles is that the sales of handhelds prop up whatever else the company is doing. Even Shigeru Miyamoto admits that the Wii U is a flop, but Nintendo survives sluggish sales thanks to the 3DS, the latest version of its portable device, a category the company dominated since the time of the first Game Boy.

Well, the days when Nintendo can count on its portable business may very well be coming to an end. The company's recently released a modified financial forecast that includes a drop to 6.6 million units in expected hardware sales for the Nintendo 3DS family from April 2015 to March 2016. That from the previously forecasted 7.6 million, making it an approximately 13-percent drop—or 1 million flat difference—in expected sales. Fewer systems sold is also represented with a drop in projected 3DS game sales from 56 million to 47 million.

Which is all to say that Nintendo's predicting a significantly less profitable outcome for the 12-month period. The company's new forecast specifically points to the sales performance up to the end of December 2015 and the declining Japanese yen as reasons for the modification. Whatever the case, the company remains profitable, but at nowhere near the initially projected level.

It might be tempting here to say, "Well, the Nintendo 3DS is in its fifth year! Of course sales have slowed significantly at this point." Unfortunately, that is just not the case for Nintendo handhelds historically. The Game Boy Advance was selling about twice the amount of units at this point in its life cycle, and the Nintendo DS sold over 31 million units at the same point according to a May 2009 Nintendo report.

Ars Technica has a lovely chart comparing the year-to-year sales of the Nintendo DS, Game Boy Advance, and Nintendo 3DS, and it paints a dismal picture for the future of Nintendo's current portable. In fact, things have looked poor for the 3DS for years now. Compared to the other two, the handheld peaked quickly and has never gained the same momentum as its predecessors.

And let's be clear: the fragmentation of the line does Nintendo no favors here. Is there a consumer alive that can explain the difference between a Nintendo 2DS, a Nintendo 3DS, a Nintendo 3DS XL, and a New Nintendo 3DS without getting horribly turned around? That's not even getting into which is actually the better platform for a given person, and attempting to verbally communicate to a store employee that you're looking for a new New Nintendo 3DS rather than just a new Nintendo 3DS.

This slump only puts Nintendo's partnership with DeNA, a Japanese mobile game publisher, into a more critical light. So far, the only result of the partnership is the avatar software Miitomo, which isn't really a game, but the fear is that DeNA—described by Motherboard previously as "the mobile, free-to-play devil"—will aggressively monetize future games, as the most profitable games do on the mobile app stores. If the 3DS continues to flail, making a Mario or Zelda game laden with microtransactions might seem more appealing to Nintendo.

The other possible savior is the Nintendo NX, the company's upcoming console. We don't have any solid details about the NX yet, but rumors and common sense point to the possibility that it will be some kind of handheld and home console hybrid. If Nintendo were to put its full creative force behind a single device, that could possibly give the company the boost it needs right now.

Regardless, one of those strategies better work, because if they don't, Nintendo's in trouble.