The historic price drop of the 3DS announced overnight by Nintendo is a transparent acknowledgement by the most successful company to ever make video games that it is struggling.
Nintendo cut the price of its flagship gaming handheld by an extraordinary 32 per cent, while making some dramatic turns. It appears to be pivoting to de-emphasise 3D and is amplifying its downloadable lineup to put the 3DS on track to have more games on sale through download than in physical stores — a likely first for any dedicated piece of video game hardware, be it handheld or console.
There is no doubt that miserable sales of the 3DS spooked Nintendo into action. Prior to the release of the 3DS sceptics wondered if Nintendo was rushing into a repeat of its Virtual Boy mistake, creating a 21st century version of the 1995 virtual reality headset that had previously been Nintendo's loftiest flop.
Nintendo's crisis, however, is more like the one its rival Sony has spent the last half decade trying to recover from. The 3DS has become Nintendo's PlayStation 3. It is in Nintendo's interest to invalidate that analogy in under five years.
Like the PS3, the 3DS launched at a questionably high price, $US600 for Sony and $US250 for Nintendo.
Both machines followed juggernauts, Sony's succeeding the competition-obliterating PS2, Nintendo's the twin powers of the DS and Wii.
Each quickly confronted its stiffest challenge from competitors it didn't previously have to sweat, the PS3 from the wimpy, wacky but wonderful Wii rather than the presumed number one contender of the Xbox 360. The 3DS has not battled Sony's PSP but the accidentally important Apple and Android digital swiss army knives of entertainment, machines that empowered the makers of Angry Birds and hordes of other cheap games to turn smartphones into the premiere aspirational portable gaming devices, gamers who desire buttons or control sticks be damned.
A foolish Nintendo would not have reacted as it did last night. If the 3DS were another Virtual Boy, it could not.
The Virtual Boy was a boulder. Its graphics were always going to be only red; it was always going to have to be worn on its player's head. The 3DS, with its 3D effects merely being optional and its innards malleable with firmware and virtual storefront updates, is at least a shrub, and it is now getting a new pruning, as the PS3 did.
Sony slowly transformed its too-expensive PS3 from the inside out, dropping support for PS2 games while building its online store, repeatedly revising its operating system, drip-feeding new features, dropping price, restoring rumble to its controllers and eventually slimming the console. It adopted the Xbox 360 strategy of changing the console from within, perhaps too slowly, which is one reason it still lags behind its competitors.
Through all of this, there is little talk of 3D, which was boosted by Nintendo, as it was by movie companies, as the next big thing gamers would flock to. Hollywood studios are suffering from consumers' own disinterest in 3D and now Nintendo, in its newest 3DS commercial in Europe (see it on the left), isn't even promoting the feature. This follows Nintendo's own top personnel saying last month that it would be fine for 3DS owners to play the system with the 3D effects turned off.
Nintendo's 3DS is in dire straits today, and Nintendo is reacting drastically. Some will say the company is doomed and we may indeed see the limit of the dedicated handheld gaming market now in sight, but the drastic moves of last night allow for a rebirth. A humbled Nintendo gets a do-over next month when the price drop kicks in. The 3DS will finally be affordable, finally be a bargain compared to an iOS device and, as its digital shop grows, may finally be a player as a device for downloadable games.
Nintendo needs to avoid Sony's mistakes and slow recovery of the PlayStation 3, as the 3DS era may not be over, but the era of untouchable Nintendo handhelds is now a thing of the past.