The Decline of the Italian Plumber

When Nintendo launched the 3DS in March of this year it was fairly safe to assume that the all conquering Italian Plumber would break new ground with a new found audience, its brand new 3D technology, built in camera and bells and whistles was sure to have people lining up in droves eager to experience the valhalla of handheld gaming. Or was it?, latest figures show a disasterous sell through of the handheld which has forced Nintendo to commit Hari Kiri on the retail price and dropping the units retail price by up to a third in an announcement that went global today, in the US the $249.99 figure will be axed to a more shopper friendly $169.99.

Nintendo sold its entire allotment of 400,000 Nintendo 3DS units during its February 2011 release in Japan,In Europe, Nintendo managed to offload 303,000 3DS units during its first two days on sale and initially it was a good sign that the handheld market was good for another rinsing. However, a bad ecomony, inflation and a poor launch title lineup have eroded much of the initial sheen that Nintendo came to the market with. Nintendo reported a net loss of 25.5bn yen ($324m, £201m) for the April-to-June quarter, compared with a loss of 25.2bn yen last year.Nintendo's total sales during the quarter fell by more than 50% to 93.93bn yen. The lower price aims to create "momentum" for the console and "accelerate its market penetration toward the year-end sales season," Nintendo have stated.

The lower price will no doubt have a strong effect particularly during the Christmas season but unless Nintendo can deliver a much broader range of titles it will struggle to reinforce consumer confidence. Buyers are extremely savvy when buying into tech, price is a core motivator for purchasing but price alone will not commit consumers into a device that can't sustain its users with product that fully embraces the new tech it contains. The continuing rise of smart phones, tablet devices and online social games all take market share away from Nintendo. As for the economy, families are buying less and have less money to spend on luxury items. The increased VAT in the UK from 17.5% to 20%, movements on taxation and tax credits for families and increased fuel prices all have a say in what people are prepared to spend money on.

For years Nintendo has been complacent about its place within the videogame market throwing vast sums of money at Celebs such as Beyonce, Kylie Minogue, Ant & Dec and Helen Mirren ( Dame Helen Mirren was paid £500,000 to promote wii fit for ads that lasted no more than 30 seconds) in advertising designed to show a broad user for its products. While no one can deny the Wii Fit has been a success in terms of market penetration it makes little difference to the money men at Nintendo who are counting the costs of a tough economic climate. By all intents and purposes Nintendo had a pretty strong E3 earlier this month but it hasn't quite hidden the fact that the latest figures show a company literally haemorrhaging cash and is in more need of an Italian plumber than we are.