Market Watch

Nintendo 3DS Early Sales Indicators


Display Driver IC Forecast

At the latest financial results briefing, Nintendo announced that it had missed its target of shipping 4 million 3DS handheld consoles by the end of the March 31st 2011 financial year. Shipments for the quarter amounted to 3.6 million units.

The company identified a number of market issues that undermined sales including:

  • The recent earthquake in its home market of Japan and the ongoing impact of that disaster
  • A lack of compelling software for the device
  • A lack of understanding of the benefits and capabilities of the platform by consumers

One significant issue the company has identified is that marketing the platform is a major challenge. With 3D graphics a major selling point of the device, getting consumers to use the device is crucial and limits the impact of marketing via video, through TV and online ads for example.

Nintendo has stated that it intends to put more effort and investment behind educating consumers about the platform. It believes that previously-announced upcoming network services will help it deliver this message.

Analysis
While Nintendo missed its shipment target by 400,000k units this is very early days in the life of the device. As such we will not be adjusting our annual forecasts for the platform on the back of these early sales indicators. Our forecasts assume a slower adoption compared to the last generation DS based on a number of factors:

  • The price of the 3DS is relatively high and consumer confidence remains low in several major sales territories
  • Compelling 3DS software remains thin on the ground at this early stage
  • Marketing a 3D device is an expensive and tricky proposition that Nintendo has yet to fully master
  • There is increasing competition from other handheld devices - primarily smart phones - which offer an overflowing pipeline of cheap games content to users

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