2DS Launch Makes Commercial Sense
The launch of the 2DS makes commercial sense. IHS believes that the market for dedicated handhelds is narrowing, but with younger handheld gamers less likely to overlap with smart device users than typical 18-35 male gamers. Unlike Sony with its PS Vita, this younger consumer is Nintendo's core user for its handhelds, and the 3DS, while performing better since 2012, is still relatively expensive and also able to display 3D, which carries a warning for younger children.
IHS forecasts that Nintendo will sell-through just under 10 million 3DS devices in the second half of 2013. While we believed that Nintendo's 3DS shipment forecast of 18 million units for this financial year was a stretch, the news of this 2DS launch makes that forecast for its handhelds much more achievable.
Filling a Gap in the Portfolio
Launching a cheaper, non-3D, non-hinged product plugs the gap left in Nintendo's portfolio created by the decline of its original DS platform. It is also critical that any new product is able to play 3DS games, and with this broadening of the market, Nintendo will hope that third-party publishers make more commitment to the 3DS/2DS platform moving forward.
The 2DS launch removes the pricing pressure on the higher-end 3DS and gives the company a path to up-sell from 2DS to 3DS, with both the hinged form factor and 3D as a selling point. Launching a 2D version of the 3DS is also an admission by Nintendo that for many younger users the 3D aspect of the device was under-used and not of that much interest. Overall, this move allows Nintendo more flexibility to engage a wider audience while protecting its hardware margins across its handheld devices.