Nintendo to Roll Out 3D Gaming System Next Year

Nintendo’s jump into the 3D gaming world won’t happen until 2011.

Nintendo 3DS
Source: Nintendo
Nintendo 3DS

The video game company on Wednesday announced that its 3DS portable system, which lets owners play games in stereoscopic 3D without the need for special glasses, will go on sale in Japan next February — and will hit U.S. and European stores in March.

While U.S. pricing hasn’t been set, enthusiasts should brace for a hit. In Japan, the 3DS will cost 25,000 yen (roughly $299).

That’s something of a departure for Nintendo , which has historically worked hard to keep prices in a range where the mass market will have immediate interest. 3D, though, is a new technology and still carries a premium — and glasses-free technology is a step beyond what even television manufacturers are offering today.

The pricing could be a deliberate move, though, to keep demand under control, as Nintendo may currently be supply constrained. Part of the Wii’s success was its perception as a must-have item for so long. Retailers could not keep the systems in stock, which only fueled consumer’s interest. The company would be ecstatic if the 3DS had that same reaction.

Analysts expected the Japanese launch of the 3DS would occur in time for this holiday season. So, it seems, did Nintendo, which lowered its hardware expectations for its fiscal year from 30 million units to 23.5 million. (Ongoing soft demand for the current DS handheld units was also blamed.)

The 3DS is a gamble for Nintendo, which after years of being the predominant player in the handheld gaming space, is now facing its most serious competitor. Apple devices, such as the iPhone and iPad, have captured a significant portion of the market. And phones equipped with the Android operating system are growing just as fast.

Meanwhile, Sony is gearing up to launch a new PlayStation Portable gaming system — dubbed the PSP2. While the company has not formally announced the PSP2’s existence, many developers have acknowledged they are in the process of developing games for the system.

No portable system has true 3D capabilities, however — and critical reaction to the 3DS at E3, the video game industry’s annual trade show, was extremely favorable. Analysts agree, saying the system could let Nintendo once again stand out from the crowd.

“As smartphones and connected tablets gain share in the casual and handheld game market, the 3DS will offer consumers a unique and differentiated experience combined with Nintendo’s historically strong first-party software lineup (e.g., Mario, Zelda, Pokemon, etc.),” says Colin Sebastian of Lazard Capital Markets.

The question is: Will 3D be enough to turn people away from their smartphones?

Pricing the system in the neighborhood of $300 makes it more expensive than the iPhone — putting Nintendo at an instant disadvantage. Beyond that, the games will be substantially more expensive than apps, as well.

While the company did not announce software prices Wednesday, current DS titles average $30 — with popular games (like Pokemon) sometimes hitting $40. Some industry observes believe the company will add a premium on top of that for 3D games. Even if it doesn’t, however, the pricing gap remains.

Nintendo is positioning the system as more than just a gaming device, though. External cameras will allow users to take and view their own 3D pictures. And the company has had conversations with Hollywood studios to incorporate home video releases of 3D films into the catalog – though it did not further detail those talks Wednesday.

While it’s confident in the product, Nintendo acknowledged that it faces a difficult battle. It hopes to convince people in the same manner that made the Wii and original DS a success — by putting it in their hands and letting it sell itself.

“We are not taking the success of the 3DS for granted,” said Satoru Iwata, president and CEO of Nintendo. “The value of the 3D experience can be understood only by getting people to try it out.”

Questions? Comments?