Nintendo 3DS Sales Expected to be Strong but Won’t Match Previous-Generation DS

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Nintendo Corp.'s strategy of promoting the connectivity and local networking features of its newly released 3DS handheld gaming system in the United States will help drive rapid adoption of the device this year.

The 3DS's 3D graphics and its unique approach to network services has prompted IHS to forecast a global installed base of 11.6 million for the device by the end of 2011. While this represents strong performance, growing competition from the iPod, iPhone and Android smart phone and tablets will prevent the 3DS from matching the sales of the previous-generation Nintendo handheld, the DS.

iSuppli's study shows that by 2015 a global installed base of 70 million 3DS devices. This compares to total sales of DS/DS Lite of 91 million at a comparable point in its sales cycle. "Nintendo's accent on network services in the key U.S. market represents an attempt to convince users to carry their 3DS systems with them at all times and to engage with the platform everyday and in every place," said Piers Harding Rolls, lead games analyst at IHS. “This engagement strategy, alongside 3-D graphics, camera and video, is key to Nintendo competing with upcoming devices from Sony and also from non-specialist smart phones, entertainment devices and tablets, which offer a legitimate alternative to handheld consoles."

Nintendo previously announced similar services in both Europe and Japan.

Among the connectivity features of the 3DS is StreetPass, a local networking function that allow players to interact with one another through their devices. Players are sent new challenges and content by other users that are passing by. They also can exchange game data such as high scores and game characters. The local network connectivity is meant to encourage users to carry their 3DS with them on their travels and to instill some "magic" around the 3DS community.

Nintendo also is highlighting SpotPass, a 3DS Wi-Fi capability. SpotPass enables the handheld console to connect automatically to wireless local area networks and Wi-Fi hotspots, with content updates pushed to devices even during sleep mode. Furthermore, Nintendo has announced a nationwide deal with AT&T to offer free 3DS user access to more than 10,000 Wi-Fi hotspots, allowing players to obtain free content updates.

Nintendo also has entered into a deal with Netflix to showcase the networked services of the 3DS for U.S. customers.

The agreement will allow movies and 3DS trailers to be streamed to Netflix customers on the 3DS, extending Nintendo's current arrangement with the bestselling Nintendo TV console. Furthermore, a Nintendo curated short form video service offering comedy and music videos also will be made available.

Through these various efforts, Nintendo hopes to leverage what it feels are the unique aspects of the display and connectivity features of the 3DS. The connectivity will be essential for various forms of distribution, while the automatic connection to networks and exchange of content with local users will emphasize the social aspects of the device. In turn, the social functionality will be a core aspect in convincing consumers to use the 3DS on a regular basis and take advantage of the platform’s ability to compete with other similarly connected devices while consumers are on the move.

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