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Nintendo to make a loss on every 3DS sold

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Traditionally, Nintendo sells its hardware for a profit right out of the gate. This is unusual practice in the video game industry; Sony and Microsoft happily absorb some of the cost of their consoles when first released, subsidising the price of the hardware to increase market penetration. With the recent news of drastic price cuts to Nintendo’s ailing 3DS, it appears the Japanese giant has had to do an about turn on that particular policy.

According to Bloomberg Japan, as a result of the price reduction, Nintendo will indeed be making a loss on every 3DS sold once that cut takes effect. Nintendo’s dropped its Japanese 3DS price by 40%, from Â¥25,000 (R 2 183) to Â¥15,000 (R 1 310). similarly, the US price of the 3D handheld has been reduced from $249 to $169.99. If you’ll recall, Sony announced its pricing for its new handheld, the PlayStation Vita – which has its entry level unit hitting retail at $249. If both handhelds were similarly priced, there’s every chance that the Vita would walk all over the 3DS at retail – but the price cut, coupled with an improved software library could see the 3DS surge in popularity.

Nintendo will also be enrolling early 3DS adopters in its “Ambassador Program,” that’ll give those who already own a 3DS 20 free downloadable games; 10 NES classics, and 10 Gameboy Advance games from its digital vault. We’ve confirmed that South Africa will benefit from the price cut – but we’ve no indication of just how much it’ll be. Other regions are seeing a price drop of about a third, so it’s likely we’ll be seeing the 3DS retail locally for about R1899.

The cuts come in the wake of news that the 3DS is doing pretty poorly; it sold just 700 000 units in the US since it launched there, and hasn’t exactly been a phenomenon in its home land either. The move has seen a bit of an investor panic; Nintendo’s stock price has dropped by over 20% following news of the chop, with its biggest shareholder losing around $500 Million as a result.

What do you think? Is this a smart move from Nintendo to gain more momentum for the system, or does it smack of desperation?

Source : Andriasang, Giantbomb

Last Updated: July 29, 2011

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