Nintendfacts: Nintendo Needs to Drop the 2ds/3ds and Focus on the Switch

Look I’m a fair guy, I’ve talked about Nintendo and it’s home console. So it’s only fair that we take a week and focus on the handheld side. I will admit that I have owned dozens of Nintendo’s handhelds. I love them. They are easy to carry and have a vast library to choose from. My current problem though is how they are going to affect the switch. So lets talk for a second and discuss the facts of the Switch and the dangers of having multiple handheld consoles.

(Two version of the N3ds, Two of the original 3ds, and two different 2ds’s It’s exhausting)

3ds/2ds

I remember when the 3ds was a first releasing, it was in 2011 and I had just started my first job. Gamestop. Yes I know not the best of jobs, but one thing was important, I gained a huge knowledge of customers and the games they played while I worked there. The 3ds was one of the least impressive consoles that ever released at my store, and the PSVita if we are being fair. Despite this numbers were quite high in the first year, around 11 million world-wide. I can’t even compare vita’s numbers to that, don’t worry Sony sadly lost any advantage in the hand-held market…. #RESTINPEACEVITA

These sales are now upwards of 66 million consoles…. Yes that is good, but there are other reasons as to that. For example, limited release handhelds, multiple iterations and kids break them. If you doubt that last part, I’m pretty sure one kid alone had bought 5 different 3ds in the course of two years, oh and they’re CHEAPER! Anyways, sales are always good on Nintendo’s handhelds. They have games that people want and at a reasonable price. So that begs the question? In what way could they possible harm the Nintendo Switch and subsequently Nintendo? Well let’s discuss, shall we?

(I mean obviously the Switch is more powerful, what could the 3ds do to the Switch?

Price$

First the New 3ds and the New 2ds are nowhere near as powerful as the switch, I think we can all agree on that since the New 3ds can’t even run Xenoblade Chronicles at full resolution. On a side note….that game is not pretty. The Switch on the other hand should be capable. So we have a huge power difference between the two. This means that Nintendo has 5 different consoles with different capabilities and power abilities. Now yes I said 5, but we have only listed 3. Yes that’s right folks we also have the 2ds and the 3ds along with the new 3ds and new 2ds. There are exclusive games on the N3ds and N2ds that cannot physically run on those older systems. What does this mean, it means that there is already a divide in the handheld space within Nintendo itself.

Nintendo is also releasing some Switch games on the 3ds, like Fire Emblem Warriors. So Nintendo is going to have to develop the same game for 3 consoles, since it is N3ds and N2ds (not confirmed on N2ds) exclusive. Why go through that hassle? Nintendo has already sold the 3ds extremely well, why not focus on the switch. If you had to go to your parents or loved one, or whomever controls the almighty dollar and ask them to buy you a console that could play these games, they are going to buy the cheaper option. Oh you mean I can get the same game for my son, it just won’t look as good? Yeah I think they will choose to save the 120$.

It’s just simple math. Why wouldn’t you just put all of your focus on one thing. Focusing on 5+ experiences only makes the entire situation more complicated. I just want the game and I want the game to be portable. So I can buy it for 40$ and it looks a little worse, may not run quite as well, or I can buy it for 60$ and I can play it on my TV. Don’t give us the option Nintendo, make us buy it on switch, give your console more bang behind it. Sure Fire Emblem Warriors may not be the hottest exclusive this fall, I mean Mario probably will be, but the point here is to not split your fan base. Your fans will buy your console if you make them buy it, don’t make them choose, you lose money that way, or you cause one to completely fail.

 

Handheld Consoles Are Dying-

Now I don’t mean this in the traditional sense, but I think Nintendo’s small handhelds are about to see some upcoming issues. As Ipads and whatever other kind of pad you can think of get further in technology, their gaming capabilities increase. I mean you can play FF7 on your Ipad, so whats to prevent Apple or Samsung releasing one with little joysticks. Nothing. Tomorrow if Apple announced this I wouldn’t be surprised. That means that in this current market Nintendo has to be more gutsy with what it is doing. The exclusives are strong, and that’s whats keeping them afloat while the Ipad and Galaxy Tabs exist.

(Nintendo found an answer before it was too late, now they need to capitalize on it)

The nice thing is that Nintendo has already found their answer to the Ipads and Tabs in the world. The Nintendo Switch. It has a bigger screen, has Nintendo exclusives, and you can play it on the TV if you want to. It’s honestly the 3ds I always wanted. Nintendo found an answer that they didn’t frankly need to worry about yet, but this is only good. Nintendo is on a great start to reviving their portable console franchise, but they can see the writing on the wall for current handheld markets. Nintendo’s handheld market has only thrived because it’s Nintendo, many companies have tried, but it’s a really hard market to enter.

The problem becomes that as devices become more and more varied and multi-operational, a handheld that only does one thing becomes less useful. Now true story time for a second, I was at work and a co-worker had called me to ask about the Nintendo Switch and if it’s something her son would like. I was a little shocked because I knew him to be a Call of Duty and online game kind of gamer. So I discussed the positives and negatives and why he would want one. Eventually she told me that he wanted a Switch because he wanted to take it on the go, but he never wanted a 3ds because the screen was too small.

(In this case…size does matter)

Imagine my surprise the same week that I was researching and looking for opinions about the 3ds/2ds existing at the same time as the switch a kid is the one who gave me an answer. For some reason a kid who is all about call of duty wants a switch and why? Because it’s portable and it has a big screen. Surprising? Absolutely. Did it get me to start thinking about the issue a little more? Absolutely. The Switch is drawing in crowds that I think would normally just ignore this console. Do I think it has a chance, heck yes. Am I still worried…yeah. Now let’s look at numbers again.

 

Manufacturing/Attach Rates-

Now one important factor here is how much it costs to manufacture a Switch versus a 3ds/2ds. Currently it costs around 250 dollars to manufacture a switch, and over time this will go down, but for now Nintendo stands to make around 50$ a console, minus all the fee’s that get tacked on from retailers and the such. The 3ds on the other hand costs around 100$ to make, and this is an old article so we can still assume we are somewhere close on the New 3ds and 2ds. So about 100$ profit. The difference here is going to be the attach rates though. Obviously Nintendo would like to make around 100$ profit a console, but what’s more important here is the software.

These numbers are pulled from here, it’s pretty up-to-date but most of these numbers aren’t going to change anytime soon. The 3ds has an attach rate of around 4.48 games per console. That means through the simple power of math, we can say the average price of a game on the 3ds/2ds is $40 USD, and we can only speculate on the profit margins but we can assume Nintendo gets half of that in profit, in reality it is probably less. So total profit per system is $80 or so, times that by 66 million and your profitability of consoles and games is close to 12 billion dollars.

That’s a lot of profit, but remember that this number is just an estimate because profit is much lower. There is marketing, manufacturing and a whole bunch of things, like you know salaries. So from a base number I think 12 billion is a pretty good place to start. So lets compare this to the switch. First off it’s super early in the numbers for switch, but I think we can assume that if Nintendo is able to keep up the supply, then we can say 10 million switches will be sold. Good solid number. Then we can take the profitability of games and say about 30$ or so per game. Remember this is also the first year, so the numbers are going to look small compared to a system that has been out for nearly 7 years.

The Switches current attach rate is about 5 games, which this can go up and down drastically. Remember that the Switch really didn’t launch super strong (number of games), but this is a main Nintendo console, I expect the numbers to get higher. So with an estimated 10 million consoles and 5 games per console we get a number around 800 million dollars profit in the first year. Which means, oh the 3ds is more profitable.

(And it’s not because of games like this)

Let’s Talk Numbers

So we know that we have an estimated 12 billion dollars profit for 3ds and then around an 800 million dollars estimated for Switch. Which again these are educated guesses, but they are pretty foundationally solid. So lets talk about why the 3ds is going to be impeding on the Switches success. So besides the points I made earlier, Switch is going to be a more profitable system from Nintendo, if they can push all of mobile on the Switch. Imagine if they drop the 3ds/2ds and all of those numbers could flow into the Switch.

No longer would there be a split ecosystem, there would be an ecosystem where the Switch covers both worlds. Smaller mobile games and the bigger console exclusives. Obviously in 7 years after the Switch has been around we can talk a lot more about comparisons. The reality is that the longer that Nintendo is pushing two different kinds of mobile experiences the more they are going to segregate their audiences. The Switch is going to have a hard enough problem getting off it’s feet without 3rd party support, which was covered in last weeks post.

(I mean seriously, this needs to be on the SWITCH!!!!)

So we need to get Nintendo to realize and we need to support a decision to end this 3ds/2ds monster. I love my 3ds but if Nintendo told me tomorrow that they were going to drop it and from then on focus on one console it would mean only positive things. First, more games. No longer would there be developers focusing on 3ds only, there would be a push for the Switch and more games, and also a more powerful console than the 3ds. Second, there would be a greater variety of games. No longer would we only get a Mario game once ever other year or so, we would start seeing more Superstar Sagas, and hey….even freaking Pokémon! This is the right move for Nintendo, if they want to see better numbers…

So let’s say it all together now, NO MORE HANDHELDS! GET RID OF THE 3DS and 2DS! CASE CLOSED!