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I agree with everythng you said up to this point because, well, you're right. It's pretty obvious that Nintendo didn't wish to cut the price, no-one wishes to, because you have to sell more to make more. But Nintendo can easily remake any lost money with extra revenue from 3DS games. 

I mean, 3 of the top 10 games sold WW last week were made by Nintendo, and that doesn't include online sales, sales of older games or DLC. So who knows how much they're really making from SW. But I'm willing to suggest it's easily enough to cover whatever loss they're making on the 3DS over last year.

If not, why would they cut the price? Same reason Sony hasn't on the Vita yet. It's not financially viable.

 

From March 11 to March 12

100 million Wii games were shipped, 36 million 3DS titles were shipped and 60 million DS titles shipped (includes 3rd parties but they don’t count) and Nintendo and lost money.

This year you can pretty much cross out any meaningful Wii and DS software titles so they are pretty much left with the 3DS and Wii U for six months and this is with a strong yen backdrop and economic uncertainty in Europe and the US.  You need to spend more to make more yes but Nintendo is defiantly sacrificing margins in the process.  Again to me its more than a late cycle to new cycle swoon, the landscape that videogames were in is totally different that the beginning of the new generation coming up, people need not to forget that.