Game Over for 3-D and Nintendo?

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Sometimes in life you got to know when to call it quits. Such is the case with the $250 price point of Nintendo's (OTC: NTDOY) 3DS. After anemic sales, the video game giant announced a price cut to $170 starting Aug. 12.

My first thought: Find out how to short-sell a game console.

My second thought: Nintendo thinks 3DS sales are bad now; wait until everyone knows the price is going to drop in two weeks.

My third thought: Loyal Nintendo fans who paid $250 for the device at launch are going to be, well, angry.

Apparently Nintendo also had the last two thoughts. To compensate those who bought the 3DS at $250, and compensate those who will still buy a 3DS knowing that the price is going to drop Aug. 12, the company is going to give the $250 buyers 20 free downloadable games, including 10 games that people who didn't (or won't) overpay for their 3DS won't get access to. And voila, the company has replaced one group of disgruntled customers with an even larger and more varied group. Brilliant work, Nintendo!

It gets worse: The company cut its fiscal-year earnings forecast by 82%.

Ouch. And the stock was down 20% in Asian markets as of this writing. Double ouch.

Apple taking from Nintendo?
I can't help but think Apple's (Nasdaq: AAPL  ) iPad had something to do with all this horrible news. The success of games such as Angry Birds might indicate casual gamers -- Nintendo's bread and butter -- are saving up for multifunction iPads as opposed to one-function 3DSes, which the company markets as featuring "real 3D graphics, with no need for special glasses."

I also can't help but think that RealD (NYSE: RLD  ) and IMAX (Nasdaq: IMAX  ) may want to reconsider their faith in 3-D. If glasses-free couldn't persuade video gamers to take up the third dimension, what hope is there for cumbersome 3-D glasses at the local five-and-dime cinema?

I saw Harry Potter 7: Part 2 last Monday in 2D, and the theater was packed.

Fool contributor Chris Baines is a value investor. Follow him on Twitter @askchrisbainesChris's stock picks and pans have outperformed 89% of players on CAPS. Chris owns no shares of the companies mentioned. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple, IMAX, and Nintendo. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (7) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 29, 2011, at 12:58 PM, cadunce wrote:

    "I saw Harry Potter 8 last Monday in 2D, and the theater was packed."

    That's because the 3D theater was sold out, lol.

  • Report this Comment On July 29, 2011, at 1:23 PM, Realexpectations wrote:

    Gosh I just don't really believe all the talk that apple is taking away gaming from the consoles.

    The reason is that the games are just plain not as good I mean really at all.

    There is no call of duty or little big planet for the ipad or Mario etc.

    They are just low class games that a person plays by themselves not with their family or friends.

    I just dont really believe it.

    Its a completely different platform.

  • Report this Comment On July 29, 2011, at 1:25 PM, Realexpectations wrote:

    O yeah and I went to gamestop to try out the 3ds

    its not that great

    so yes im not suprised

    it doesnt really feel 3d either

  • Report this Comment On July 29, 2011, at 1:35 PM, pmart wrote:

    Cadunce, Actually, ticket sales of 2D Harry Potter showings have been outpacing 3D. I'm with Chris on this one. 3D may be losing it's edge.


  • Report this Comment On July 29, 2011, at 1:46 PM, Quaker08 wrote:

    If you back out the cash from Nintendo's balance sheet you can see this stock is mispriced. Keep in mind the value Nintendo's IP and brand recognition(pokemon, mario, legend of zelda. I agree that the 3DS is likely to be a losing proposition, however, I think the market has completely overreacted and there is a ample margin of safety in as an investment. I am personally doubling down.

  • Report this Comment On July 29, 2011, at 2:23 PM, Onebigmo54 wrote:

    I am reminded of my grandfather, who said TV was a fad, how did that turn out? The only thing keeping Reald from realizing even higher profits is more screens, Cinemark added 1500, AMC added 1000, the plan is to add an addittional 6000 screens overseas as well. At current 82% seat fill in the 1st 15 days of releases, that can only mean one thing, a tremendous increase in revenue 3rd and 4th qtr. The recycling of the glasses is not a surprise, anyone who thought that al the glasses would simply be thrown out,need I say is very short sighted, the bottom line here is simply $$$s the more screens the more $s, the only reason viewers share is not over 50% is lack of screens, go to any complex and you will notice only a select # of screens showing 3D more, screens will fix this. My advise is wake up get on board, or risk being the "Grandpa" on the wrong side of a supposed fad.

  • Report this Comment On July 29, 2011, at 3:55 PM, pmart wrote:


    I wouldn't count on more screens to boost ticjet sales. Only 43% of Kung Fu Panda 2's ticket sales came from 3D, which was lower than Despicable Me, despite Kung Fu Panda showing on more 3D screens. Harry Potter took in 34% of its sales from 3D showings.

    Also, no one called 3D a fad, but there are signs of decline. 3D HDTV is largely considered a flop, no one bought a 3Ds. And Electronic Arts' CEO has said that 3D gaming has brought in "very poor returns."

    3D may not be a fad, but it's not a game changer either.


Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1528183, ~/Articles/ArticleHandler.aspx, 10/25/2016 4:50:03 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 7 hours ago Sponsored by:
DOW 18,223.03 77.32 0.43%
S&P 500 2,151.33 10.17 0.47%
NASD 5,309.83 52.43 1.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/24/2016 4:00 PM
AAPL $117.65 Up +1.05 +0.90%
Apple CAPS Rating: ****
RLD.DL $0.00 Down +0.00 +0.00%
RealD CAPS Rating: *