Wedbush Morgan analyst Michael Pachter
recently shared with us his insight on yesterday's pricing and release date announcement
for the Nintendo 3DS
. He predicts that the 25,000 yen ($299) price point for the Japanese launch of the handheld will depreciate somewhat as it travels to Western markets, arriving in the U.S. for $250, Europe for €250 and the U.K. for £200. And although Nintendo of America CEO Reggie Fils-Aime stated
the 3DS would "launch in all of our major markets by March 31, 2011," Pachter foresees an even later arrival in the West.
"Looking at how Nintendo does things," Pachter said, "if you're launching February 26 in Japan, and their earnings reports say before the end of the fiscal year in U.S. and Europe -- is there any prayer, even a 1 percent chance that they'll launch a week later in the U.S., March 5? No freaking way. It's not even remotely possible they're launching first half of March. I'm betting it gets delayed until April in Europe and U.S.."
Some analysts have balked at the fairly high Japanese launch price of the 3DS. Though Pachter admits the launch price is "higher than what's customary" for the handheld market, he said the market will bear the toll -- a lesson hard learned by Nintendo when it launched its latest home console.
"They screwed up on the Wii. It was sold out for two full years! You just couldn't get one," Pachter said. "What was the point? They should have sold it for $300 at launch, and made another $50 for every Wii sold during that period. It sold so competitively in the first few weeks that it was going for $1,000 on eBay -- and they absolutely don't want to see the 3DS on eBay."
"I'm vilified in the gaming community for saying these companies are in it to make money," Pachter added, "but I think they should charge as much as the market will bear. That's just not what most companies do -- we've seen what happens when you price your hardware too high, like Sony did with the PS3 when it launched, or too low like Nintendo did with the Wii. I don't know a gamer that I've talked to who doesn't want one. I know people who havent played a handheld in forever -- I'm talking guys who play Halo
and Call of Duty
24/7 and nothing else -- and they all want one. I think Nintendo will charge $250 and people will pay it."
Of course, the 3DS itself might not be the only thing with a higher price than what consumers are used to paying, Pachter explained.
"I think they're gonna try to increase software price," Pachter said. "Look at the price of Nintendo first-party games on the DS, they all launch at $34.99 or $39.99, well above the standard $29.99 software price point. I think they'll try [the standard price] at $34.99. Who knows if they'll get it, but if the 3DS sells at $250, they'll know they've already got a wealthy consumer."
"Go back and do your history, and listen to [EA CEO John] Riccitiello and [Activision Blizzard CEO Bobby] Kotick talk during the last hardware cycle about PS2 prices," Pachter said. "They said software prices have to match hardware prices. When the price of the hardware went down, so did the games. On the other hand, if the hardware's expensive, the games will be more expensive. "
Pachter also commented on the supply restraints responsible for the 3DS' later-than-expected Japanese launch, saying the blame for the limitations probably can't be laid on Nintendo.
"I think the restraint is not theirs. It's not the plastic, or the D-pad or buttons they're short on. It's the new microprocessor or 3D camera or the screen," Pachter said. "If they're having trouble getting enough of the screens -- they're likely sourcing the screens in Japan, and they can't say their partner sucks and isn't getting them enough of the screens. I don't know what else it could be. It's not that every assembly plant is occupied -- we're still in a recession. The plastics and the other compliments are commodities. The microprocessor's new, but it's fairly easy to fabricate, and it can't be more complex than the microprocessor in most smartphones."
We've contacted Nintendo for a comment on Pachter's remarks.