Nintendo Drops Wii U Price, Unveils 2DS Handheld Game System
Nintendo (OTC: NTDOY) made two sizable announcements today.
The first -- a price cut for Wii U -- has been anticipated for months. Effective September 20, the deluxe version will retail for $299.
Nintendo's second announcement was a bit more surprising. The company unveiled a new handheld game system called Nintendo 2DS. Designed for very young children, the new device is essentially a Nintendo 3DS without the 3D display. It also lacks the ability to fold, which means it is actually bigger than Samsung's (OTC: SSNLF) largest smartphone.
The Nintendo 2DS has been priced at $129.99 and will be released on October 12, the same day that Pokemon X and Pokemon Y are scheduled to arrive. The Nintendo 3DS will remain available for $169.99. The Nintendo 3DS XL will also maintain its existing price of $199.99.
From a pricing perspective, this might sound like a smart move. Few games take advantage of the 3D effects, so why should consumers pay a premium for a feature they may not use?
By releasing it alongside the new Pokemon games, Nintendo clearly thinks that the popular franchise will be a system-seller. Consumers who are on the fence about the 3DS may be tempted to take the plunge now that they can get cheaper version.
That said, parents may not mind spending an extra $40 if it means their kids can actually fold the game system and put it in their pockets. That alone could be worth the extra money.
From a sales perspective, IGN speculated that consumers may be confused when trying to purchase games for the Nintendo 2DS.
For example, if Soccer Mom and Fishing Dad visit the nearest GameStop (NYSE: GME) to purchase a new game for their son's Nintendo 2DS, they may ask for a 2DS game.
The GameStop employee will then be forced to explain that Nintendo does not make 2DS games, and that it actually plays 3DS games. It is not difficult to imagine how this revelation will confuse these and other parents.
Nintendo has published an infomercial to help clear up the confusion:
As helpful as that video may be to parents and six-year-olds, investors should wonder how much Nintendo will have to spend to properly educate every potential customer about the differences between the 2DS and 3DS.
While Nintendo is known for releasing different versions of its game systems (the original DS was revised twice), the company typically treats them as an upgrade. The Game Boy Advance SP, for example, was the first Nintendo handheld to feature a front-lit display and a clam shell design.
Aside from the cost savings, however, the Nintendo 2DS offers no benefit over its predecessor.
Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.
Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ
© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.