Why is Nintendo Phasing out the 3DS?

Nintendo released its 2nd Quarter financial results yesterday, and along with the financials were updated hardware and software sales figures. While the Nintendo 3DS has sold an impressive 73.53 million units, the handheld console sales are well behind the 154.02 million units of Nintendo DS predecessor. While Nintendo has been relatively quiet on its plans for phasing out the 3DS in favor of the Nintendo Switch, the writing is on the wall for the historically dedicated handheld console.

But are lagging hardware sales the only reason why Nintendo is slowly phasing out its 3DS handheld? A deeper look into the software sales figures reveals another key piece to this convoluted puzzle:

System Hardware* Software* Avg per User
3DS 73.53 371.16 5.05
DS 154.02 948.62 6.16
GBA 81.51 377.42 4.63

*Sales in Millions

It is no secret that video game companies normally sell hardware at an operating loss in an effort to recoup those costs from video game sales. While the install base is a good indicator for the available market of a video game, the concentration of video game sales to a few select titles can be detrimental for third party developers. Because Nintendo’s first party video games have sold historically well, third party developers have been hesitant to release games on Nintendo platforms for fear of lackluster sales. Let’s examine each console’s ten best-selling video games:

3DS Top 10 Sales* % Install Base
Mario Kart 7 17.21 23.4%
Pokemon X/Y 16.31 22.2%
Pokemon Sun/Moon 16.12 21.9%
Pokemon Omega/Alpha 14.10 19.2%
New Super Mario Bros 2 12.70 17.3%
Super Mario 3D Land 12.12 16.5%
Animal Crossing New Leaf 11.78 16.0%
Super Smash Bros 3DS 9.30 12.6%
Pokemon Ultra Sun/Moon 7.72 10.5%
Tomodachi Life 6.25 8.5%

*Sales in Millions

From the data above, one out of every five 3DS owners purchased a Mario and/or Pokemon game, and nine of the top 10 best selling 3DS games have an install percentage greater than 10 percent. This type of concentration does not bode well for third party support, especially considering that each game on the 3DS top 10 list is a first-party Nintendo title. Let’s check out the DS:

DS Top 10 Sales* % Install Base
New Super Mario Bros 30.80 20.0%
Nintendogs 23.96 15.6%
Mario Kart DS 23.60 15.3%
Brain Age 19.01 12.3%
Pokemon Diamond/Pearl 17.67 11.5%
Pokemon Black/White 15.64 10.2%
Brain Age 2 14.88 9.7%
Pokemon HeartGold/SoulSilver 12.72 8.3%
Animal Crossing Wild World 11.75 7.6%
Super Mario 64 DS 11.06 7.2%

*Sales in Millions

The Nintendo DS had a slightly less concentrated top ten list of video game sales with only one game over 20 percent of the install base; however, six out of 10 games still have an install percentage greater than 10 percent. While third party developers did have an easier path to releasing titles on the Nintendo DS in comparison to the 3DS, the concentration of best-selling Nintendo DS titles still revolves around Mario and Pokemon. Now for the GBA:

GBA Top 10 Sales* % Install Base
Pokemon Ruby/Sapphire 16.22 19.9%
Pokemon FireRed/LeafGreen 12.00 14.7%
Pokemon Emerald 7.06 8.7%
Mario Kart Super Circuit 5.91 7.3%
Super Mario Advance 2 5.69 7.0%
Super Mario Advance 5.57 6.8%
Super Mario Advance 4 5.43 6.7%
Namco Museum 2.96 3.6%
Pac-Man Collection 2.94 3.6%
Super Mario Advance 3 2.83 3.5%

*Sales in Millions

It is no secret that third-party developers loved the Game Boy Advance. While the Pokemon craze still dominanted the install base, only one in five GBA owners purchased Pokemon Ruby/Sapphire. The average GBA owner purchased fewer GBA titles than the 3DS or DS; however, the concentration of game sales was more diverse than the following generations. For this reason, developers such as Square Enix and Camelot felt comfortable releasing cult classics such as Final Fantasy Tactics and Golden Sun to the tune of 1.62 and 1.65 million units, respectively.

Notice the trend. With each successive handheld hardware release, Nintendo owners have concentrated their sales to a few select titles. While Pokemon and Mario have earned Nintendo billions in revenue, the company realizes that it needs third-party support to remain viable. Not to mention, the internal development costs of producing 3DS games that release at $39.99 is increasing unviable when compared to the average selling price of Nintendo Switch games at $59.99. While handheld console division has kept the company afloat amidst the failure of the Nintendo WiiU, Nintendo has decided to go “all-in” on the Nintendo Switch in hopes of earning more revenue on first-party software sales and encouraging third-party developers to release games on the platform.

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