3 March 2011

By: Andrei Dobra, Games Editor
Nintendo 3DS Gets New Super Mario Game, TurboGrafx and Game Gear Legacy Titles
Nintendo's Satoru Iwata and the new Super Mario 3DS logo Kotaku
The Nintendo 3DS will get a brand new Super Mario game, as well as legacy titles from the Sega Game Gear and Turbografx consoles, according to an announcement made by the Japanese company at the Game Developers Conference in San Francisco.
The Nintendo 3DS is getting ready to be released in Europe and North America, after already selling out in Japan.
As such, the company saw fit to make a few big announcements at the GDC summit in the USA, through the voice of its president, Satoru Iwata.
At the Nintendo keynote held yesterday evening, the executive officially confirmed that a new Super Mario game would be developed exclusively for the 3DS.
More details about the game will appear later this year, at the E3 conference, but Iwata confirmed that the development team is the same one who worked on the innovative Super Mario Galaxy for the Wii home console.
The logo, which you can see above, has also been showcased, and sports a particular mark at the end of the 'O' in Mario, similar to a tail.
Immediately, Mario fans started speculating that this hints at a return of the popular Raccoon Suit for the Italian plumber.
Iwata didn't comment on these rumors, but did announce that the 3DS' eShop would be getting new classic games.
Besides the Game Boy and Game Boy Color titles, Nintendo 3DS owners will be able to download older games made for the Sega Game Gear and TurboGrafx consoles.
Page 1 Copyright (c) 2001-2011 Softpedia. All rights reserved. Softpedia and Softpedia logo are registered trademarks of SoftNews NET SRL.
The 3DS eShop will also deliver, besides these legacy titles, 3D classics, updates of older Nintendo games with 3D support and lots of other content.
The eShop, as well as the DSiWare and other online services will be activated by Nintendo through a beefy system update after the 3DS will be launched across the world.
The Nintendo 3DS will appear in Europe on March 25, and in North American on March 27.
Page 2 Copyright (c) 2001-2011 Softpedia. All rights reserved. Softpedia and Softpedia logo are registered trademarks of SoftNews NET SRL.

Between 1989 and 1990, four major interchangeable handheld gaming devices were released in Japan and in the USA, the most ever in a two year period (http://www.engadget.com/2006/03/03/a-brief-history-of-handheld-video-games/). Introducing a portable gaming device to the public is a highly risky and costly procedure, as a high level of research and development goes into each system. As a result, companies need to sell a lot of consoles to break even, and a poorly selling console can affect a companys fiscal position for many years after the initial decision to produce it. This thesis aims to determine if a powerful hardware engine and a variety of innovative built-in extra features are the driving forces behind the sales of interchangeable handheld gaming devices. I will start with the four-way console war that began in 1989, compare the sales of competing consoles, and end with an in depth analysis of the current portable gaming battle between the Sony Play Station Portable and the Nintendo DS. I will compare the hardware specifications of the systems that competed against each other and a series of factors relating to the hardware, including screen size, color displays, system malfunctions, battery life, processor power, cost of cartridges and the cost of the hardware itself. The market for interchangeable portable gaming devices (henceforth referred to simply as portable gaming devices) is highly competitive, so the market cost of a system is positively correlated with the cost of producing a system. Aside from this, I will look at the features of each portable gaming device, such as MP3 and TV players, and try to determine how these features contribute to the overall sales of the systems based on qualitative and quantitative analysis. On the other side of the equation, I will examine the popularity of certain games and characters in the same way I examine the inbuilt features, and try to determine if
having well known and likeable video game characters, popular game franchises, and software support from third party development teams are more important than the hardware specifications. I will conclude with the question of whether it is worthwhile for companies to put a lot of money into developing a powerful portable gaming system with many addition features, or if they should focus on cheap but easily developable systems and invest in game development and marketing. I will use both qualitative analysis to make conclusions about how much certain features contributed to a consoles sales, and quantitative analysis to gather and analyze data regarding hardware specifications. In the end, I will use sales data to determine how successful a console actually was due to its hardware and built in features compared to the competition.

Since the market is relatively new (about twenty years old), there should be a competition between the producers of consoles for market share as various companies try and establish themselves as the main brand associated with quality handheld gaming. Portable gaming devices and software are complimentary to one another, as both goods require the other to function, so there should be some correlation between the quantity and quality of software sales and the quantity of portable console hardware sales. As time goes on, portable gaming devices will become more technologically advanced and have more inbuilt features, although these increases will likely increase the cost of the consoles, so companies will have to decide what sacrifices to make in order to keep prices low and products competitive. Companies may develop various innovative marketing and advertising techniques, such as product bundling, to try and sell their products in different ways to different types of consumers. Developmental costs of portable gaming devices are generally quite high, so companies whose products fail to gain market share are likely to exit the gaming devices sector.

Sales Wars

The first real portable gaming device battle began in 1989-90 when the Nintendo Game Boy, the Atari Lynx, the NEC Turbo Express and the Sega Game Gear were released. The Game Boy was by far the most successful. Despite having the worst graphics engine, lacking the color displays of the other consoles, and not featuring a backlighting system (http://www.engadget.com/2006/03/03/a-brief-history-of-handheldvideo-games/), the Game Boy went on to sell far more units than the other three systems combined. The reasons for Game Boys success are numerous, but the most important factor may have been its low price, about $109 at launch 7
(http://www.engadget.com/2006/03/03/a-brief-history-of-handheld-video-games/). Furthermore, Game Boy came packaged with the game Tetris, which is one of the most popular and best selling video games of all time (http://www.absolutist.com/tetris/tetris.html). In an emerging market where people do not know what to expect, pricing is crucial to early success. Nintendo offered people both the system and a game to play on it for under $110. By contrast, the Lynx and the NEC Turbo Express each cost over $180 without any games due to their expensive processors (the Turbo Express cost a whopping $350) (http://www.gamepro.com/article/features/125748/the-10-worst-selling-handhelds-of-alltime/), while the Game Gear cost $149 (http://www.answers.com/topic/sega-game-gear). Not surprisingly, the Game Gear went on to sell far better than the other two systems, and is usually considered a moderate commercial success despite the far superior sales of the Game Boy (http://www.gamepro.com/article/features/125748/the-10-worst-sellinghandhelds-of-all-time/). Thanks to their lack of third party developers and enormous price tags, the Lynx and the Turbo Express soon found themselves out of the market, leaving the Game Boy and the Game Gear to battle for market share. As well as having a cheaper price than the other consoles, the Game Boy had a much better battery life. Running on only four AA batteries, the Game Boy could run for up to 10 hours without needing a replacement set (http://www.answers.com/topic/segagame-gear). The Game Gear could only last for about 3 hours and many people considered this, and not console price, the most important reason the Game Boy became so much more popular than the Game Gear (http://www.consolepassion.co.uk/segagame-gear.htm). Battery life is an ongoing variable cost for customers, and the large

There are a number of reasons for the Neo Geos failure, but what really put the nail into its coffin was its timing. On October 1, 1998, Nintendo released Pokemon Red and Blue in the United States, more than two years after the initial release in Japan (http://www.gamingtarget.com/article.php?artid=6531&pg=1&comments=). The premise of these games was very simple. Players had the two fold mission of collecting all of the pokemon (little creatures that would battle each other) in the game and then using their pokemon to win a series of set battles until reaching the final boss. In a brilliant marketing ploy, Nintendo made the games essentially the same except for eleven exclusive pokemon in each game (http://www.gamingtarget.com/article.php?artid=6531&pg=1&comments=). This cut down production costs, as Nintendo basically sold the same game twice, paying minimal development fees for the changes. To collect all of the pokemon and beat the games, gamers had to have friends with copies of the other game and a link cable to connect Game Boys so that the players could trade with one another. Nintendo made the link cables, creating a complementary good to sell to gamers along side its consoles. In most cases, ploys like these do not work because consumers know they are forced by companies to spend extra money for essentially the same thing. However, pokemon quickly became a phenomenon, and Pokemon Red and Blue combined to sell over 30 million copies, making the pair the best selling handheld games ever at the time(http://vgchartz.com/games/index.php?&results=50&name=&console=GB&keyword =&publisher=&genre=&order=Sales&boxart=Both&showdeleted=&region=All&alphaso rt=). The games were formatted for the original Game Boy, so they functioned on the Game Boy, the Game Boy Pocket and the Game Boy Color. Multi console support
became incredibly important in this case, as Nintendo wanted to focus sales on its new Game Boy Color instead of its older systems. As Pokemon was the hottest game on the market at the time, enabling the game to play on the new Game Boy Color helped Nintendo avoid cannibalization from its older systems and increased the sales of its new product. The unrivaled success of pokemon destroyed the Neo Geos chances of surviving in the portable gaming market. At the time of the Neo Geos release, pokemon had taken over the retail world, appearing on everything from beach towels and clothing to cars and jets (http://www.ana.co.jp/eng/flights/pokemonjet/design.html). Pokemon had its own TV show and trading card game as well, and children all over the world demanded it in all of its forms. Nintendo had and still has exclusive rights to license video games (www.pokemon.com). The Neo Geo had other problems, including a much smaller fan base than Nintendos, and fell victim to incredibly bad timing. It entered the market at the time of the Pokemon craze, and could not produce the product which the consumers wanted, Pokemon-licensed games. Nintendo won the console battle against Neo Geo due to software. The Neo Geo had far better graphics and battery life than the Game Boy Color, as well as cheaper prices and a library of critically renowned games. Despite these advantages, some of which Nintendo had used to its favor during the first handheld console war, the only thing that really mattered was the Pokemon license. SNK got almost everything right when designing its system, but failed to capitalize on the pokeman fad. Nintendo again put out a cheap and technologically inferior portable console, but managed to win this console war even more easily than the previous one by gambling on the success of pokemon and

could no longer rely on the strength of software and licenses alone to drive the sales of its portable gaming devices. It wanted to show its customers that while it still focused on developing quality games based off of popular franchises for its portable gaming systems, it also had the most powerful device on the market which would allow the games more scope in terms of game play and better graphics. For these reasons, it retained the name of its popular handheld franchise, the Game Boy, but changed the cosmetics of the system completely to fit the change in technology. It should be noted that the Game Boy Advance had some competition. Bandai had released a system called the Wonderswan Color in Japan in December of 2000, a few months before the release of the GBA, with a 16 bit graphics core that ran off of a single AA battery for upwards of 20 hours (http://www.nationmaster.com/encyclopedia/BandaiWonderSwan-Color). The system also had exclusive rights to games produced by Squaresoft, a gaming company with the rights to the popular Final Fantasy gaming franchise. However, Bandai released only a limited number of systems, as it did not want to suffer the same fate as SNK had with the Neo Geo, and Squaresoft started developing games for the GBA shortly after the Wonderswans release. Bandai never really made an effort to try and take market share from Nintendo, at its peak controlling only eight percent of the Japanese market for portable gaming devices. Soon after the WSCs demise, Bandai began developing games for the GBA (http://www.nationmaster.com/encyclopedia/Bandai-WonderSwan-Color ). As Bandai was first and foremost a toy company, and handheld gaming was only a small part of its business, it had little problem leaving the market for portable gaming device hardware sales and joining the market to sell software to its former competitor.
With all of its competition in the handheld gaming market eliminated, Nintendo started to focus on increasing profits. One way it did this was by rereleasing games on the GBA that had sold well on previous systems. The GBA had more powerful hardware than the Super Nintendo Entertainment System, one of the most popular Nintendo home video game consoles of all time (http://www.coranac.com/tonc/text/hardware.htm). This meant that Nintendo could take any of the games published on the SNES and port them over to the GBA, effectively reselling products. Doing so drastically cut down development and marketing costs, as the games already had an existing fan base from their days on the SNES and other various systems and needed very little in the way of programming as the code was already there from the previous incarnations and only needed slight modification to run on the GBA. Among the SNES games rereleased for the GBA are Super Mario World 1 & 2, The Legend of Zelda: A link to the Past, Final Fantasy 2, 4, 5, and 6, Donkey Kong Country 1, 2 and 3, Earthworm Jim, Final Fight and Contra 3, as well as ports of the original Pokemon games for the Game Boy. Some of these ports included additional content not included in the original games, like a new multiplayer game in The Legend of Zelda: A link to the Past (Zelda Box), but most of them were exactly the same as the originals. Nintendo manufactured many of these ports and owned the licensing rights for many of these games (Mario, Zelda, Donkey Kong, etc), allowing the company to generate revenues without spending much money on development costs. Consumers quickly bought these rereleases, as the games granted them the ability to relive some of their favorite games wherever they wanted thanks to the portability of the GBA. The ports of the Mario, Zelda and Pokemon games sold

works). Cosmetically, the slim and the 3000 are pretty much identical; the only real difference is in screen resolution. In contrast, the DS lite was 50% smaller and lighter than the original and featured a much sleeker design (http://www.nintendo.com/ds/what/meetds/lite). Despite releasing an almost identical system to the current one in the 3000, Sony still managed to jolt sales for a couple of weeks by essentially renaming the system and giving it a few new paint jobs (PSP boxes). Other than that, the yearly market share of the two systems was nearly identical to the yearly market share of the past two years with the DS increasing its market share from the prior year by a percentage point. At this point, the DS and PSP battle seems to resemble the previous handheld battles. The DS has much better battery life than the PSP, but much less powerful hardware and far fewer additional features, and it has enjoyed far more success. However, closer inspection shows that this battery versus hardware comparison was not quite accurate. The battle was very close for the first year and a half, and the PSP has had consistent and acceptable sales since its entry into the market. The difference is that the DS consistently increased its sales since its inception with new versions of its system that improved on the perceived flaws of the original system (heavy weight, ugly system design) as well as increasing its already impressive battery life (http://www.nintendo.com/ds/what/meetds/lite). More importantly, Nintendo has released and licensed a large number of critically acclaimed, high selling games featuring well known characters, giving consumers a wide variety of games and, more importantly for Nintendo, a large number of reasons to purchase a system. Sony produced a few of these games, but it did not release them continually like Nintendo did, and as such, even though
the PSP doubles as a DVD player and an MP3 player, it could not outsell the DS as it did not have enough high quality games to consistently entice new consumers to purchase their system. Another key reason for the success of the DS has been its price. Creating a more powerful system with DVD and MP3 capacities meant that the PSP would cost considerably more than the DS. As such, the only way to come close to breaking even was for Sony to charge a higher price for the PSP than the DS, at times a much higher price. As for all of my comparison analysis, I have excluded the first two weeks the DS hit the market since the PSP had not yet entered and the sales are small enough to ignore. With that in mind, the average price of the DS over its lifetime is $133.40 while the average price of the PSP is $203.07. The ratio of the price of the PSP to the DS is 1.522 while the ratio of PSP sales to DS sales is 0.447. These ratios suggest a strong negative correlation between sales and console price. Price changes in handheld video game consoles happen only a handful of times over the course of the systems lives and are announced very shortly before they happen so that consumers cannot knowingly wait on buying a system at a lower than current market price. They also happen almost concurrently in the different regions of the world, as consumers know that a price decrease in Japan will inevitably lead to a price drop in America, so companies like Sony and Nintendo are forced to drop prices world wide or risk losing sales as consumers wait for lower prices. Furthermore, price changes in the handheld video game market are predominantly decreases. The DS has featured two prices over the course of its live: the release price of $149.99 and the current price of $129.99. The PSP has seen its price drop from an original price of $249.99 to $199.99

One pricing strategy both Sony and Nintendo have used to try to increase the sales of their respective systems is bundling, although the two companies have used the strategy in significantly different ways. Investorwords.com defines bundling as The practice of joining related products together for the purpose of selling them as a single unit. Bundling is used when a company believes that two or more of its goods are complementary and customers would prefer to buy them together, or when a company believes that it can get people to buy one of its products that might not have great sales by bundling it with another more popular good (http://www.investorwords.com/620/bundling.html). Nintendo was the first company to come up with the idea of bundling in the handheld gaming market, bundling the original Game Boy with the highly popular game of tetris in a very successful move. Times have changed since the release of the Game Boy and one only need step into the any retail establishment to notice the differences in the bundling strategies between Sony and Nintendo. The first PSP system on the shelf at any store that sells video games, such as Game Stop or Wal Mart, is a bundle including the system itself, a one Gigabyte Memory Stick, a National Treasure UMD movie, the game Ratchet and Clank: Size Matters, a voucher for a free online game, a battery and an AC adapter (http://www.gamestop.com/Catalog/ProductDetails.aspx?product_id=72881). To get an unbundled system, you typically have to look around the store a bit or ask an attendant. An unbundled PSP comes with the system, a power cord, a battery and an AC adapter (http://www.gamestop.com/Catalog/ProductDetails.aspx?product_id=73083). Of the items included in the bundle not included in the core package, the only item that complements the PSP completely for every consumer in the way a razor blade
compliments a razor is the memory stick. Without a memory stick, gamers cannot save their progress on a PSP, rendering the system pretty much useless. Before it released this bundle, Sony had released four other bundles featuring different games and different colors but used the same marketing strategy of trying to make all consumers of their product buy the bundles. Nintendo has taken a much different approach. Instead of trying to force consumers to buy their bundles, Nintendo has released a series of Limited Edition consoles bundled with artwork on the system cover that describes included games. Based on personal experience and information from an informal survey, these bundles were typically sold only for 2 or 3 months and were no easier or harder to find in stores than the unbundled systems. Scanning Amazon.com revealed 10 different limited edition consoles based on 9 different games (two bundles contained Mario Kart) (http://www.amazon.com/Consoles-Nintendo-DSHardware/b/ref=vg_nav_nds_consoles?ie=UTF8&node=11076561&pf_rd_m=ATVPDK IKX0DER&pf_rd_s=browse&pf_rd_r=1KBW4TVHZRFXH1E372CK&pf_rd_t=101&pf _rd_p=457966901&pf_rd_i=11075831). Some bundles contained small items other than the games and the systems (the Pokemon bundle came with a stylus and the Brain Age bundle came with a carrying case) but for the most part, the selling points of the bundles were the game and the console. Every single one of these bundles was selling well beyond the combined market price of an unbundled console and the game the bundles included. Some of these bundles reached prices more than double a console by itself. For example, the Zelda bundle cost $270 new (none of the used consoles included the game and the box) (http://www.amazon.com/gp/offer-

listing/B000X25GWM/ref=sr_1_olp_12?ie=UTF8&s=videogames&qid=1232843022&sr =1-12) and the Final Fantasy 3 bundle, released exclusively in Japan and in very limited quantities, cost $600 (http://www.amazon.com/Nintendo-DS-Lite-Japanese-imprintedinspired/dp/B000M3U8CU/ref=sr_1_36?ie=UTF8&s=videogames&qid=1232844229&sr =1-36). Nintendos strategy was to put the bundled consoles out on the market in limited quantities and leave them there until consumers bought them all, then developing a new bundle to put back on the market in limited quantities. Analyzing which company enjoyed more success through bundling is not entirely straightforward, as the two companies used different strategies. However, it is possible to draw some conclusions based off of the perceived intent of the bundling strategies. Sonys goal with the bundling was twofold: increase the sales of the game packed with the system and increase the sales of their consoles. The first of these retail dominating bundles was the Ice Silver Daxter PSP bundle, released back in September of 2007 (http://www.gamasutra.com/php-bin/news_index.php?story=15372). Since then, the PSP console market has been dominated by bundles and its market share over this time period is 28.81%, down from 33.24% before the bundling took effect. Sonys bundling efforts have not been a complete loss, as all of the games (with the exception of Madden 09, a relatively new game) that Sony included in their bundles have sold over 1 million copies and place in the top 15 overall of PSP game sales (http://vgchartz.com/games/index.php?&results=50&name=&console=PSP&keyword=& publisher=&genre=&order=Sales&boxart=Both&showdeleted=&region=All&alphasort). Nintendo simply tried to sell its bundles and eventually created more. The limited quantities of each bundle meant that they would have little impact on the overall sales of
the DS, and to this point, all of the bundles have been a huge success, as shown by their short shelf lives and high prices on Amazon despite having no more actual functions than an unbundled DS and the included games. Nintendo effectively created a niche market for collectors and fans of certain games, and has always sold out of all of these bundles. While the bundles have not affected Nintendos overall DS sales, they were not meant to, so it is fair to say that Nintendo accomplished its goals through bundling better than Sony did. One final advantage the DS may have over the PSP is a stronger brand and reputation. Although both Nintendo and Sony are synonymous with quality video games, Nintendo is specifically known for its quality portable gaming devices while Sony is new to the market. Through commercials, press releases and prior products, Nintendo has displayed a commitment to its customers to provide quality handheld gaming devices for the past 20 years. Just as the McDonalds golden arches represent cheap, homogeneous fast food for consumers, the Nintendo logo on a handheld gaming device generally signifies the perceived quality of gaming that consumers want. Sony has not had as much success in the market as Nintendo has, and is also a relative newcomer meaning Nintendo almost certainly enjoys a stronger brand with respect to handheld gaming devices than Sony does.

A Word to Future Students
The best advice I have for future students is to stay on top of deadlines. Do not wait until 2 or 3 days before a draft is due as you will not be able to piece together the necessary data in a satisfactory manner. Another crucial aspect of your thesis will be your data source or sources. Deciding on data sources early, be they databases, surveys, or experiments you decide to run, will help the writing process greatly as you will have a starting point to basis your work around. Make sure to consult the professors whenever you run into roadblocks or come up with new approaches. I cannot say enough about how helpful my professors were in guiding me towards the path I wanted to take with my thesis. Originally, I had wanted to base my entire analysis on an econometric model formulated around my sales data but the professors convinced me not to. I am very happy with the final outcome of my thesis and looking back, I know that I would not have obtained the same positive results had I used an econometric model for most of my research. If you do decide to create a detailed econometric model, you will want to find an additional professor to help guide you in your work. I did not do so, but a couple of my friends did and were quite pleased that they did so. Finally, listen carefully to what your peers have to say during the first few months of the process. I picked up a bunch of good ideas in the discussion sessions and found out about an extremely useful time saving website in easybib.com which will create and format your bibliography for you at no cost. Plus, your peers have interesting topics too and your attentiveness will encourage them to keep up their good work. Thirty to forty 52
pages sounds like a lot and you will have to work hard at it. However, this thesis should not overwhelm you as the professors have planned out the due dates carefully and are there to guide you through this long process. Good luck and I hope you are all as happy with your final products as I am with mine!

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