Initial Reaction Mixed On Nintendo ‘3DS’ Glasses-Free 3D Game System

Opinions were mixed Tuesday among analysts and others we polled about Nintendo’s coming “3DS” handheld game system that the company said will achieve 3D effects “without the need for any special glasses."

Third-party publishers and most retailers were mum on the new system. But Sterne Agee & Leach analyst Arvind Bhatia said, “My sense from talking to third-party publishers is they are taking a wait and see approach on this. Their view is there is no particular first-mover advantage in doing this.” Nintendo will ship the 3DS sometime during the company’s fiscal year ending March 2011 at a price yet to be disclosed, it said. The 3DS, referred to as only a temporary name, will be able to play games from older DS systems including the DSi, as well as titles designed exclusively for it, Nintendo said.

Contributing significantly to the decidedly guarded opinion by analysts was that Nintendo offered so few details about the 3DS. “If the 3DS supports switchable 2D/3D so that all of their 2D games still look correct, then” the system will “speed the arrival of autostereoscopic 3D (AS-3D) to the consumer market,” said Insight Media analyst Dale Maunu, who has studied 3D technology extensively in recent months. But, he cautioned, “If the 3DS does not allow the AS-3D feature to be fully turned off, and there are some compromises in the 2D visual performance on older games, then I would be concerned that customer acceptance would not be great."

The 3DS could offer yet another way for Nintendo to battle Sony Computer Entertainment, whose PSP has been vastly outsold in the U.S. by the DS systems. But Maunu said, “It is hard to say if Nintendo and Sony are still the main rivals in the handheld gaming market, as Apple seems to be growing much faster and attracting a lot of developers to” the iPhone and iPod Touch and, “soon, the iPad.”

Nintendo’s Tuesday announcement came one day after research company Flurry Analytics said Apple’s game platform accounted for 5 percent of the $10 billion in U.S. videogame software revenue for 2009, up from only 1 percent in 2008. In comparison, portable software for Nintendo and Sony systems accounted for 24 percent of revenue, up from 20 percent, while console revenue accounted for 71 percent of revenue, down from 79 percent.

"As AS-3D games are released for the 3DS,” Nintendo “will have an opportunity to differentiate themselves in the market against Apple and Sony,” said Maunu, noting the DS already had a “huge” installed base of games. Handheld AS-3D “is a pretty good idea as long as” Nintendo is “using a switchable 2D/3D technology,” he said. Two other analysts declined to be quoted, one noting there was just not enough information available from Nintendo about the 3DS and the technology it uses to achieve 3D without glasses.

Apple and Sony Computer Entertainment America didn’t immediately respond to requests for comment. Microsoft also didn’t comment by our deadline. There was speculation for a long time that Microsoft could enter the handheld game market, though that’s died down over the past year or so. Various third-party publishers either didn’t respond to requests for comment or declined to comment about the 3DS.

GameStop was “learning about the product and excited by its possibilities for our customers,” said its spokesman, Chris Olivera. His chain is under non-disclosure agreements “with manufacturers at this time and are unable to discuss it further,” Olivera said. Target was “excited” about the 3DS launch, but that retailer had “no specific plans to share about its distribution at Target,” a spokeswoman said. Other major U.S. retailers didn’t respond to requests for comment or declined to comment.

Bill Gardner, CEO of sales, marketing and distribution company Visisol USA, said he believes a glasses-free solution for 3D in the home “is the only way that 3D will be completely successful.” Visisol demonstrated glasses-free 3D technology at CES (CED Jan 25 p7). The company announced a seven-inch portable DVD player with a 3D LCD display requiring no glasses in December (CED Dec 2 p6). At CES, it said the device will also play Blu-ray discs. The glasses-less 3D effect is achieved by alternating left and right LED backlights, Hiroyuki Minamikawa, president of the product’s Japan manufacturer, I-Tec, told us. Images can be transformed into 2D by turning on both left and right LEDs at the same time, “creating a very smooth shift between 3D [and] 2D images,” I-Tec said. I-Tec expects to field 3D displays in various sizes, up to 20 inches, with larger screen sizes expected to appeal only to commercial customers, it said. Only a prototype of its 3D display was shown at CES.

"It will be interesting to see the price point of the 3DS, as glasses-free 3D display technologies often feature additional filters or lenses to create the 3D effect, as well as additional processing powering and robust graphics engines to render glasses-free 3D media,” said Tom Zerega, CEO of glasses-free 3D company Magnetic 3D. On top of “a potentially higher price tag due to elevated hardware costs on the handheld itself, there are also special considerations with respect to the production costs of developing glasses-free 3D games,” he said. “Whether new titles are created from the ground up entirely in 3D or older titles are retooled to fit the new format, there will undoubtedly be additional production costs such as those typical in producing 3D films,” he said. Contrasting it “to the dilemma the movie studios are facing with a lack of 3D capable” movie theaters, he said “there will need to be enough 3D-enabled handheld devices in the market to justify the added production costs of developing 3D games.” However, he said, “Before that can happen, Nintendo will need to ensure that their handheld solution provides the quality 3D experience that players will expect from Nintendo at a price point that encourages adoption."

Nintendo intends to provide other details about the 3DS at E3, June 15-17 in Los Angeles, it said. The company provided no other details Tuesday and Nintendo of America declined to elaborate. But Nikkei reported from Japan that the system will have “a 3D joystick” and “force feedback mechanism that will let players feel the collisions of a game character.” Nintendo acquired related patents in late 2009 and is also weighing the addition of an accelerometer such as the one used in the iPod Touch and iPhone, the report said. The 3DS will also include “significant improvements in wireless communications speed and battery life” -- and its screens “will likely be no larger than 4 inches -- smaller than the 4.2 inches” of the DSi LL, launched in Japan late last year and about to ship in the U.S., Sunday, as the DSi XL, the report said.

Among the many other questions remaining about the 3DS Tuesday was why Nintendo decided to announce it just before the U.S. DSi XL launch and nearly three months ahead of E3. Some consumers could wonder whether they should buy the XL or wait a year for the newer 3DS, possibly hurting sales of the XL.

Nintendo had played down the significance of 3D before Tuesday. But comments by Nintendo President Satoru Iwata and Cammie Dunaway, Nintendo of America executive vice president of sales and marketing, targeted 3D glasses for ridicule, not the technology itself. Wearing 3D glasses “just doesn’t seem like a great experience to me. … I certainly don’t think you'll see us asking people to put glasses on their face” to play games, Dunaway told us (CED March 15 p5). She also said it was “a very small space for now,” and “certainly not something that we're focused on.”

It also wasn’t clear Tuesday whether Nintendo had any plans to bring 3D to the home console space or prevent third-party companies from making stereoscopic 3D games for the Wii even if Nintendo had no plans to make such games. Disney Interactive Studios already shipped the game Toy Story Mania for the Wii. It used anaglyph 3D glasses that worked with all TVs as opposed to the coming 3D games for the PS3 that will be using active shutter glasses and can only be played on compatible, 3D TVs. But the paper-framed, anaglyph glasses with red/blue lenses are flimsy and produce a significantly weaker 3D effect than active shutter or passive 3D glasses such as the ones made by RealD.