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Nintendo Cuts $80 From 3DS Price in Hopes to Boost Sales

Thursday Nintendo announced a drastic reduction in price of the just-released Nintendo 3DS handheld gaming unit that will become effective as of August 12. The news unsurprisingly arrives right after company reports revealed (pdf) that Nintendo suffered its first-ever quarterly loss since it began reporting quarterly earnings back in 2003.

According to company financial reports, Nintendo booked an operating loss of 37.7 billion yen for the first fiscal (April-June) quarter. This loss was largely blamed on poor sales of the 3DS which donned a $249.99 price tag here in the States when it launched back in March – a loss also powered by a limited library of games at launch and thereafter. Previous reports have also indicated that developers are actually canceling 3DS projects, one of which wanted to "wait and see" how the handheld performs this year.

To combat the quarterly loss, Nintendo said it plans to respond by reducing its annual net profit forecast to 20 billion yen and its annual operating profit forecast to 35 billion yen, an alarming drop considering the company originally predicted a 175 billion yen profit for the fiscal year. This will be Nintendo's lowest annual operating profit since 1985.

The financial reports also revealed that only 710,000 3DS units were sold between April and June 2011, bringing the total number of units sold worldwide to 4.32 million (830,000 in the U.S. total) -- Nintendo was originally expecting to sell that many units within the first few weeks alone. But the numbers may actually start climbing now, as Nintendo is reducing the cost of the handheld by $80 come August 12, bringing the hefty $249.99 down to a more digestible $169.99 price point.

"For anyone who was on the fence about buying a Nintendo 3DS, this is a huge motivation to buy one now," said Reggie Fils-Aime, Nintendo of America president. "We are giving shoppers every incentive to pick up a Nintendo 3DS, from an amazing new price to a rapid-fire succession of great games."

Just recently Nintendo unleashed the Netflix app for the 3DS system, granting access to the $7.99 movie/TV on-demand video streaming service. Nintendo also launched the Nintendo Video service which delivers "short 3D videos from the worlds of music, comedy, animation and Hollywood."

For those who already purchased a Nintendo 3DS, the company is handing out 20 free downloadable games from the Nintendo eShop. These free games are available to anyone who owns a Nintendo 3DS system and uses a wireless broadband Internet signal to connect to the Nintendo eShop at least once before 11:59 p.m. Eastern time on Aug. 11. Nintendo will automatically register these users into the new "Nintendo 3DS Ambassadors" program. This is where the 20 free games come in, broken down into two groups of 10:

Starting Sept. 1

Nintendo 3DS Ambassadors will be able to download 10 NES Virtual Console games at no charge and before they are available in the Nintendo eShop to the general public. These games, including Super Mario Bros., Donkey Kong Jr., Balloon Fight, Ice Climber and The Legend of Zelda, are slated to become paid downloadable games, but Ambassadors get them early for free. Once the paid versions of the games are posted to the Nintendo eShop later in the year, the updated versions will be available to Ambassadors for download at no cost.

By the end of 2011

Nintendo will provide Ambassadors with 10 Game Boy Advance Virtual Console games. These include games like Yoshi’s Island: Super Mario Advance 3, Mario Kart: Super Circuit, Metroid Fusion, WarioWare, Inc.: Mega Microgame$ and Mario vs. Donkey Kong. These games will be available exclusively to Ambassadors, and Nintendo currently has no plans to make these 10 games available to the general public on the Nintendo 3DS in the future.

Will the price hack and free games be enough to jolt Nintendo's profits back to life? "We believe the company's focus on doing both hardware/software, while noble, will ultimately limit their ability to be relevant in a 'smartphone in every pocket' world," said analyst David Gibson said in a report, adding that Nintendo needs to take "radical" steps like purchasing a U.S.-based video game publisher and making one of its popular IPs a Nintendo exclusive.