In a corporate news brief today, Nintendo has announced an $80 price drop for Nintendo 3DS, effective August 12. The price slash comes less than six months after the launch of the handheld console, plagued by sluggish sales caused by a lackluster game library, an online distribution platform that his been critically dismissed as a pathetic joke1, and fierce competition2 from its predecessor, the Nintendo DSi.

For gamers of all kinds, not just Nintendo fans, the price drop should be cause for concern. The move to a 40% lower price so quickly seems to be a concession from Nintendo that the 3DS has performed dismally in a market that is increasingly gravitating away from the full-scale games that have been produced since the times of the dinosaurs and toward social applications and casual games on platforms like Facebook and mobile phones.

A new warrior has entered the ring

Indeed, Zynga, the social network game developer responsible for Farmville, is being valued as high as $20 billion3. In comparison, Nintendo's current market capitalization is about $25 billion4.

While new companies emerge to build new gaming empires backed by social media and mobile devices, established game designers are becoming more attracted to the wellspring. Just this week Yuji Naka, Keiji Inafune, and Goichi Suda, famed designers of games like Sonic the Hedgehog, Mega Man, and No More Heroes, announced that they have formed a group called the "Super Creators" with the specific goal of breaking into the social games market5.

Curb your enthusiasm

Nintendo 3DS launched in March of this year with a manufacturer's suggested retail value of $249, a price considered to be steep by some. Nintendo CEO Satoru Iwata is on record as saying that the high price was due to several factors, among them its impressive debut at E3 2010 and the subsequent reaction from developers and fans6.

A Gamasutra opinion today derides Nintendo for the 3DS price point:

...the mobile gaming world continues to evolve at a breathtaking pace, it may not be enough to secure the [3DS's] long-term future... The decision to launch the 3DS at $250 was one motivated by ego and greed. Rather than looking at its audience base as a whole, the company made the decision based on the enthusiastic feedback the device received at E3... The decision ignored the budget-conscious consumer that had become the company's lifeblood – the gamer who rewarded Nintendo for charging $250 for the Wii, rather than $350 or $400.

It's possible that the current state of the 3DS is due to its high price, weak launch lineup, weak online support, and continued competition from the everlasting DS line. Or it could be that somewhere between 3DS's warm reception at last summer's E3 and the chilly launch this past spring, the games industry changed irrevocably.

The viability of not only Nintendo's strategy, but handheld console gaming itself is in question. A price cut is a good first step, but it may not be enough to save the 3DS and the upcoming PlayStation Vita from succumbing to irrelevance when their $40 games are competing against $5, $1, and even free apps like Farmville and Angry Birds.

That's a problem that won't go away soon. While things like Super Mario 3D Land and Mario Kart 7 might be able to command $40, that's simply not the case with most 3DS titles – something Nintendo has yet to acknowledge. Without a more concrete plan to sell non-premium 3DS games at a lower price (the $15-$20 range would be ideal), the problems won't be over soon for the 3DS.

Love, Nintendo

Those early adopters who have already purchased a 3DS will be "rewarded" with free early releases of games from the Nintendo eShop:

But what about the 830,000 of you who already own a Nintendo 3DS? You're some of Nintendo's most loyal customers, and we're rewarding you for getting in on the action early with not one, not 10, but 20 free downloadable games from the Nintendo eShop! Here's how it works:

The 20 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. These users will automatically be registered in the Nintendo 3DS Ambassador program. The program contains two elements:

1. 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.

2. 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.

The silver lining

The corporate news brief concludes,

It's a great time to own a Nintendo 3DS!

Nintendo's stock price forfeited more than 12% today on the news of the price drop and disappointing earnings, dropping to a five-year low.

However, what the "ambassador" program reveals is that Nintendo may be increasing its focus and getting more serious about its eShop service. The release of original NES games like Super Mario Bros. and Donkey Kong Jr. for play on 3DS mars a break from the previous policy of segregating all handheld (Game Boy line) games and standalone console (NES, SNES, N64) games to their handheld (DS, 3DS) and console (Wii) counterparts.

This is a welcome (if late) shift that Sony has provided for some time, allowing classic PlayStation games like Castlevania: Symphony of the Night and Vagrant Story and to be downloaded to PlayStation Portable for on-the-go play. Is it possible that soon gamers will be playing Super Metroid, GoldenEye 007, or even The Legend of Zelda: The Wind Waker on 3DS? Nintendo's library of classics is truly one asset that Apple or Zynga would be hard-pressed to compete with.