Following my previous post on Legends, I was intending to explain how one of the factors is poor sales of the 3DS, and try to show why the 3DS is currently struggling in the market. However, Nintendo has essentially admitted to it now with this incredible fire sale they've lined up
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Likely, they also felt that the higher-end tech of the PS Vita would lead to that being even more expensive than the 3DS.
They were wrong on both counts, and are now quickly reacting. $80 is a massive price drop (at least, for a system less than five months old), but I think they'll maintain goodwill with the existing userbase by giving them 20 free games (good ones, even, like Yoshi's Island!). If people are smart about it, they can get one right before the price drop, get qualified for 3DS Ambassador, then go back to the store to get a refund for the price difference.
Of course, software is the big thing. The cancellation of Legends 3 was a bit of a blow to the system, I think. I've seen it again and again, many Megaman faithful saying they were getting a 3DS just for it (of course, it's hard to say if someone was ( ... )
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As far as the games go, Nintendo needs to take a risk and launch some new franchises to shore up weaknesses in their existing lineup. Mario and Zelda sell decently to the Nintendo faithful, but look at the genres that are popular on the Xbox. First-person shooters, third-person action, western RPGs, survival horror, tower defense games, driving simulators... I think there's room for Nintendo to try new things here. There was a time when Nintendo experimented like crazy with new franchises. Some worked, some didn't. But it was almost a sure thing that the characteristic Nintendo polish and charm was there no matter what they did.
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