GameStop: 3DS Launch Success Dampened By Lagging Sales

In a Thursday earnings call, GameStop said it captured big Nintendo 3DS market share immediately after the handheld's launch, but the retailer now projects slower-than-expected sales in the near-term. "We were very excited about 3DS when it launched. [It] was one of the highest market shares we've ever had for a Nintendo launch at 45 percent," said GameStop president Tony Bartel. "We were excited about market share." But he added, "I think there have been reports that the numbers are lagging from what the expectations were in the U.S., and I think our results will be in line with that." "In [fiscal] Q2 [ending July], we do expect we will fall slightly short of what we expected. We were excited at the launch, but in Q2 we believe it will slightly lag [behind] our expectation," he said. Bartel didn't detail GameStop's projected sales figure for the 3DS, which launched in the U.S. and Europe in late March. The retailer today reported fiscal Q1 sales of $2.28 billion, a 9.5 percent year-on-year increase driven in part by sales of the 3DS. The $250 handheld, which boasts glasses-free 3D stereoscopic effects, sold nearly 400,000 units in its opening week in the U.S., along with 303,000 units in its opening weekend in Europe and 371,000 in its first two days in Japan. The large majority of GameStop's sales come from the U.S. In April, Nintendo confirmed that it shipped 3.61 million 3DS hardware units worldwide through the end of March, short of its original projection of 4 million units shipped. Nintendo blamed lagging Japanese sales on March's earthquake and tsunamis that devastated the country, but admitted the disasters didn't explain slower-than-expected uptake in Western markets. Nintendo CEO Satoru Iwata said the company would address the slower sales by renewing its marketing campaign around the device. GameStop's Bartel said the 3DS launch lifted the current profile of the handheld gaming space in general, "but it hasn't been a significant increase in there. We anticipate the 3DS is going to continue to be the hottest handheld platform for at least the second quarter."