Nintendo says reaction to 3D warning was overblown

Thu Jan 20, 2011 4:10am IST

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* Reaction to its health warning "over the top" -executive

* Device sets it up to better compete with Apple -analyst

* 3DS to sell in U.S. for $249.99 starting March 27

By Liana B. Baker

NEW YORK, Jan 19 (Reuters) - A top Nintendo Co Ltd 7974.OS executive said reaction to a health warning on its new 3D handheld game player was overblown, portraying as routine the warning that hit its shares two weeks ago.

Nintendo had warned that its 3DS, set to go on sale March 27 in the United States, could harm young children's eyes, and advised that children 6 years old or younger play games only in 2D mode. [ID:nTOE70201U]

The warning, which appeared on the company's website in Japanese, was picked up by media outlets and blogs, and triggered a three-day sell-off in Nintendo shares two weeks ago. Some people criticized Nintendo for the warning, saying there was no medical evidence 3D harmed children's eyesight.

Nintendo of America president Reggie Fils-Aime downplayed the worries at a promotional event in New York on Wednesday, saying other devices in the home have similar warnings.

"It certainly has been a reaction that has been a bit over the top," Fils-Aime told Reuters in an interview.

He added that children 7 and above "can certainly enjoy the 3D features."

Nintendo is betting heavily on the 3DS, which doesn't use bulky glasses, but it faces far stiffer competition than when it launched other notable handheld game devices, including the Game Boy in 1989 or the DS in 2004.

The device, which will sell for $249.99, can play 3D graphics and video and snap 3D photos without the need for glasses -- features that analysts have said will give it an edge over Apple.

"The 3DS gives Nintendo something that Apple can't offer people right now," MKM Partners analyst Eric Handler said.

Nintendo could use the boost of a new hot product to regain its luster. [ID:nN12138884]

After three years of record earnings until March 2009, Nintendo's margins have fallen sharply and the company has forecast that profit will fall to its lowest in five years. [ID:nL3E6N605E]

Nintendo's first major piece of hardware since the Wii, is a bid by the Japanese company to outpace rivals Sony Corp (6758.T) and Microsoft (MSFT.O) and to beat newer rival Apple (AAPL.O), which is stealing handheld market share.

"We are convinced that the Nintendo 3DS is the next entertainment breakthrough," said Fils-Aime. "We think it's going to set us apart."

Fils-Aime, 49, dismissed critics who say Nintendo is in decline.

"Some so-called experts don't understand how the maturation cycle works in this industry and the fact is, no one can sell 10 million units of any system year after year," he said referring to the company's once explosive Wii sales.

When asked whether Nintendo was keeping up with its rivals, Fils-Aime insisted it was Nintendo's rivals who should be threatened by the company.

"Our competitors continue to be at a place of having to react to what we've done and not the other way around," he said.

(Reporting by Liana B. Baker; editing by Gary Hill)

((liana.baker@thomsonreuters.com, +1 646 223 6179)) Keywords: NINTENDO

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