Nintendo (PINK:NTDOY) said this week it’s partnering with AT&T (NYSE:T) to allow free online access to owners of Nintendo’s new 3DS portable game player at 10,000 new AT&T Wireless hotspots.
Unlike Google– (NASDAQ:GOOG) and Apple– (NASDAQ:AAPL) powered mobile devices, the 3DS doesn’t have 3G technology, which makes it more affordable but limits its function as a connected device.
The conflict with Android and iPhone handhelds was a major theme of Nintendo’s announcement, namely how the low cost of mobile and social games that are proliferating on those platforms is threatening the profitability of the video game industry. Wedbush Securities analyst Michael Pachter said, following the announcement, “Long-term, Nintendo is doomed.”
It’s interesting then that Nintendo also announced a 3DS alliance with Netflix (NASDAQ:NFLX) that intends to aid another beleaguered industry: film. The announcement was auspicious not because Netflix’s streaming service would be on a devoted portable gaming machine — as shareholders well know, it’s the ubiquity of Netflix’s service that has made the stock so profitable — but that the 3DS version of the service would now host 3-D movies, a first for Netflix streaming.
The service won’t mean a significant influx of new business for Netflix, as it’s likely that many early Nintendo 3DS adopters are already among the company’s existing entertainment hungry audience.
But the impending release of the 3DS could be good news for investors in companies like Time Warner (NYSE:TWX), Comcast (NASDAQ:CMCSA), Disney (NYSE:DIS) and even Nintendo competitors like Sony (NYSE:SNE).
The Nintendo 3DS may be the key to finally turning 3-D movies into the consistent moneymaker the film industry has been searching for.
The logic is sound. 3-D blockbusters like Disney’s Tron: Legacy cost $170 million to make and distribute, but while 3-D effects might draw audiences into theaters, they’ve hardly helped dwindling DVD and Blu-ray sales in the home market. The past success of Nintendo’s handhelds — more than 140 million Nintendo DS handhelds have sold since 2004 — indicates a vast potential audience for downloadable video sales and rentals for Hollywood studios.
The 3-D support will ultimately be beneficial for Netflix on a long enough timeline as it will strengthen its licensing deals with studios looking to distribute older 3-D content.
In theory, this is all good news. But it also ignores the fact that consumers have so far shown broad indifference to 3-D entertainment. The glasses-free Nintendo 3DS might spark the sector, but for now it’s enough to see how well the 3DS sells – and how much support Hollywood studios put into film distribution on the platform.
As of this writing, Anthony John Agnello did not own a position in any of the stocks named here.