There was a time when Nintendo could do no wrong, when everything the Kyoto-based game maker touched turned to gold. That time is over — and has been for some time. However, that doesn’t mean you should count them out.

Earlier this year, Nintendo released the 3DS, a 3D glasses-free portable gaming system. The company is also preparing to release a new home console, the Wii U. But both consoles have to overcome a huge obstacle — Nintendo’s previous success.

The one-two punch of the Nintendo DS and the Nintendo Wii are the greatest comeback in video-game history. Before the DS launched in 2004, Nintendo was stumbling along with the GameCube, which was a great console with great games, but no match for Sony’s mighty PlayStation 2.

The DS’ slow burn, especially in Japan, gave way to a nationwide fever, with the DS becoming the “must have” piece of tech. In 2006, the DS was so popular in Japan that American DS handhelds were being reimported back into Japan in a desperate attempt to avoid the DS from selling out. It’s now the best-selling portable gaming handheld ever. Nintendo’s second act was the Wii, which dazzled players with its motion controller, inspiring players to get up off the sofa and flail about the living room. But in the last year or two, that dazzle has turned to fizzle, and the Wii appears to have run out of steam.

The 3DS might be Nintendo DS’ heir, with its dual screens and glasses-free 3D, but it’s not the DS’ successor in terms of sales. The 3DS, which launched in February, sold well out of the gate, but interest wained, with the Sony PSP dominating hardware sales in the spring. Things for the 3DS started looking so grim that Nintendo slashed the console’s price from ¥25,000 to ¥15,000, causing a huge sales spike. As an olive branch, Nintendo is offering 20 free downloadable games to 3DS owners who purchased the handheld pre-price drop.

Nintendo has typically ruled the handheld gaming realm, but the 3DS, so far, isn’t quite capturing the public’s imagination. It’s not totally Nintendo’s fault. It’s the times we live in. Now that smartphone owners can download games for a ¥100 — entertaining games that provide continual free updates — who wants to pay ¥15,000 for a dedicated piece of hardware and then ¥4,000 for games? Kids, probably. But kids don’t have jobs — or money. And as Nintendo recommended that gamers under the age of 6 shouldn’t use the 3DS’ main function — the glasses-free 3D — it may have scared off some parents.

The sudden price cut revealed a panicked Nintendo. Gone was the cool and calculated master of the gaming universe. With the DS and the Wii, Nintendo caught lightning in a bottle — twice. Now the bottle was broken, and Nintendo was picking up the pieces. The price cut helped enormously, with sales jumping from a measly 4,000 3DS units a week to an astounding 196,000 units during one week in mid-August. During the following week, that number halved to 100,000, which is certainly better than 4,000 units. However, a 50 percent drop in sales is still a 50 percent drop in sales.

The glasses-free 3D never quite caught on with gamers, just as 3D television has never quite caught on with consumers. To achieve the 3D effect, gamers ended up focusing on images cross-eyed, causing headaches for some. But the initial gripe towards the 3DS was the nose-bleed high price, though Nintendo abruptly took care of that. These days, 3DS owners complain about a lack of compelling games, and they have every right to be miffed. In the months following the 3DS launch, a whole host of non-Nintendo-developed 3DS games were either delayed our canceled outright (such as “Assassin’s Creed: Lost Legacy” and “Mega Man Legends 3”), leading players to wonder if outside studios were getting cold feet towards the 3DS.

One of Nintendo’s strengths is software development; one of its weakness is attracting outside studios to make games for Nintendo hardware. The reason for the reluctance by outside studios is that gamers buy Nintendo consoles to play Nintendo games. While other companies are happy to spin off their games onto outside platforms or smartphones, Nintendo is steadfast in its desire to release its games only on its hardware. Because Nintendo is synonymous with releasing games on its hardware (and those are the games that sell best), it seems as though more and more outside studios are reluctant to release their games on Nintendo machines.

However, not all hope is lost for the 3DS. Nintendo is coming to the rescue, readying several big titles for the 3DS later this year, such as “Super Mario 3D Land” and “Mario Kart 7.” Gamers everywhere love “Mario,” and these titles, along with the approachable price point, will help the 3DS out of its funk. Nintendo is holding a press conference right before this year’s Tokyo Game Show, an event it does not traditionally attend, to discuss the 3DS. It is expected that Nintendo will reveal a new 3DS title. But as with the sudden 3DS price drop, the sudden announcement of this event does feel like Nintendo is scrambling. There are unconfirmed rumors that Nintendo — never one to shy away from multiple versions of its own hardware — is revealing a tweaked 3DS, either a thinner or a larger model, a new version with dual thumbsticks or a version with the 3D effect dropped entirely. Since the 3D effect can be switched off on the current 3DS, I doubt Nintendo would even bother with a 3D-free 3DS. A 3DS with dual thumbsticks would align the portable with Sony’s upcoming PS Vita handheld, but it would mean a significant hardware redesign. The current 3DS only has one thumbstick.

Because the 3DS and the PS Vita are so different, studios must develop games and controls for each title differently. With its touch screen controls, the PS Vita is closer to a smartphone, meaning that studios will have an easier time of creating titles for both. For the 3DS, studios must develop titles specifically for the handheld’s two screens, and if they are implementing the 3DS’ 3D effect, developers must specifically develop titles for that feature. Outside studios must bend to the will of Nintendo’s hardware in a way they don’t quite have to with other platforms. For example, the system architecture of the PS3 and the Xbox 360 are different; however, the graphics and controller layouts are similar, meaning that studios can simultaneously develop relatively similar games at the same time. But the Wii, with its low res graphics and motion controls, is a whole other can of worms. The upcoming Wii U has powerful, HD graphics, and it will no doubt close that gap entirely. The Wii U uses a large controller with a touch display, which means that studios will have to spend more money developing Wii U games because of this added factor. Likewise, this could turn off some outside developers.

With so much competition from rival game makers and the rise of smartphones, Nintendo’s future may not be as luminous as its past. The company has been in worse situations, however, and has had bigger failures (remember the Virtual Boy?). Generally, Nintendo has had a long, proud history of great games and great hardware — and that isn’t over. So don’t count Nintendo out yet. Just don’t expect it to dominate, either.

Brian Ashcraft is a senior contributing editor at gaming website Kotaku.com.

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