By Malathi Nayak
SAN FRANCISCO, Aug 28 (Reuters) - Nintendo Co Ltd plans to offer a new handheld gaming device and a $50 discount on its most expensive Wii U console in North America and Europe, to compete with rivals Microsoft Corp and Sony Corp as they prepare to release new hardware.
Nintendo said on Wednesday it will start selling the product, called 2DS, on Oct. 12, priced at $129.99, which is $40 and $70 less than its two 3DS devices. The new gaming device is a lower-resolution version of the popular 3DS and will play DS games and 3DS games in 2D graphics.
The new product, which will come in red and blue and will have two screens and a camera, is about as big as a 3DS laid out flat, but without the foldable clamshell design of the 3DS.
Known for games with characters like "Mario" and "Zelda," Nintendo has faced stiff competition from inexpensive or free mobile games on tablets and smartphones. Games on iOS and Android devices are eating into the market share of consoles and handheld devices.
With the 2DS, Nintendo hopes to attract new players who have not been able to afford costlier versions of its 3DS, priced at $169.99 and $199.99, Reggie Fils-Aime, president of Nintendo of America said in an interview earlier this week.
Some industry analysts have criticized Nintendo for limiting its games for use on its own systems and not taking advantage of the rapid growth of games on iOS and Android mobile devices. Nintendo executives have said letting popular game characters like "Mario" roam on mobile devices would impair the company's hardware business in the long term.
By introducing the 2DS, Nintendo is going after "not just consumers who have necessarily a phone or tablet" and want a taste of Nintendo's game fare, "but all consumers, especially younger consumers," Fils-Aime said.
The 2DS release will coincide with the launch of kid-friendly role-playing game "Pokemon X and Y."
"When you look at software sales, the 3DS isn't competing with the Android or iOS platform in terms of pure games sales," said Peer Schneider, publisher of videogame website IGN.com.
Schneider said he was surprised at Nintendo's decision to introduce another product in the DS line because the 3DS hardware and first-party titles on that handheld are selling well.
From the launch of Wii U last November to June 30, Nintendo has sold 3.6 million units of the console, compared to 9.3 million units of the original Wii sold over the same amount of time.
The game maker now aims to sell 9 million consoles by next March by offering new games and reducing its price. To get there, the company plans to sell its highest-end 32GB version for $299.99, down from $349.99, starting Sept. 20, Fils-Aime said.
But the eight month-old Wii U could face stiff competition from Sony's PlayStation 4 at $399 and Microsoft's Xbox One at $499, both hitting store shelves in November. They come with cloud technology that lets players stream games from remote servers, and carry a host of exclusive games.
Nintendo will have a hard time explaining to users how its Wii U is better or different from the Xbox One and PlayStation 4, Schneider said.
So it was a good move to drop the price, he said.
Nintendo has also timed the release of games like "The Legend of Zelda: The Wind Waker HD" and "Super Mario 3D World" around the holiday season to reinforce its Wii U console, Fils-Aime said. Titles from other publishers include "Call Of Duty: Ghosts" by Activision Blizzard and "Assassin's Creed IV:Black Flag" by Ubisoft that will be released in coming months.
"It's going to be these launches that are going to drive the business forward, and we're certainly going to do a lot of marketing activity behind the price decline," Fils-Aime said.