By Michael Fitzpatrick
FORTUNE -- Can Nintendo's 3DS handheld become a powerhouse e-reader? Japan's biggest printer, Dai Nippon Printing, thinks so. The company, which is a big player in domestic publishing here, announced it will launch 300 titles for young readers this fall for Nintendo's popular portable console.
Dai Nippon is already selling e-books and manga through conventional e-readers, a crowded market. Manga on all platforms including mobile phones are popular but regular e-books do less well. The publisher says it is particularly keen to go after young readers who, it claims, often don't have access to e-books on any platform. By narrowing their demographic to a gaming-obsessed youth, the firm hopes e-book sales might finally take off. "We estimated that portable game devices, especially the 3DS, is popular among under twelves in Japan," a DNP spokesman says. "But, there aren't many children that have e-book readers, iPads, and so on, so we started this new business to target them."
Despite a reputation for being early adopters, Japanese consumers haven't fallen for e-readers. Sales of conventional e-books and e-readers have been comparatively poor. E-Reader adoption, well established in other developed nations -- around 25% of U.S. consumers have one -- is low in Japan. With 11 million 3DS units sold so far in Japan, Nintendo's (NTDOY) gadget could be ideal for creating an e-book audience. As there are only about 1 million dedicated e-readers in circulation in Japan, DNP reckons it stands to multiply possible e-book outlets by a factor of ten.
"For Nintendo, e-books are a new business that will not only allow them to diversify their product portfolio and create a new revenue stream but also provide a new marketing angle: It will be now easier to sell the 3DS to parents -- who mainly make the purchasing decision for their kids," Tokyo-based technology consultant Serkan Toto says.
He agrees potential sales could be massive in one of the most bookish nations in the world. The children's books market in Japan is worth about $790 million annually. Meanwhile, the market for e-books in Japan is expected to triple by 2017 to $2.3 billion, according to analysts at Japan's Impress Business Media Corp.
Some are not so bullish. Critics point to falling readership of books, magazines, and newspapers. Tokyo-based market research firm MM Research Institute reports that e-reader demand was weaker in Japan last year than expected owing to the high price of e-books in Japan, their relative scarcity, and competition with smartphones and tablets. E-reader sales are expected to slow substantially this year.
DNP's e-book service for children will be implemented through a freely downloadable e-books app for the 3DS, although a Nintendo spokeswoman denied the console maker is collaborating with DNP on this aspect of the service. Books digitized by DNP will be easily readable on the 3DS's high-resolution touchscreens she said. "We already distribute brain training and english learning and e-books through our consoles, while Sharp Corp has a program that uses the 3DS at schools in Japan," she said.
DNP said the initial offering will be just text and image-laden e-books. Not a good choice for the 3DS with its color screen, fast processor, and 3-D capabilities says Robin Birtle, Japan e-books industry analyst and CEO of Sakkam Press Ltd. "Nintendo and DNP really should know better. Those 300 titles might impress if each was a souped-up edition using sound and 3-D effects," he says. "The two companies will find incredibly tough competition from Japan's excellent local [physical book] libraries, not to mention the numerous iOS and Android capable devices to which most Japanese kids have access to."
Nintendo has dabbled with e-books before, and some of its consoles worldwide offer downloadable package of e-books known as 100 classic books. DNP and Nintendo said there are no plans to introduce non-Japanese children's e-books outside of Japan on the 3DS.
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