Nintendo has been suffering large losses in revenue this past year as competitors such as Sony, Microsoft, and Apple have been outperforming it.
Rather than paying hundreds of dollars for one of Nintendo's games, consumers are choosing to turn to substitute goods such as the inexpensive smartphone app, Angry Birds.
The only way for Nintendo to receive profits is to increase their prices. However, according to the law of demand, an increase in price will result in less consumer demand. Also, seeing as consumers are highly sensitive to changes in price in the video game market, price elasticity of demand is very high and doesn't fare well for Nintendo if they do not come up with a better idea and fast.
Source: http://www.businessweek.com/magazine/nintendo-needs-a-hit-in-a-hurry-02022012.html
