Nintendo

Avatar may have done serious business at the box office, but fans didn't respond by taking their bulky, cinema glasses into their home theaters. Last year's wave of 3D-enabled TV sets haven't been selling—really, they're tanking—which has left an industry wondering what to do with the fad.

Games company Nintendo might have the right idea: deliver 3-D on a portable system, and take the glasses out of the equation.

The Nintendo 3DS, announced months ago in Japan, received an official American unveiling this morning with a March 27 release date and a $249.99 price tag. It's the first major American gizmo to sport a no-glasses 3-D display, developed by Sharp, and it works by sending alternating images to left and right eyes when held at the right distance.

Other neat gimmicks include two rear-facing cameras, which let users take 3-D photos; a pedometer that awards points in certain games for getting up and walking around; and an always-on wifi mode that seeks other 3DS units for, say, social games. The system will also support one of my favorite new gaming trends, augmented reality (AR): aim the 3DS camera at a card on a table, and the screen will show that card transform into creatures and objects that can be played with by moving the camera around.

With an impressive, elegant 3-D effect—which players can adjust or disable at will—Nintendo should have no trouble outpacing 3D TV sales this year alone. That's not saying much, though, and a bigger competitor looms. Nintendo's been peddling Game Boys and other portable systems for years, but never figured to jump on the smartphone bandwagon, and now, fans are running out of pocket space (and would rather buy $5 apps than $35 cartridges). If Nintendo can't make its game systems smaller or attach a phone, then, the only path left is to up the wow factor and convince fans to make room.