Nintendo has admitted that sales of the glasses-free Nintendo 3DS have not been up to scratch.
The 3DS, which launched globally in March, suffered because it failed to meet fan expectations, Nintendo said.
"It's fair to say that while Nintendo 3DS had a strong launch day, the results since then have not met our expectations," Nintendo president Satoru Iwata told investors at E3.
"By which I mean to say that although pre-orders for this system were very strong and initial impressions of this system were very positive, those early indicators stand in conflict with where the system is at today. So, I can't say there are no issues at present.
"So, what we have analysed up to this point is that the initial move by the early adopters has not translated into broader movement by the broader market in the ways that we had expected."
So, what went wrong?
"The current situation resulted from the fact that the delay of developing Nintendo 3DS software and launching online services, like Nintendo eShop, 3D video services and so forth, occurred simultaneously, so we could not meet people's high expectations that they had before its launch, and we did not see momentum after the launch," Iwata explained.
But all is not lost. Iwata hopes upcoming games, such as The Legend of Zelda: Ocarina of Time 3D, will help get the 3DS back on track.
"I think that we'll be able to show you that as Nintendo eShop and 3D video services come online, and a number of key software titles become available, we'll be able to regain momentum for this hardware."
Iwata denied the accusation that the 3DS is not significantly different than the DS.
"Regarding the form factor, I think that people who purchase video game systems tend to purchase it for the experience that the system offers, so while I do agree that it's important for us to work on creating products with appealing form factors, I don't think that the current state of the Nintendo 3DS is because of a result of not having a significantly different form factor from our other handheld systems.
"But, as you have pointed out that you have a concern about the form factor, then as we continue to look at what we do with the system, we'll continue to take that into account and see what we can do to satisfy that concern."
The 3DS has sold just over a million units in Japan. It sold 113,000 units during its first two days on sale in the UK a figure short of the 140,000 3DS pre-orders Nintendo announced it had received before the console went on sale.
Across Europe the 3DS shifted 303,000 units in its first two days on sale.