Nintendo says it will cut the price of its Nintendo 3DS gaming console to $169 from $249 in the U.S., after reporting a large drop in sales and drastically cutting its profit outlook for 2011.

The Japanese video gaming giant reported a net loss of $328 million for Q1 2011 (April-June) due to a 50% drop in sales compared to last year. This prompted Nintendo to reduce its net profit forecast for the year to $257 million, down from a previous estimate of $1.4 billion.

Globally, Nintendo sold 710,000 units of 3DS and 4.53 million game titles during the quarter and 1.56 million units of its Wii console. Wii's price was also recently cut to $150 in the U.S.

Nintendo says a lack of hit games, together with a stronger yen against the dollar and costs of 3DS promotion, hurt its earnings. The company hopes that the significantly reduced price of the 3DS will generate momentum before the holiday shopping season.

In June, Nintendo revealed it plans to launch an advanced new version of the Wii, called Wii U, sometime in 2012.