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Are Smartphones Killing Handheld Gaming? Part 1

It's an accepted fact these days that smartphones are rampaging through the handheld industry, wiping out single-use products one after another, including portable media players, GPS, and satellite radio. Are handheld games next?

Handheld gaming has had problems over the last few years because high startup costs keep competition at a minimum. Microsoft, Nokia, and a score of small companies have tried, but only Sony has managed to compete against Nintendo.

This lack of competition could be a reason why this industry was so prime to be taken over by smartphones. The most popular Nintendo games can sell between 15 million and 25 million units; Angry Birds has had 200 million downloads. Here's a list of the best smartphone games of 2011, the operating systems behind them, and prices (in British pounds sterling), according to the UK's Guardian newspaper:

Though this list is based on nothing more than the preferences of the Guardian's readers, it is a good indication of the differences between the types of games available on phones and those available on handhelds, especially the price difference. The average price for a handheld game is between $10 and $40, with newer games closer to $40, a significant difference from the listed smartphone games. For handheld games, Japanese game magazines publisher Famitsu lists the best-selling handheld games — and the corresponding platforms — for the first half of 2011 as follows:

  • Monster Hunter Freedom 3 (Capcom), PSP
  • Dragon Quest Monsters: Joker 2 — Professional (Square Enix), NDS
  • Dissidia: 012 (Duodecim) Final Fantasy (Square Enix), PSP
  • Dai-2-Ji Super Robot Wars Z: Hakai-hen (Bandai Namco), PSP
  • Phantasy Star Portable 2: Infinity (Sega), PSP
  • SD Gundam G Generation: World (Bandai Namco), PSP
  • Pokemon Black / White, (Pokemon Co.), NDS
  • Professor Layton and the Miracle Mask, (Level 5), 3DS
  • Tales of the World: Radiant Mythology 3 (Bandai Namco), PSP
  • Nintendogs + Cats: French Bulldog/Shiba /Toy Poodle & New Friends, 3DS
  • The Legend of Zelda: Ocarina of Time 3D (Nintendo), 3DS
  • Ni no Kuni: The Ebony Wizard (Level 5), NDS
  • Ace Attorney Investigations: Miles Edgeworth 2 (Capcom), NDS

There are two types of gamers out there: casual and hardcore. Casual gamers represent a huge market, and with the Wii, Nintendo specifically targeted this demographic. But for handhelds, smartphones did a great job of grabbing this market with easy-to-play games that used the phone’s touch screen to innovate game play. Casual gamers have made the smartphone the No. 1 handheld gaming device, bumping the Nintendo line down to No. 2.

According to the head of a casual gaming household: “My 7-year-old has wanted a DS for the past few years and may just get one for Christmas this year. However, we've been thinking that an iPod touch might make more sense; not a lot more money and the apps are so inexpensive (free to $5) compared to the DS games ($15 to $35). By the time we purchase a few games for him we'd be at the price of an iPod Touch. And the DS still uses a stylus?! A stylus and game cartridges are just more things to lose. Plus we already know he loves Angry Birds.”

Her viewpoint ends by referencing a game that really draws her kids to the smartphone platform. So is there a game on the Nintendo side kids are anxious to play? Not at the moment, though in the past there have been Nintendogs, Pokemon, Animal Crossing, Mario, Zelda, etc.

In the concluding part of this series, we will focus on how the slump in handheld gaming is affecting the sales of hardware at the leading vendors, including Nintendo.

24 comments on “Are Smartphones Killing Handheld Gaming? Part 1

  1. AnalyzeThis
    August 17, 2011

    Michell, as someone who worked in the gaming industry for many years, I can say I suppose with some degree of authority that I very much agree with you!

    The old handheld gaming model doesn't seem to make much sense anymore. Why pay $150 (or more) for a system, $30+ for each game, and have to drag around a separate device when you can get free games or super cheap ($1-$6) games for your phone?

    Of course games on phones are nothing new, but once the iPhone came out there was a lot more graphical firepower to throw around and more developers actually expended effort on creating good games. That quote you have from the head of a casual gaming household I think is dead-on, the iPhone Touch at this point is possibly a better (and certainly cheaper) gaming platform than the Nintendo 3DS at this point.

    And to possibly verify your point, the 3DS did recently just drop its price from $249.99 to $169.99… so what does that tell you? (I'm guessing you're going to discuss that in Part 2, though!)

    One nitpick about using Famitsu statistics, however: the games you listed are based off of Japanese sales, so that list would probably look more recognizable if it were based on US sales. A couple of games on that list aren't even available in the US, I believe. Also another nitpick, the game that you list as 6th on your list of best selling games for smartphones I believe should be Dead Space.

  2. Kunmi
    August 18, 2011

    This ia an absolute truth. Handheld games tools will soon be obsolate because the smart phones has made life more easy in terms of comfort and cost

  3. SunitaT
    August 18, 2011

    @kunmi I totally agree with you that Handheld games tools will soon be obsolate. I see no reason why people will buy handheld games when they get the same gaming experience with their mobile devices.

  4. mfbertozzi
    August 18, 2011

    It seems this will be the trend. Anyway smartphone requires in general a quite knowledge of how it works and maybe console or handheld will be still in place, especially for babies and children till the age of primary school.

  5. Jay_Bond
    August 18, 2011

    I think smartphones are absolutely killing the handheld gaming market. Besides Nintendo, which has had a grasp on the handheld market since the Gameboy was introduced, the only other stable attempt was Sony's PSP. In the last few years Sony's marketing and selection of games has dwindled down to nothing. Keep in mind this was a system that also played top of the line movies and had removable memory cards.

    With the introduction of the Sony/Ericcson Xperia, Sony has combined a handheld Playstation platform along with a smartphone running the Android OS. I think the release of this type of smartphone has pretty much put the end to future handheld systems. 

     

  6. eemom
    August 18, 2011

    I agree that Smartphones are killing the handheld games but I think the iPod touch specifically is the one that is taking over.  While not a phone, the touch does everything iPhone can do except make calls.  You can even download a free texting app.  I see more and more kids with the touch than the DS and you are right, it makes a lot more sense.  It has a lot more functionality than simply playing games and a lot of games are free or cost just a few dollars. 

  7. mfbertozzi
    August 18, 2011

    Good eemom, in your opinion or experience, “kids” means teenagers? If this is the sense, probably handheld will remain in the market for people younger.

  8. Houngbo_Hospice
    August 18, 2011

    One thing is certain: Smartphones are changing the gaming industry as many prefer the low cost video games for smartphones even though the quality is not always the same as what we can get with the traditional handheld gaming devices. But it doesn't matters for most casual gamers.

  9. Houngbo_Hospice
    August 18, 2011

    @mfbertozzi,

    ” maybe console or handheld will be still in place, especially for babies and children till the age of primary school.”

    I agree, but this demographic alone won't be enough to help the handheld gaming industry remain viable for a long time. The averrage age of gamers (as of 2011) is 37 according to this article  on Wikipedia(See “Demographics” section). 

  10. mfbertozzi
    August 18, 2011

    Thanks Hospice_Houngbo, this is another good point. Demographic trend especially in western part of the globe, won't really help in the near future, handheld market, then this is why they are coming to be replaced by smartphone owned by people older, like teenagers.

  11. saranyatil
    August 18, 2011

    As everyone rightly pointed out Smartphones are killing Handheld gaming, I think Ipads are creating a great revolution and there will be a huge hit with respect to other companies and manufacturers.

  12. Clairvoyant
    August 18, 2011

    I tend to look at this a different way. I wouldn't say that Smartphones are killing handheld gaming, I would say that Smartphones are expanding handheld gaming. These devices are now becoming many in one (i.e. phone, internet browser, game console, etc). It is hurting companies who only build gaming products (i.e. Nintendo), but still making handheld gaming easily accessible. With smartphones becoming more powerful all the time, more advanced games can be used on them.

  13. itguyphil
    August 18, 2011

    Well like many see with economies, it's not about crashing and burning but it is 'creative destruction' controlled by the marketplace. So the handheld device makers must innovate or use more creative measures to stay alive and relevant in today's world, if they have not already done so.

  14. eemom
    August 19, 2011

    While I do mean mostly teenagers, I have seen kids as young as 9 or 10 with an iTouch and maybe even a phone.  The age for getting electronic gadgets is getting younger and younger.

  15. hwong
    August 19, 2011

    I believe the answer to the article is a sounding yes from everyone. It's inevitable that the gaming handheld markets will vanish sooner or later and will be replaced by the smartphones. If you think about it, many of the items like handheld dictionary, handheld camera, video camera…all will be replaced. The traditional companies like Kodak, canon will have to rethink their strategy. Otherwise, it'll become another Borders book

  16. Anand
    August 20, 2011

    The traditional companies like Kodak, canon will have to rethink their strategy.

    @hwong, you are right these companies should rethink their strategy but unfortunately they dont have much option. Only way they can compete with handheld devices they should slash their prices so that people prefer their products instead of handheld devices.

  17. Anand
    August 20, 2011

    The age for getting electronic gadgets is getting younger and younger.

    @eemom, I agree with you that age for getting electronic gadget is getting younger but surely this is not healthy trend. Kids spend more time using these handheld devices rather than get involved in physical exercises. But from electronic industry point of view this is good news because they will get younger audiences also to whom they can target their products.

  18. Anna Young
    August 21, 2011

     @Anandvy, You're absolutely right, access to games on smartphones by young children is a concern. Many of these younger players are addicted and are lacking in social skills.

    However, from electronics industry it is business. It is development and advancement and is yielding revenue – great!

    I think whilst, I encourage innovation, advancement and good market targets, electronics industry, parents and all involved should  step back and evaluate the impact such devices are currently having on these young ones. We are all responsible to ensure that these kids are not severely damaged, in a quest for huge profit making venture.

     

     

     

     

  19. Nemos
    August 21, 2011

    Gaming it is a big story…..

    this phrase say it all :“not a lot more money and the apps are so inexpensive (free to $5) compared to the DS games ($15 to $35).” As you mentioned in the article the casual user is the user who determine the gaming market. And for a casual user the price per game is a high priority. The story with the crazy birds game show us that a small (few lines of code ) but a well written program can be more popular even from a program that the programmers team spent the double time to create it.

  20. electronics862
    August 21, 2011

    I think smartphone games aren’t as deep or as fully featured as the current games you get on the Handheld Video Game machine. But that could change as smartphones become more powerful plus more entrenched.

  21. elctrnx_lyf
    August 22, 2011

    The articles deals very clearly with the subject to make it easily understand why the smartphones are eating the handheld gaming device market. What I would like to see is, if the smart phones are also going to affect the sales of gaming consoles in the near feature making smart phones an alternate. Any views on this?

    May be the casual gamers will be just happy with smart phone games rather than buying a console.

  22. Himanshugupta
    August 24, 2011

    I noticed something with the popularity of the mobile phones and that was the segmentation of the phones. Some mobiles were targeting music lovers, some camera and video while other internet etc. This segmentation is still to happen in smartphones. A smartphone can have all the capabilities but i wonder whether making smartphone specialized in one segment make sense.

  23. maou_villaflores
    September 27, 2011

    Hard core gamers would rather invest to handheld gaming/consoles because it would take to another dimension in where they can live in their own fantasy compare to the small screens in your phone.

  24. electronics862
    September 27, 2011

    There's a chance that smartphone gaming may become better than handheld gaming. PC gaming is already leagues better than console gaming and has been for decades..

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