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Are Smartphones Killing Handheld Gaming? Part 2

{complink 10098|Nintendo of America Inc.} is in a big gaming slump, with none of the best selling games for 2011 coming close to the 15 million to 25 million units previous bestsellers have sold. This slump is making the handheld market look bleak, but if Nintendo can push out a best seller within the next year {complink 7526|Semico Research Corp.} believes it will maintain a significant portion of the market share.

On the other hand, Nintendo is facing a lot of pressure to start porting its games to the iPhone. If it gives into pressure, then its hardware sales might as well be finished. And while content is still king, it's not the full story. How has the hardware side been fairing?

Japanese hardware sales are usually a pretty good indication of what is going on in the market, though recent numbers have been affected by the March earthquake; sales are down and slightly off from usual.

Here are some shipment numbers for August 8, compared to August 1, from Joystick.

  • PSP: 35,619 — down 1,040 (2.84%)
  • PS3: 18,338 — down 2,366 (11.43%)
  • Wii: 17,004 — down 1,228 (6.74%)
  • DSi LL: 4,176 — down 1,091 (20.71%)
  • 3DS: 4,132 — down 12,283 (74.83%)
  • DSi: 3,900 — down 725 (15.68%)
  • Xbox 360: 1,406 — down 210 (13.00%)
  • PS2: 1,529 — down 65 (4.08%)
  • DS Lite: 102 — down 36 (26.09%)
  • PSP Go: 0 — down 7 (100.00%)

The main thing to take away from that list is everything is down. PSP is doing great in Japan, a more recent trend, with almost all PSP sales now shipping there. The DS line in total is 12,310 units, about a third of the PSP shipments. The recent release of the 3DS has been a complete letdown for Nintendo, partly because the earthquake happened so close to its release date, and partly because it has too high a price point and too few games. When this changes, these numbers should bump up, something Nintendo is counting on as it continues to slash the 3DS price.

So, the complete story is: Don’t give up on Nintendo yet. Semico’s forecast leans to the more optimistic outcome for handheld gaming, because Nintendo has a history of turning things around after almost everyone has given up on it.

But we need to keep in mind two caveats:

  • If Nintendo lets smartphones dictate the game release lineup, then in a few years Nintendo will be at current PSP numbers worldwide, with the decline continuing thereafter.
  • If Nintendo ports its games to smartphones, then the decline is going to happen even sooner.

15 comments on “Are Smartphones Killing Handheld Gaming? Part 2

  1. mfbertozzi
    August 22, 2011

    It is a very fascinating 2nd part Michell; past week we have discussed in depth and shared many opinions about. At the end, I would like to report my final position: smartphone will potentially replace handheld gaming  for certain games, but it will be hard to replace specific console that people love and that allows a realistic environment for players. I am thinking for instance about console for racing (in track or outside).

  2. Tim Votapka
    August 22, 2011

    Agreed. The hand held universe will thrive on downloadable games. However the console-based gaming world will continue to share much of the available market simply because of the experience it provides.

  3. AnalyzeThis
    August 22, 2011

    This is something I don't foresee happening anytime within the next five years. There are numerous reasons why Nintendo wouldn't do this:

    – It would possibly cannibalize their own handheld sales (obviously)
    – The price structure of games is completely different; Nintendo still sells games they released 20+ years ago for more money than the average smartphone game.
    – Nintendo has been fiercely dedicated to not releasing games for other people's hardware in the past (there are very few exceptions to this and none of the major exceptions have occurred within the last decade). Like Apple, Nintendo likes being in control.
    – Difficulty of getting games to work on multiple devices (less of an issue if they only ported to Apple products)
    – Most of Nintendo's flagship titles don't make as much sense or play as well as on the smartphone: they are largely designed for physical controllers.

    Now I know there are games that have “virtual” d-pad's and buttons, but even if you are a fan of such mechanisms (I'm not), I'm unsure as to if that type of control scheme would work for something that requires the precision of say, a Super Mario Brothers game.

    So again, I would be shocked if we see Nintendo games on smartphones anytime soon.

  4. Barbara Jorgensen
    August 22, 2011

    I definitely see smartphones eating handheld-gaming's lunch. Downloadable games will be the beginning of the end. Nintendo should hold out as long as possible, although they will still have the software business when hardware begins to migrate.

    3-D might keep handlheld alive awhile longer, if the quality is good enough.

  5. Nemos
    August 22, 2011

    I don't think the slowdown in sales for the handheld devices has to do with the increasing number of downloads for the smart phones. There are two different markets and is not competitive to each other, but it is complementary. Moreover, we have two different type of users:  casual and guru. Casual users they dont spend a lot of money for a game and they play simple games such as tetris,crazy birds,nibble, etc. From the other hand guru users spend a big amount of money for a game, and they have many requirements from it.   

  6. Daniel
    August 23, 2011

    Barbara, you are right. Now a day’s most of the peoples prefer gaming apps in smart phones rather than physical gaming devices. Only kids or teenagers prefer gaming consoles and such dedicated devices. I think this trend may continue further because many new gaming apps are developing by many companies.

  7. jbond
    August 23, 2011

    I think it’s a matter of time before smartphones totally kill the handheld market. As the phones are allowing better gaming, more people are purchasing the games on their smartphone to kill time. Generally speaking, other than younger kids who wants to carry around multiple devices? If your smartphone can do everything, there is no need for other devices. There will continue to be a market for full-size devices at home as long as the prices don't sky rocket, but I think the smartphones are looking for a hammer to put the final nails in the coffin for handheld gaming devices. 

  8. JADEN
    August 23, 2011

    Smartphones are having a big effect on the future of handheld gaming.  The proportion of games play on phones increases, people playing games on their mobile phones also own a DS or PSP which they no longer use.

  9. Anne
    August 23, 2011

    I don't see smartphones as gaming platform, they are only good for simple fun, timewaster, not actual games.

  10. elctrnx_lyf
    August 23, 2011

    Good to see that the part 2 followed immediately. This clearly illustrate the smart phone are not just damaging the portable game devices but also the actual game console market. May be the gaming industry needs something fresh to attract more users.

  11. Taimoor Zubar
    August 23, 2011

    It's interesting to see that PS2 and PS3 did not dip that much as compared to other video game models. Considering the recent massive data breach at Sony, I would have expected the company to lose a lot of customer confidence.

  12. William K.
    August 23, 2011

    The fact is that hand held electronic games are a fad in decline. Console games are next to fall out of vogue, although a bit slower.

    The winner would be some hacker who creates a means to play the existing games on a smartphone. Either hardware or software, enabling existing games to be played on a smartphone, or anywhere, for that matter, would run around the copyright rules by repurposing legally purchased products, thus, no infringement.

    This may be “the next big thing” if anyone is able to pull it off. IT would also signal the fast end for the game hardware makers. Oh Well, it was a fad that has had it's day.

  13. Himanshugupta
    August 24, 2011

    @jbond, i agree with most of your comment. The difference in my opinion is that even though smartphone can become one-stop-for-all consumer devices, the capability will be limited. I can think of an example for gaming. Most of the people have PC and the hardware capability of PC is more than that of smartphone still people do not get that kick of playing on PC as they do get on dedicated gaming console/platform. 

  14. Kunmi
    August 24, 2011

    Himanshugupta : I agre with you absolutely. The fact that samart phone may have the same functionality as PC does not conote the same capability neither the same specifications.

  15. Kunmi
    August 24, 2011

    When we turn phone to toy, the purpose of the phone is being defeated. It is not a game platform at all, there is no reason to waste time debating this.

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