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Handheld gaming device shipments are expected to slow and even decline in 2013 and beyond while tablet/smartphone shipments continue to soar

Mobile devices are certainly taking over the tech world, but not just any mobile devices -- smartphones and tablets are slowly pushing handheld gaming devices out of the spotlight.

A new study conducted by ABI Research shows that more portable gamers are looking to smartphones and tablets for their gaming needs rather than handheld gaming devices like Nintendo's 3DS and Sony's Vita.

According to the study, both Nintendo and Sony are expected to ship over 38 million portable gaming devices in 2013. After that point, unit shipments are expected to continue declining slightly and then remain "flat" through 2017.

The 38 million-unit shipments in 2013 is a dramatic fall from the 47 million-unit shipments in 2008. Expert analysts say that smartphones and tablets are moving in on this sector, offering mobile games that are much cheaper right on the devices they use on a daily basis. However, core gamers will still keep Nintendo and Sony's gaming sales afloat.

"Mobile devices will compete with dedicated handheld gaming devices, but select consumer segments like core gamers and those individuals who do not want or have a smartphone or tablet will still provide some demand," said Michael Inouye, senior ABI analyst. "The addition of mobile gaming is not necessarily a zero sum situation; in fact, many feel there is plenty of room in the gaming market for both portable and mobile gaming.

"The mobile and tablet markets have increased consumers' price sensitivity. First party developers and key game franchises will be vital cogs for the industry in the future, since hardware alone is not going to cut it given the shorter upgrade cycles for mobile devices."

This was clearly demonstrated last year when Nintendo's 3DS launched for $249.99 and initially didn't sell very well. In July 2011, the gaming company reported poor financial results, posting a net loss of 25.5 billion yen ($324 million USD) and decided to slash the 3DS' price to $169.99 starting August 12.

In April of this year, Nintendo posted its first annual loss ever with an operating loss of 37.3 billion yen ($460.9 million USD) and a net loss of 43.2 billion yen ($532.5 million USD).

However, it looks like Nintendo is still doing all right. In March of this year, the company celebrated the 3DS' birthday with a 4.5 million sales milestone. Sales for the device picked up after the price slash and when more impressive titles were released. 

In addition, Nintendo recently introduced its own social network, "Miiverse," which is to be released with its upcoming Wii U console release.

While gaming companies like Microsoft's Xbox division and Sony's PlayStation unit still seem to attract core gamers, mobile devices have a bit of an advantage in that they can capture the attention of both casual and core gamers. Smartphones tend to be used by a larger audience, since carrying a cell phone on a daily basis is more common than someone carrying a 3DS. When we're not using it for phone calls or the Internet, gaming apps are a popular pastime, and they're convenient because they're right on our phones. They're also cheap, and many times even free.

Also, many new tablets and smartphones are released annually, giving consumers many choices for different price ranges. For instance, Apple has released a new iPad each year since its initial release in 2010. During the first quarter of this year, Apple's iPad had 11.8 million total shipments.

Last year, Rovio CEO Peter Vesterbacka, creator of mobile game Angry Birds, said that console games were dying in favor of mobile games because of how expensive console games are and the slow rate of system upgrades.

Source: ABI Research

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RE: Not surprising...
By inperfectdarkness on 6/12/2012 3:34:31 AM , Rating: 2
sorry, but mobile gaming systems are here to stay:

1. parents aren't going to buy an iphone for $500 to give to their 6-year-old to keep him entertained on road trips--they'll splurge $200-250 on a portible hand-held.

2. as noted elsewhere, control interface is a key factor between a touch-only interface & something with buttons. there's quite a bit more limitation on what types of games can be played with a smartphone's limited interface.

3. 30 $1 games can't provide the depth and draw of a 1 good $30 game (less if you buy used). i can guarantee that a zelda game will give you many more hours of enjoyment than 30x $1 throwaway games.

4. putting all your "tools" in one "smartphone" means that you're making yourself a victim to the stupidly short battery life on said phone. how are you supposed to make calls or pay for something with your phone...when the battery has died yet again? my old DS-Lite can play for 17+ hours per charge--and i don't have to worry about being stranded if i drain the battery and can't call a tow-truck.

5. google, apple and microsoft would have to convince ALL the 3rd party developers to develop primarily for their smartphones--at trivial profits ($1 games, remember?), rather than for portible gaming systems where the profit margins are higher & there's more freedom to develop without the hinderance of limited controls.

so no, i don't think DS/PSP is dead. i think you're probably going to see more overlap between the two--but remember kiddies, being a jack of all trades = master of none.

RE: Not surprising...
By WalksTheWalk on 6/12/2012 4:54:03 PM , Rating: 2
The PSP and other dedicated potable devices will appeal to the more hardcaore users where the system has a good control mechanism and so on.

For everyone else who is a casual gamer a smartphone falls in the "good enough" category. Most people aren't willing to spend $250 on a portable system, plus $30-40 per game when a smartphone can give them some kind of portable experience for a few dollars per game when they already have the device.

"Mac OS X is like living in a farmhouse in the country with no locks, and Windows is living in a house with bars on the windows in the bad part of town." -- Charlie Miller

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