The Changing Handheld Market

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There are some new numbers for 3DS sales. Quoted from the 3DS Catch-All:

BNice wrote:
http://www.businesswire.com/news/home/20120306005652/en/Nintendo-3DS-Sells-4.5-Million-Units-Year

The 3DS has sold 4.5 million in hardware and 9+ million in software in it's first year in the US. It's a great turnaround after the horrible launch and the 3DS is outpacing both the Wii and DS sales in the US. We know that the 3DS is at 5+ in Japan and 4.5 in the US so if we assume that EU numbers are close this system could reach 25+ million worldwide in only it's second year. For a little perspective, the GameCube sold ~21 million worldwide and the Xbox sold ~24 million worldwide in their lifetimes. Pretty zany.

Then there's this from Forbes:

Forbes[/url]]They may have their doubters, and I count myself among them at times, but it’s never wise to bet against Nintendo.

The company looked like it was poised to make its first major hardware mistake in years, as the 3DS got off to a slow start in sales, and customers complained about the lack of quality titles and the sometimes dizzying glasses-free 3D.

But as the 3DS turns one year old, and we look at how the numbers have rebounded, it’s hard to say that the handheld is anything other than a win for Nintendo. They released some official numbers today, and most tellingly compared them to the initial sales of their last smash hit, the DS. The 3DS outpaces it in almost every category, and it shows that despite the rise of casual mobile gaming with Apple‘s iPhone and Google‘s Android, traditional video game portables aren’t nearly dead yet.

The 3DS has sold 4.5M units in the US as compared to the DS’s 2.3M in the first year. It has released close to double the amount of software titles, and sold nearly twice as many as well. Combined sales figures for hardware and software for the DS were $540M its first year, while the 3DS has sold $1.2B worth in the US.

This week, the 3DS is now being outpaced in sales 2:1 in the US and 5:1 in Europe by the recently released Sony Vita, but still outsells it 7:1 in Japan. The Vita has made a large splash, but as it’s just been released and the 3DS has been out for a year, it’s no surprise.

There's encouraging numbers about the Vita, as well, as Sony sells 1.2 M units worldwide, and some analysts predict it could hit 12.4 M sales this year if they cut the price. At the same time, it's sold more slowly than the PSP in the UK and other parts of Europe, and sales have effectively stagnated in Japan.

Then, of course, there's that iOS thing that might or might not have anything whatsoever to do with handheld gaming consoles.

So rather than clog up the 3DS and Vita Catch-All threads with market and money talk, let's hash it out here. What's the future of the handheld market look like? Are Nintendo and/or Sony in as much trouble as they appeared to be this same time last year? Are they really in competition with the iPad 3?

Go nuts.

TheGameguru wrote:
So that crazy Yen is the big issue for Nintendo?

It's also hurting Sony a good amount among other issues they're facing.

So that crazy Yen is the big issue for Nintendo? Is it true that the price drop on the 3DS means that Nintendo for the first time in long time (forever?) is taking a loss on every 3DS sold?

Its concerning to me that so much is sounding positive but the cold hard reality on the financial statements reveals a much different story... OR was 2011 a blip and 2012 will be a record breaker as the above articles are pointing out.

3DS has record breaking sales.. I would imagine a record setting year for Nintendo... What will the spin be if its not? The Yen again?

Edit..

If the 3DS is outpacing DS sales does that mean the Handheld market is now in its growth period? So we should see rising sales as well as more software sales in 2012? Whats the trend here?

Edit..

Oh god.. the Forbes article is written by who?

Blind_Evil wrote:
Shoptroll, gentleman and scholar, knocked the subject out of the park with this one IMO:

shoptroll wrote:
I still don't understand why everyone brings up the portable systems in comparison to smartphones/tablets. Isn't it obvious that smartphones/tablets have a much larger appeal due to the fact they're multi-use devices (and I bet you a large number of them aren't used for gaming outside of the Zynga/Rovio/fad du jour). The PC industry ships out a ton more PCs than consoles yet we don't hear nearly as much doom and gloom about how consoles are a dying prospect (in fact we get the opposite!).

Sooner or later conventional wisdom is going to have to accept the fact that it's possible for cats and dogs to live together.

+1

Shoptroll, gentleman and scholar, knocked the subject out of the park with this one IMO (from the 3DS thread):

shoptroll wrote:
I still don't understand why everyone brings up the portable systems in comparison to smartphones/tablets. Isn't it obvious that smartphones/tablets have a much larger appeal due to the fact they're multi-use devices (and I bet you a large number of them aren't used for gaming outside of the Zynga/Rovio/fad du jour). The PC industry ships out a ton more PCs than consoles yet we don't hear nearly as much doom and gloom about how consoles are a dying prospect (in fact we get the opposite!).

Sooner or later conventional wisdom is going to have to accept the fact that it's possible for cats and dogs to live together.

shoptroll wrote:
TheGameguru wrote:
So that crazy Yen is the big issue for Nintendo?

It's also hurting Sony a good amount among other issues they're facing.

No doubt.. as did a host of other issues.. but is that all? I guess thats the crux of the argument.. is the market changing significantly or are both Handheld and Smartphone gaming markets growing?

edit..

To the posts above. I'm not sure anyone reasonable thinks that its ALL OR NOTHING.. I've never suggested that both can't exists in some form or another.. my concern has always been is the handheld market what it once was prior to the smartphone market? i.e. is Nintendo going to be as big as they are with the cash they could generate NOW like they were back then? OR are market forces changing their playing field in significant enough ways to force Nintendo into changes.

I'll certainly eat some crow on this. I extrapolated way too much on Iwata's "iPhone games are devaluing the rest of the handheld market speech" and figured that the 3DS and other premium handhelds were really dying. Now it's starting to look like the markets don't overlap nearly as much as I thought they would. Which is still really surprising to me.

The Vita seals it though. There's nothing on the various iOS devices that compares to what that thing can do.

Rather than re-type the same points with different language, here's my three most recent points from the other thread. On the constant comparisons of tablets/phones to dedicated handhelds:

In my opinion, it's a combination of the fact that the gaming community at large always needs something to lose and that we keep hearing stories about people leaving AAA developers in order to go into mobile and social development which is leading people to believe that there simply is no future for dedicated handhelds and indeed, dedicated gaming systems at all. I personally still don't believe there's enough evidence for this as we're still in the fashion trend phase for tablets. Once that plateaus, I think then it will really determine which can and can't succeed in the long-term. Right now, those predicting either way are just guessing.

shoptroll wrote:
Parallax Abstraction wrote:
we keep hearing stories about people leaving AAA developers in order to go into mobile and social development

We're also seeing a large number of developers heading off for indie projects/studios as well. Much like the mobile/social development it seems there's a genuine interest in smaller scale projects with everything that comes with them: smaller budgets, smaller teams, more creative freedom. Which is where the bulk of the mobile/social development is currently at as far as the average project size/scope. Also, indie games and mobile/social games pretty much operate outside the traditional publisher/retailer paradigm which I think is another point in the favor.

I completely agree. I certainly get why we're hearing that, it's just that many are making the leap to assuming that everything in the future is going to be a mobile or social title because of this. There are advantages to developing on a dedicated handheld because though the market is smaller, the profit margins per unit sold can be a lot higher and since you're going into a market with fewer games, you do have the potential to stand out more, though of course you usually do have to have a publisher involved if you're going to release in retail stores. The mobile space is already very hit driven and like most other platforms, the vast majority of titles are commercial failures unless you get co-marketing from Apple or can afford to do PR. It's certainly a big and growing market but many are still assuming it's a near guaranteed path to success which is very much not the case and it has many of the same challenges as other platforms do.

And secondly, on Nintendo finances:

I get that Nintendo is bleeding cash but has been discussed before, a lot of that is because of the strong yen. Similar problem in Sony's case and many other Japanese companies that rely on exports. Of course that's not the only reason. The Wii sales went off a cliff way faster than Nintendo thought and the WiiU isn't out yet, plus I remember reading something about how Nintendo has an insane R&D budget right now. I'll say it for the 50th time, the 3DS and Vita are not guaranteed successes and Nintendo and Sony ignore the phone and tablet spaces at their own peril. I think Nintendo is definitely more akin to that thinking than Sony is based on my experiences with both the 3DS and Vita. But one can't deny that the 3DS is apparently selling better than the Wii and DS which were both stellar successes. All I'm saying is that based on that, it's equally as ridiculous to just discount them as successes that are now impossible because iOS exists. That's what I have been and still read in many places and I don't think there's evidence for that yet.

I don't believe the yen can be solely blamed for Nintendo's financial issues and there are other issues at play but it's indisputable fact that it is part of the issue. Not even just for Nintendo, for large sections of the Japanese economy as a whole. The Japanese government has been trying to keep their economy afloat by keeping their currency weak to boost exports. I know because Canada had been doing the same thing for a long time. Now the currency's rising and all those industries are losing a bunch of money while they retool their business models.

Regarding Nintendo's financial situation, which I don't profess to know a damn thing about: doesn't R&D cost a hell of a lot for a new console? I hear people downtalk the possibility of a PS4 in 2013 because Sony isn't in the right financial state to push new hardware through R&D.

Blind_Evil wrote:
Shoptroll, gentleman and scholar, knocked the subject out of the park with this one IMO (from the 3DS thread):

shoptroll wrote:
I still don't understand why everyone brings up the portable systems in comparison to smartphones/tablets. Isn't it obvious that smartphones/tablets have a much larger appeal due to the fact they're multi-use devices (and I bet you a large number of them aren't used for gaming outside of the Zynga/Rovio/fad du jour). The PC industry ships out a ton more PCs than consoles yet we don't hear nearly as much doom and gloom about how consoles are a dying prospect (in fact we get the opposite!).

Sooner or later conventional wisdom is going to have to accept the fact that it's possible for cats and dogs to live together.

I'm not sure if he knocked it out of the park, exactly. I'll ask my dedicated MP3 player and dedicated PDA if they agree with this assessment.

I'm pretty sure I have a Diamond Rio and a Palm Pilot kicking around my house somewhere.

Because your phone can handle MP3 functionality just as well, but for now phones are either unwilling or unable to handle the demands of traditional gaming. On the Apple side, dedicated controls. On the Android side, unified specification systems.

One rippin' thing about dedicated handhelds: no $100/mo. contract. I got out of the iPhone ownership game because I couldn't see dropping that much plus $200 every two years for iterative, marginal improvements. I don't bother buying many games for my LG Android smartphone replacement because compatibility can be such a crapshoot.

DSGamer wrote:
Blind_Evil wrote:
Shoptroll, gentleman and scholar, knocked the subject out of the park with this one IMO (from the 3DS thread):

shoptroll wrote:
I still don't understand why everyone brings up the portable systems in comparison to smartphones/tablets. Isn't it obvious that smartphones/tablets have a much larger appeal due to the fact they're multi-use devices (and I bet you a large number of them aren't used for gaming outside of the Zynga/Rovio/fad du jour). The PC industry ships out a ton more PCs than consoles yet we don't hear nearly as much doom and gloom about how consoles are a dying prospect (in fact we get the opposite!).

Sooner or later conventional wisdom is going to have to accept the fact that it's possible for cats and dogs to live together.

I'm not sure if he knocked it out of the park, exactly. I'll ask my dedicated MP3 player and dedicated PDA if they agree with this assessment.

I'm pretty sure I have a Diamond Rio and a Palm Pilot kicking around my house somewhere.

When smartphones can do games better than dedicated hardware, then we can talk.

Historically, it's been a bit of a problem. While everything is getting combined, we get separate, dedicated gaming hardware (consoles). And generally, physical input is a big thing, something not many current touch-only phones are good at.

Blind_Evil wrote:
Because your phone can handle MP3 functionality just as well

And that's the root of it. If handhelds always stay ahead of phones (by either being innovative like Nintendo or raw horsepower like Sony) then they'll always be a reason for them to exist. MP3 functionality and dedicated PDAs are already defined functionality that doesn't push ahead like games do so of course phones caught up.

I did a word search and there is one word missing from this page that will keep Nintendo in the handheld market: Pokemon. I never even follow that franchise, but I know it's still a huge deal for them.

Blind_Evil wrote:
Because your phone can handle MP3 functionality just as well, but for now phones are either unwilling or unable to handle the demands of traditional gaming. On the Apple side, dedicated controls. On the Android side, unified specification systems.

One rippin' thing about dedicated handhelds: no $100/mo. contract. I got out of the iPhone ownership game because I couldn't see dropping that much plus $200 every two years for iterative, marginal improvements. I don't bother buying many games for my LG Android smartphone replacement because compatibility can be such a crapshoot.

I'll shoot a couple of holes in that.

#1 - You don't need a $100 contract. iPad and iPod do just fine in terms of the mobile market. The phone is just something you happen to have in your pocket already.

#2 - The upgrade cycle on iPhone is kind of brutal but games are supported a couple of systems back frequently and there is no worry about backwards compatibility so far. When the iPod 6 comes out you'll probably still be able to play your $1 copy of Angry Birds if you'd like.

As to handling dedicated gaming I go back to my original point. Of course what Sony and Nintendo do is better. But for a large section of the gaming public, particularly the kids that used to ask for a Gameboy/GBA/DS for Christmas the iPod works just fine. Dedicated MP3 players and dedicated PDAs are by and large gone. If someone ever came up with a really sweet case for the iPhone that gave it twin sticks, some buttons and universal API support I think you'd see even further erosion of the handheld market.

Keep in mind that I say this as someone who loves handheld games. As much as anyone on this forum, I'd dare say. So I'm not being biased. I'm looking at the facts.

DSGamer wrote:
I'm pretty sure I have a Diamond Rio and a Palm Pilot kicking around my house somewhere.

I dunno, dedicated iPods still sell pretty damn well. And what Blind_Evil said, also including the fact that while iOS does have a handful of games that can arguably look as good as dedicated handhelds, they also don't have the depth or the length, at least not yet. Infinity Blade looks great but takes 15 minutes to finish. Uncharted: Golden Abyss and Super Mario 3D Land are 8-10 hours a pop. There's a reason most of these games are $1, there's nothing to most of them.

As for R&D, I do remember reading an article that said Nintendo was spending an unprecedented amount on it but I can't remember when that was. I don't know how true the whole Sony thing is. They are no doubt losing a lot of money but they have over 10 billion in cash and equivalents and the ability to borrow a ton of money if they need to. Given that the PlayStation division is one of their only profitable ones right now, I imagine they'd spend whatever they had to in order to get the PS4 to market. The current rumour is that they're making the hardware much more standardised and have AMD designing most of the guts which is a really smart move and means it'll probably cost a lot less to develop than the PS3 did with the Cell processor.

I dunno, dedicated iPods still sell pretty damn well. And what Blind_Evil said, also including the fact that while iOS does have a handful of games that can arguably look as good as dedicated handhelds, they also don't have the depth or the length, at least not yet. Infinity Blade looks great but takes 15 minutes to finish. Uncharted: Golden Abyss and Super Mario 3D Land are 8-10 hours a pop. There's a reason most of these games are $1, there's nothing to most of them

Are you saying that aggregated gaming time on Handhelds is far > than aggregated gaming time on Smartphones?

Also is Infinity Blade the pinnacle in gaming on Smartphones? and why? Are graphics key? What about games like Bejewled on iOS (my total time playing is obscene at this point)

DSGamer wrote:
I'll shoot a couple of holes in that.

#1 - You don't need a $100 contract. iPad and iPod do just fine in terms of the mobile market. The phone is just something you happen to have in your pocket already.

#2 - The upgrade cycle on iPhone is kind of brutal but games are supported a couple of systems back frequently and there is no worry about backwards compatibility so far. When the iPod 6 comes out you'll probably still be able to play your $1 copy of Angry Birds if you'd like.

Neither of your points are wrong but just for the sake of rebuttal:

1. I wonder though, if the iPhone weren't around, would the iPad and iPod Touch permit iOS to be as big a deal as they are? Those devices are as or substantially more expensive than a dedicated handheld. People keep making the argument about how you always have the phone and that's a very salient point but if the iPhone is the biggest driver of this (and it is the biggest selling iOS device far and away), I think the $100 contract is a consideration when making an argument about the growth of iOS. That's theoretical and obviously we are in a market where iOS is a big deal but I think if we didn't have the iPhone with it's expensive contract, iOS would still be huge but wouldn't be the gaming juggernaut it has become.

2. I don't think backwards compatibility is going to be infinite on iOS. Eventually, they're going to have to start using vastly different CPUs (or even design their own like Sony tried with Cell, so far every device has just used a faster ARM core) to keep iOS advancing at the pace they want and when that happens, I think older software will become unusable. Apple's done it many times with Mac OS. They aren't afraid to cut away legacy baggage, in fact that's something I praise them for over Microsoft. And the thing is, as you said the upgrade cycle is brutal and if you want to be on the cutting edge of iOS gaming, you have to have the latest stuff. Infinity Blade II was touted as such a huge deal (still don't know why but that's another discussion) but you could only play it on an iPad 2 and many new releases that aren't showpieces for Unreal Engine (like Pinball Arcade for example) don't run as well or in some cases at all on older devices. Sure there's lots of stuff that does but unless you only buy a handful of games on iOS, the long term cost of ownership for that platform is probably similar or longer to a dedicated handheld.

Both of those things I just argued have a lot of guesses and theoreticals in them. Just throwing them out for consideration. There's no doubt the market is different now and Sony and Nintendo have to adapt or die. Truthfully, for companies that have histories of arrogance that has frankly only been surpassed by Apple, I think being forced into some humility and adaptation is a good thing. In the current handheld generation, my first impressions are that Sony gets this need for change better than Nintendo does with some of what the Vita is doing. They are definitely poised to better take on the phone world at this point I'd say.

DSGamer wrote:
#1 - You don't need a $100 contract. iPad and iPod do just fine in terms of the mobile market. The phone is just something you happen to have in your pocket already.

That's the whole idea behind eliminating my need for a DS or PSP though, isn't it? If I'm going to carry two pieces of tech to handle my business (talking, texting, and gaming) I don't see the point in one being a phone and one being an iPod. Unless I'm super into iOS games, and that ship has sailed until further notice. Tablets don't offer the kind of portability I'm talking about, it would require something more than my pocket. If I buy one eventually it'll replace my laptop, not my 3DS.

DSGamer wrote:
But for a large section of the gaming public, particularly the kids that used to ask for a Gameboy/GBA/DS for Christmas the iPod works just fine.

I don't know exactly how to articulate it, but I think you're making an incorrect or to-be-determined assumption there. As in, there'll be no kids that come up on iOS games that don't want more meaty experiences when they have their own money to spend.

DSGamer wrote:
If someone ever came up with a really sweet case for the iPhone that gave it twin sticks, some buttons and universal API support I think you'd see even further erosion of the handheld market.

I think you run into the issue there that you do with something like the Wii Remote+. Nintendo knew that to get the kind of sales they'd need for a game that required that, they'd need to produce controllers that integrated it. I suspect not enough people would buy a peripheral case to start that erosion.

On a different note, I read today that Sword and Sworcery moved 350k units. That's kind of telling about the audience crossover.

1. I wonder though, if the iPhone weren't around, would the iPad and iPod Touch permit iOS to be as big a deal as they are? Those devices are as or substantially more expensive than a dedicated handheld. People keep making the argument about how you always have the phone and that's a very salient point but if the iPhone is the biggest driver of this (and it is the biggest selling iOS device far and away), I think the $100 contract is a consideration when making an argument about the growth of iOS. That's theoretical and obviously we are in a market where iOS is a big deal but I think if we didn't have the iPhone with it's expensive contract, iOS would still be huge but wouldn't be the gaming juggernaut it has become.

I'm struggling to get your point here.. you are saying that the $100 a month contract helped iOS gaming become what it is? Not sure I can connect these dots.

TheGameguru wrote:
I dunno, dedicated iPods still sell pretty damn well. And what Blind_Evil said, also including the fact that while iOS does have a handful of games that can arguably look as good as dedicated handhelds, they also don't have the depth or the length, at least not yet. Infinity Blade looks great but takes 15 minutes to finish. Uncharted: Golden Abyss and Super Mario 3D Land are 8-10 hours a pop. There's a reason most of these games are $1, there's nothing to most of them

Are you saying that aggregated gaming time on Handhelds is far > than aggregated gaming time on Smartphones?

Also is Infinity Blade the pinnacle in gaming on Smartphones? and why? Are graphics key? What about games like Bejewled on iOS (my total time playing is obscene at this point)

I don't know what the aggregate time between the two types of devices is, nor does anyone else. I'm simply pointing out key differences in the experiences, differences that are important to many people. The reason I believe a dedicated market still exists is for the people who do want length and depth and technical prowess. Once again, I don't believe there's room for only one market segment. Many do, I don't. What I am saying is that the reasons people want a dedicated handheld are different from the reasons someone would game on a smartphone.

Graphics aren't key to me but Infinity Blade was heavily marketed and held up for its graphical fidelity. Many asked why you need a dedicated handheld when your phone can produce graphics that amazing. It does indeed look amazing but in order to work in the form factor for which is was designed, certain design decisions were made for that (i.e. simplistic gameplay that doesn't last long). In the case of say Uncharted, the game definitely costs more but it looks good and is long, deep and has engrossing story and characters. And it's selling very well. Again, I say that only to point out that people still seem to want those experiences, at least enough to make a viable market out of it.

If someone ever came up with a really sweet case for the iPhone that gave it twin sticks, some buttons and universal API support I think you'd see even further erosion of the handheld market.

I dont think theres a market for a smartphone that is trying to be a gaming device (by adding physical controls). That runs counter to the advantage smartphones have. They need to be carried at all times and be comfortable devices to use as a phone... snapping things on will always be a niche aspect and won't move the needle on a macro level.

Smartphone gaming exists today I believe because of how capable the iOS platform is... how many units have been sold (both Android and iOS) and how far the computing power has come in your average smartphone.

TheGameguru wrote:
1. I wonder though, if the iPhone weren't around, would the iPad and iPod Touch permit iOS to be as big a deal as they are? Those devices are as or substantially more expensive than a dedicated handheld. People keep making the argument about how you always have the phone and that's a very salient point but if the iPhone is the biggest driver of this (and it is the biggest selling iOS device far and away), I think the $100 contract is a consideration when making an argument about the growth of iOS. That's theoretical and obviously we are in a market where iOS is a big deal but I think if we didn't have the iPhone with it's expensive contract, iOS would still be huge but wouldn't be the gaming juggernaut it has become.

I'm struggling to get your point here.. you are saying that the $100 a month contract helped iOS gaming become what it is? Not sure I can connect these dots.

As I said, that was just a theoretical point that really doesn't mean much but the iPhone is the best selling iOS device, the iPhone is what made iOS into the force it is today because it came out well ahead of the iPad and the iPhone is where iOS gaming started and took off. And unless you wanted to pay $750+ for it, you couldn't get an iPhone without an expensive data plan. I was just thinking out loud as to whether iOS gaming would have become this big if there never was an iPhone and instead, things started with the iPod Touch. Of course, that's not what actually happened.

Graphics aren't key to me but Infinity Blade was heavily marketed and held up for its graphical fidelity. Many asked why you need a dedicated handheld when your phone can produce graphics that amazing. It does indeed look amazing but in order to work in the form factor for which is was designed, certain design decisions were made for that (i.e. simplistic gameplay that doesn't last long). In the case of say Uncharted, the game definitely costs more but it looks good and is long, deep and has engrossing story and characters. And it's selling very well. Again, I say that only to point out that people still seem to want those experiences, at least enough to make a viable market out of it.

I agree with your statements.. I might not agree that we know for sure that there is a viable market on a go forward basis for handhelds in their current format(s). Lets revisit that end of year 2013.

But there are PLENTY of games on iOS that provide 8-10+ hours of gaming for $1. So I'm not sure Infinity Blade means anything in the grand scheme of things.. Its safe to say that perhaps even that $50 I spend on iOS games provides me FAR more gaming "time" than the $50 Uncharted on the Vita provides.

Edit

Agreed with your above post now that I understand your point.. without the iPhone..iOS gaming isnt where it is.. even with an iPad, and iPod Touch

One thing I think rarely comes up in this discussion is that part of the strength of iOS is not from the device or the interface, but actually the software delivery mechanism and initial development costs. I don't know how much dev kits cost for Nintendo or Sony hardware but I'd be really surprised if they're cheaper than a Mac Mini or a low-end Macbook. And unlike the dev kits you can actually use those systems for doing other things for your business/development/life style. The only other ecosystem where you'll find a similar experience is on the PC.

On the consumer side you have the advantage of lower prices, and an immediacy that you can't get from the retail channel. You want to get your Angry Birds on? You drop $1 in the App Store and within seconds/minutes you're flinging birds across the screen. Want to get your Call of Duty on? Well you're gonna have to drive out to the nearest retail outlet, drop the disc in your system and wait 20 minutes while you have to grab the latest patch from the server.

Nintendo said a couple of press events ago that they're working on the eShop a lot and that they want to allow you to browse the store from a web browser and have your games download right to the device when you buy them. Since then they've added background downloading which, as someone who spent a good 15 minutes downloading the first wave of ambassador games, is a huge step in the right direction for the platform.

The switch from retail distribution to digital distribution model transformed the PC games industry in a huge way. The iOS vs. traditional handhelds is a continuation in some way of that transition.

Parallax Abstraction wrote:
1. I wonder though, if the iPhone weren't around, would the iPad and iPod Touch permit iOS to be as big a deal as they are? Those devices are as or substantially more expensive than a dedicated handheld. People keep making the argument about how you always have the phone and that's a very salient point but if the iPhone is the biggest driver of this (and it is the biggest selling iOS device far and away), I think the $100 contract is a consideration when making an argument about the growth of iOS. That's theoretical and obvious we are in a market where iOS is a big deal but I think if we didn't have the iPhone with it's expensive contract, iOS would still be huge but wouldn't be the gaming juggernaut it has become.

iPad maybe. Touch I have no idea one because it's too high a price for an iPhone sans the phone. The iPad I think is notable for being the first tablet that was designed with a tablet in mind. Most tablets up until that point were Windows derivatives and my understanding is that MS really wasn't doing a good job with making Windows work on a touch-centric OS. Despite being the ones to make a big push on tablets in the late 90s. Tablets were just another failed initiative from MS for quite a while.

I agree that for dedicated systems, time will definitely tell. If it turns out that the 3DS and Vita end up dying off quickly, I'll be the first to admit I was wrong. I just really hope I'm not because of how those systems fit into my personal gaming tastes.

And tastes are ultimately what this comes down to. If you're seeing greater value for yourself out of cheaper iOS games, that's awesome and perfectly cool. Personally, I've tried a lot of the big iOS games and find most of them to be underwhelming. But that's me and I get that. My girlfriend and I are probably still splitting an iPad 3/HD, largely so that I can have more time to dig into iOS gaming beyond borrowing the office's iPad 2. I'm willing to make the investment to see if I can enjoy it and if not, I just won't buy the next iPad. My tastes are currently not in line with the mainstream trend that's driving the iOS growth spike, a trend I still firmly believe will plateau in the next couple of years. I just think there's a bigger market of people with similar tastes than many in the gaming and tech press assume right now. But again, time will tell on that.

shoptroll brings up a good point about the ease of game acquisition on iOS. Sony's trying to do a big digital push with the Vita and most believe that the next generation of home consoles will have simultaneous digital releases for all titles. Once that becomes a big thing, I wonder if sales of even bigger titles will start to pick up because they're easier to get and being digitally delivered more easily permits things like short-term discounts. A lot of what I'm reading lately is saying that the era of $1 iOS games may be coming to an end soon because apps are already hit driven and the chance of major financial success in that market is getting slimmer by the day. Angry Birds is a huge deal but like I said in another blog post, it's success has never been duplicated or in fact, even come close to. I doubt we'll ever see Infinity Blade VII costing $50 but I think the barrier to entry is going to go up there soon.

Parallax Abstraction wrote:
I agree that for dedicated systems, time will definitely tell. If it turns out that the 3DS and Vita end up dying off quickly, I'll be the first to admit I was wrong. I just really hope I'm not because of how those systems fit into my personal gaming tastes.

I don't get this. The whole reason this thread even exists is because people like GameGuru and I talk about how the handheld console wars are silly because both Sony and Nintendo are at the mercy of forces beyond their control. When we say this we are lambasted and threads are derailed.

So we create an entire separate thread in which to discuss the very premise that seems incomprehensible in the 3DS and Vita threads.

And then it comes around to being right or wrong? I think we all want dedicated handhelds to thrive. But hoping they will and *knowing* they will and thinking that those of us who don't agree are stupid are different things.

So can we agree from here on out that it's reasonable to even consider that smartphones are a threat to the handhelds?

DSGamer wrote:
So can we agree from here on out that it's reasonable to even consider that smartphones are a threat to the handhelds?

Define "threat". I don't think smartphones are going to kill off portable systems unless smartphones become incredibly cheap or portables systems continue to creep up in price, and the fact both the Vita and 3DS struggled to really move at $250 seems to suggest we've found the upper limit (both should've targeted $200 or less initially to distance themselves from the iPod/iPhone). It's still too early to see if the smartphone ecosystem will embrace traditional games made on a traditional budget and sold for a traditional $20-40 price. Only a handful of companies are flirting with the $10-15 price tag currently. If the market will only buy $1 or free games (with or without microtransactions in either case) you're going to have a really hard pitch getting large publishers to commit resources to a big project that might not sell based on the market trends.

In the short term, I don't think Sony or Nintendo are in much danger. Longer term they might lose more of the casual audience who is only looking for the occasional 15 minute distraction. I don't know how much of their audience that entails. Gamers won't fully convert until there's actually some brand or new hotness with depth and polish to attract them.

I also think that Nintendo and Sony both need to embrace a larger range of price points on their shops and actively court the likes of Rovio, Halfbrick, etc. to at least port their games to the respective platforms.

In the short term, I don't think Sony or Nintendo are in much danger. Longer term they might lose more of the casual audience who is only looking for the occasional 15 minute distraction. I don't know how much of their audience that entails. Gamers won't fully convert until there's actually some brand or new hotness with depth and polish to attract them.

Define danger? I think Sony is in a WORLD of hurt right now.. Kaz even came out and say the road ahead is going to be "difficult" (his exact words were even stronger). Sony is in bigger trouble than Nintendo simply because gaming alone can't save it entirely... Nintendo can be 100% fine with a bounce back year.. they play in a much smaller world.

TheGameguru wrote:
Sony is in bigger trouble than Nintendo simply because gaming alone can't save it entirely...

And not all of that is due to white plastic devices manufactured in China and marketed by a company in Cupertino. Unless you want to talk about Sony-Erickson. Sony is fighting a lot of wars on a lot of fronts and it's only recently they finally owned up to it.

DSGamer wrote:
So can we agree from here on out that it's reasonable to even consider that smartphones are a threat to the handhelds?

I think everyone posting here has considered the possibility, at least. I'm just not convinced.

Traditional handhelds will either continue to exist or adapt to compete. It's going to take more than a down generation to convince Nintendo to throw in the towel. If the N64 and Gamecube couldn't do it, selling 50 million 3DS units (lowballing it) sure won't.

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