More Bad News for Portable Gaming

I'm sorry, diehard gamers, but your portable-gaming-system days are numbered. According to a new report from the mobile-analytics firm Flurry, revenue from game sales on Apple (Nasdaq: AAPL  ) iOS and Google (Nasdaq: GOOG  ) Android is set to surpass the combined sales of Nintendo (OTC: NTDOY.PK) and Sony's (NYSE: SNE  ) portable games.

What a difference two years makes
Back in 2009, Nintendo ruled the portable-gaming market with the DS. Sales of DS game sales accounted for 70% of portable-gaming revenue while the Sony PSP held a respectable 11%. However, Flurry estimates that in 2011 iOS and Android games will generate 58% of gaming revenue. Meanwhile, Nintendo and Sony will drop to 36% and 6%, respectively.

It isn't just that mobile markets growing more quickly, either. Flurry estimates that Nintendo and Sony's combined revenue will decrease from $2.2 billion in 2009 to $1.4 billion in 2011. It's clear that smartphones and tablets are eating into mobile consoles.

But, but buttons
Honestly, this shouldn't be surprising. From the price standpoint alone, separate mobile systems don't make sense. Take the upcoming Sony PlayStation Vita. Because Sony chose to saddle the console with an expensive proprietary memory, gamers will have to shell out nearly $300 before they even begin to think about games.

If you're just looking for something to keep you amused while you wait for the subway, it's hard to justify spending that much money when you can download an addictive time-waster like Fruit Ninja­ from Apple's App Store for $0.99. I'll admit that the top mobile games don't offer the same experience as a portable console, but they don't have to. They just have to be entertaining enough to keep you amused for five minutes.

The ever-evolving tablet
Even if the market for more immersive mobile games turns around, I think gamers will find tablets will suit their needs. If you want proof, just look at GameStop (NYSE: GME  ) and Microsoft's (Nasdaq: MSFT  ) mobile strategies. GameStop plans to sell branded Android tablets and a Bluetooth controller for on-the-go gaming. Meanwhile, rather than develop a portable Xbox, Microsoft plans to bring Xbox Live to Windows Phone and Windows 8. Granted, having a tablet and a controller is slightly more cumbersome than just a console, but the trade-off is a bigger screen and more functionality.

Foolish takeaway
I expect Sony and Nintendo will fight to keep portable-gaming consoles alive for a few more years, but I suspect it will be a largely losing battle. Smartphones and tablets simply offer too many extras to justify also owning a dedicated portable system.

If you'd like to read about another industry that smartphones will soon disrupt, then check out this free report on how near-field communications may soon make your credit card worthless.

The Motley Fool owns shares of Apple, GameStop, Microsoft, and Google. Motley Fool newsletter services have recommended buying shares of Apple, Microsoft, Google, and Nintendo, writing covered calls in GameStop, and creating bull call spread positions in Microsoft and Apple. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Patrick Martin owns no shares of any of the companies mention here. You can follow him on Twitter, where he goes by @TMFpcmart03. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (5) | Recommend This Article (2)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 12, 2011, at 2:29 PM, VolkOseba wrote:

    You know, I was going to write a thoughtful response, but seeing as the death of dedicated consoles is predicted by analysts every few years, I guess I'll just say LONG NTDOY.PK.

  • Report this Comment On November 13, 2011, at 10:33 AM, Varchild2008 wrote:

    Meanwhile, Nintendo is set to sell more 3DS systems in its first year than the first year of sales for the Nintendo DS.

    I'd rather have a 3DS or PlayStation Vita than Fruit Ninja.

  • Report this Comment On November 13, 2011, at 10:05 PM, Jerry20000 wrote:

    First a 8 year old boy is not going to get a IPhone for Xmas. Second who plays for 5 minutes. Is this reliving a lost childhood? A 8 year old boy is not going to be flashing mom's credit card for .99 cent purchases. Mom will pay the cash to have the device not linked at all. I suggest you need to go back and check your demographic. I go back to Cramer, "They take our paper and give us electronics."

  • Report this Comment On November 14, 2011, at 12:12 AM, pmart wrote:

    @Jerry, at last check, the average video gamer was 37. Kids still play, but they don't drive the market the way they used to. They will probably wind up moving over to something like the iPod Touch or Amazon Kindle Fire.

    Keep in mind, I'm only talking about portables here. I still think traditional consoles have a lot of life left in them.

    -Patrick

  • Report this Comment On November 14, 2011, at 12:28 PM, vintageronjohn wrote:

    I got a feature phone for about $50, and a 3DS for $170. Why should I buy a smartphone?

    Last I looked, a new iPhone *with a contract* will run me $200, and I'd have to pay for a monthly data plan. No thank you. I will never own a smartphone as long as I can avoid it, ie not unless some future job requires it. Tablets? They're nearly as cumbersome as a laptop, and not as useful.

    I'll agree that the Vita has made serious missteps in more than one area, and there's a serious possibility that Sony will bow out of the handheld market. Nintendo, however, is poised for a big holiday (the 3DS's first) with Super Mario 3D Land and Mario Kart. Those two titles, $40 apiece instead of $.99, will do wonders for Nintendo's 3DS.

    Apple is tapping a new market; they're not drawing people away from dedicated handhelds. We're not interested.

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