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For years, handheld gaming has been popular amongst both casual and die-hard gamers. However, as the as the market for smartphones and tablets continues to rise, sales of handheld games are experiencing a decline. In an interview with Game Informer, Analyst Michael Pachter from Wedbush Securities tells why:

“What really happened was that about half the people who were buying DS were buying it to babysit their kids and have them play casual games, not because all 30 million who bought one every year played Zelda. They played Tetris. You can play Tetris on your Kindle now. Tablets and smartphones have cut into older casual gamers’ ability or desire to play on a dedicated handheld and, to some extent, they’ve cut into younger gamers’ likelihood of playing handhelds….My kids got phones at age nine – as did every single kid in their class. I made my kids wait until their 13th birthday to get smartphones, and I swear to God my kids are the last ones of all their friends to get iPhones. If you look at the domestic demographic of who bought handhelds, say it was about age 7-to-15 kids. Now that’s cut to age 13, because any casual gamers who are that age would rather have a smartphone and play Doodle Jump or Angry Birds because they are just as fun as Tetris on a DS and they are free.”

The decline in handheld gaming is significant enough that Nintendo lowered their sales projections for the 3DS. Pachter doesn’t see this as disconcerting, rather Nintendo is just being realistic.

“No, I think it’s realistic and we’re not talking about massively down – it’s a couple million. If you look at peak Nintendo DS sales, they were north of 25 million for three years in a row. They’ve steadily come down since. I don’t think it’s because the 3DS is an inferior product or priced too high, it’s just that the handheld annual market is now a 15 million annual market – and being split by Vita.”

This isn’t to say that video game fans have no desire for the 3DS. The difference is that now, it has to compete with smartphones, and many kids (and adults) have to choose between the two. But as long as there are devoted gamers, there will still be handhelds.

“The handhelds are going to always appeal to core gamers. Core gamers can be six or seven years old. Go look at Skylanders. It’s far from a casual game. There are tons of 8 and 9-year-old core gamers – look at the kids that play Minecraft. So, those kids are still going to want a 3DS, I believe that. But I promise you will not be able to find a nine-year-old alive in America who says they would rather have a 3DS than a smartphone. Kids who are hardcore gamers want both, but all kids would rather have a smartphone so they can text all their friends.”

With the growing popularity of low-cost games for mobile devices such as Angry Birds, Pachter believes Nintendo would benefit from branching out into the mobile market. A $5 price-tag on a game for a smartphone or tablet, devices that serve multiple functions, looks far more attractive than $40 for a game that is equally fun, and is only playable on a system that is strictly for gaming.

“They should take their old software – and I don’t mean their new software – [to mobile]. Some of the 500 games on the GBA could be easily ported to iOS and Android. Most of them are just run forward and jump controls schemes. Why not sell those games for $5 to $10 on iPhone and Android? When you think about half a billion Android and iOS phones and tablets out there right now and growing, what are the odds that every game Nintendo released would sell 5 million copies at 5 bucks? Pretty good. Let’s say they did 10 games and only did 50 million units at $5 – that’s $250 million more than they have now. And – oh by the way – it wipes out their financial loss. If they put 100 games on phones, and the average is $7 because some are at $5 and some are at $10 and they sell five million each of 100 games, we’re talking billions of dollars. I think they would make more from mobile than the rest of their operations combined.”

So if, according to Pachter, introducing their old software to the iPhone, Android, etc. could only be beneficial, why won’t Nintendo do it?

“I just don’t think they think about it that way. I think that their vision or mission is to sell hardware. They believe that their proprietary software exists solely to support sales of their proprietary hardware. First and foremost, they are a hardware company that makes great software. Apple is that way. They are a hardware company, but the iOS and interface is all software. If you ask anyone why they like the iPhone over a Samsung, they are going to say the interface. Apple thrives because its software supports its hardware. Just like Apple won’t support Adobe or license its operating system to other PC makers or HTC. Nintendo thinks it’s Apple. I get how consumers would think that’s the right strategy. And I have to say, if they were Apple, that would be the case. But I don’t think they are Apple, as their sales have proven.”

As a consumer, I could see where it would be nice to have games such as Dr. Mario or Metroid available on the iPhone. It would be a great way to introduce younger kids to gaming. At the same time, however, if their software doesn’t run as well on certain devices, it could easily varnish Nintendo’s reputation of producing quality games and equipment.

Source: Game Informer
Via: GoNintendo, GoNintendo
  • Metal Man

    Few people are as out of touch with reality as Michael Pachter.

  • ANGRY FANBOY

    JUST SHUT UP PACHTER

  • True Davad

    This guy has Nintendo’s point of view all wrong they are about great gaming both software and hardware, not just hardware. He also doesn’t understand that what GBA could do. You call Legend of Zelda The Minich Cap just run and jump? I disagree. I would rather have a 3DS than a smart phone by the way. My phone has NO games. and Those games are not as fun.

  • Ann

    Emulating is also a big part. You can play pretty much any game from almost any system for free on smartphones and tablets.
    I only emulate older games or games that have become too expensive to buy on the system.
    Either than that, I play mostly play on my systems.

  • Michael Pachter is a bit of an idiot. I really wouldn’t take anything he says to heart. The things he believes some companies should be doing just don’t make sense no matter how you cut it.

    Nintendo won’t benefit from putting their games on iOS. Since Nintendo puts a lot of time and effort into their games, they cost enough to develop, and they aren’t going to make it back selling a game on the iOS market for $5…. which honestly… is high as the average iOS player would be willing to spend on a hot game.

    Especially when “like Michael Pachter said” there are so many free games on the app store. So I mean even if Nintendo puts their games on iOS, how much more profit will they make? not a whole lot, cause they are still competing with the cheap for free titles. At the end of the day they would just be de-valuing their own franchises. Not to mention shooting themselves in the foot by killing the main reason for people to buy a 3DS (or any portable Nintendo console for that matter).

    It’s simply a bad move for them. They are better off to continue making software for their device, and if people really love their games that much they will get the system to play it.

    Also Pachter has been on a crusade for the last 6 years to convince people Nintendo needs to stop making consoles (although I’ve never heard him pipe up about say the PSP or the Vita surprisingly… which has more reasons to drop out, then to stay in).

  • Cuber456

    I wouldn’t really call it “the fall” of dedicated handhelds. It is just that smartphones/tablets are on the scene now. While there is an area of overlap in competition between the two, they don’t compete directly with each other. In most cases, the games found on smartphones/tablets tend to be simple games that you play for a few minutes. They are particularly useful when you want to kill time (ex. riding on a bus, waiting for class to start). Games on a dedicated handheld, in most cases, offer a much deeper experience and aren’t something you pick up and play for only a few minutes. To put what I said in context, I’d rather be killing only 3 minutes of time playing Angry Birds than tease myself puling out ALBW but you can bet that when I have 3 hours to kill, it won’t be wasted on Angry Birds.

    I should also say that there are some things that a dedicated handheld can do that a smartphone or tablet can’t. In particular, a touchscreen is no substitute for physical buttons. If a game is fast paced, like a platformer, or requires button combos, like a fighter, it is nearly impossible to play.

  • d-o

    I’ve never really understood the purpose of ‘core’ (ie. non-casual) games on handheld devices. Whenever I’m at home, I’ll want to play my core games on the big screen. Whenever I’m out, I’m only interested in passing a bit of time (say, 1hr max), and so I’ll play casual games. But maybe I’m unusual. I used to enjoy playing my core GBA games (inc. Zelda) games on the GameBoy Player (for Gamecube), but I realise that this hardware wasn’t a commercial success.

  • raichu-keaton1411

    I do not like Michael Pachter, it seems like he’s always hating on nintendo and doesn’t always get his facts, and the things he suggests for them are ridiculous.

    Also Kids at that age in my opinion should’t have phones and if they do they should just be for emergencies, let alone expensive iphones, I would rather buy my kid gaming devices with actual fun games to play then a phone with dumb games, but then again I understand everyone is different. (Also, I don’t have kids yet, just saying if I did) 😛

  • Nick

    i think yeah for the most part most kids would choose smart phone over 3ds, but ive had the opportunity many times and I have a lot of nintendo and no iphone. this whole article is kind of sad because it’s definitely pandering to a higher class…. the difference between an iphone and a 3ds is that when you buy an iphone youre actually buying a service, not the iphone, so youre practically renting it. whereas, with the 3ds youve bought it and can use it at your own free will. there’s a lot of people who are getting irritated out there about these kinds of things where you have to “rent” the service. Like, it’s not really fair if you think about it. It’s companies taking control of people if what you buy isn’t what you own anymore.

  • MikeL

    I can’t recall the last time Pachter made a correct analysis or a prediction that turned out to be accurate.
    The 3DS market is being split by the Vita… eh, what!? The Vita isn’t even putting a dent in the 3DS sales. The DS however had to compete with the successful PSP.

    • I agree with you for the most part…. except the part where you say the DS had to compete with the successful PSP. The PSP I suppose well, but to say it was decent competition for the DS is kind of funny…..

      I mean the NIntendo DS sold a whopping 153.96 million units.

      The PSP sold 80 Million….

      It wasn’t even close. Not to mention it wasn’t ever close during the peak of these systems lives. The DS has always had a huge lead over the PSP. I mean even at the end here, the DS is still got double the sales.

      • MikeL

        80 million sold units is still a success, and at least it’s half of what the DS sold. The Vita on the other hand, Sony are too embarrassed to even release any sales figures newer than January 2013 but it’s safe to say it’s only a fifth of the 3DS sales. You might as well consider it dead and gone.
        My point was that it’s ridiculous to mention the Vita as a competitor to the 3DS, especially when not mentioning how the PSP was a much stronger competitor to the DS.

  • Ulises

    3 years later it was proved that all Nintendo’s Fanboys were wrong…