Nintendo may exit handhelds in 10 years due to disruption

[Squilliam]

archbrix said:

Squilliam said:

Typewriters, even electrical ones are specialist devices which are used to create documents. That speciality was folded into one general purpose device, much the same as car GPS makers are finding their products folded directly into the feature set of cars and cell phones. So just as a cell phone isn't as good as a GPS unit as a standalone unit, a cell phone definately isn't as good as a portable games device for playing games. However it is good enough for a large proportion of the market and it does come with a unique distribution model. For the cost of a single Nintendo game you could buy a veritable greatest hits of iOS games, and even if Nintendos quality never falters it doesn't mean they won't ever see market share eroded.

The idea that PCs have never hurt consoles and vice versa is based upon what empirical data? If a large number of people are sitting down every night to play Farmville and go on Facebook that reduces the time they have to play console titles. Remember, Farmville as a game is possibly the biggest game in the world in terms of time sunk into it.

So whats to stop Nintendo from establishing their own online business model? Well for starters, they haven't really started now. It takes time to develop an online content distribution business and it appears that Nintendo still haven't started on theirs. Beyond this if they start to offer the same types of mini games as cell phones, they could erode their market share on their own platform and introduce serious pricing pressure on their own games. So taking on the smaller and more focused games could be counter-productive for their own first party revenue structure. Finally which phone company would they partner with? None of them has the overall market share dominance, they would go from top of the handheld market to middle of the phone market.

Sorry, Squilliam, but I think you're reaching quite a bit to sell your point.  Your typewriter analogy is very flawed; as Rol pointed out typewriters are hardware meant for a specific function.  People no longer have a need for them because they can type on other devices.  What you're saying is that everyone will treat gaming as a secondary feature on other devices; people won't buy Nintendo's handhelds because they can game on their phones.  Problem is, there will always be people to whom gaming comes first, and people don't buy phones just to play games.

As far as your Farmville argument, well, I think you helped prove my point even more.  What empirical data you ask?  Oh, how about the 180 million home consoles sold so far this gen despite all of the Farmville playing on PCs.  And tell me, what happens when Farmville, or something like it, comes to those home consoles?

The only point I will agree with you on (halfway) is that Nintendo is very behind in the online marketplace, but again, why would Nintendo need to tackle this area all by themselves?  They definitely have the resources to hire, partner with, or flat out buy any "professionalized" assistance in that area.  Only reason they're so behind here is because they (erroneously, IMO) don't view online as a big deal for themselves... yet.  The part where your argument fails again is assuming that if Nintendo made smaller, cheaper games (ala Angry Birds) it would deter people from buying the next Mario Kart or Zelda at $25-$30.  Tell me, how much did the huge success of simple games like the Brain Age games and Nintendogs hurt the sales of NSMB DS?

Forget about that analogy, I wasn't thinking straight when I wrote it.

Anyway if you want proof of what smart phones are doing:

"The sales figures tell the story. While smartphone sales in the United States continue to skyrocket, unit sales of point-and-shoot cameras fell nearly 16 percent from 2008, according to the market research firm NPD Group. That corresponds to a decline of 24 percent in dollars, to $1.9 billion, from $2.4 billion.

Even when the recession eased over the last year, sales of point-and-shoots fell. At the same time, sales of more powerful cameras like S.L.R.’s, with advanced features like interchangeable lenses and manual settings, have increased, by nearly 29 percent in dollars since 2009, according to NPD."

Link

Now smart phones aren't even as good as point and shoot digital cameras. However they are good enough. Hence the reason why they are disrupting the typical digital camera market. The rest of the camera makers have retreated up market and into more specialist cameras which leaves the lower end of the market ripe to be overtaken by camera phones which aren't nearly as good.

So if smartphones packing mediocre cameras can do that to the digital camera market then why, pray tell me, can they not do that to the game industry when they offer both unique value in terms of their game pricing and distribution whilst catering to the widest audience in terms of user numbers? Just as a smart phone will never replace a digital SLR, a smart phone will never replace a game system for a dedicated game player. However someone who isn't so dedicated and simply wants something to spend 1-15 minutes at a time on may no longer find it worthwhile to own a dedicated game handheld when a smart phone can do almost everything they want it to do.

Theres no point in pointing to sales numbers without other evidence as proof that theres no effect on the industry, unless you have Earth 2 hidden somewhere so you can study the world of games without certain influences like smart phones you cannot say what the sales of certain devices or software would have been like under different conditions. If smart phones weren't having an effect on Nintendo then why do they appear to be retreating up-market? Why did they point to Apple as their biggest competitor/threat?

Finally, they can't just 'hire' assistance in developing an online presence. Most of the present players in the market between Apple, Amazon, Google, Microsoft, Sony have spent years developing their networks over multiple devices, many of which are not game devices. The reason for doing so is simple, its a network effect and once you gain a subscriber you're more likely to gain his or her friends as well simply because the networks are mostly exclusive to one another. You can't just click your fingers and catch up, nor can you get into the business without a willingness to spend in the hundreds of millions to billions range.