It is easy to blame smartphones and tablets but the truth is that both Nintendo and Sony made a lot of mistakes this gen with their handhelds.
For instance:
What is the point of porting N64 games for the 3ds when you can port Wii games (that appeal to much more people) to it?
Every successful Sony console had plenty of third party exclusives, so where are GTA, Monster Hunter and all other games that shaped PSP's soul?
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In order to continue on the handheld maker Nintendo needs to focus on the right games (not n64 and GC games, btw) and also keep their hardware simple and minimalist (3D and many other 3DS features are pointless).
In order to continue on the handheld maker Sony needs to "convince" (with money) third parties to develop more exclusive content to their consoles and also stop making unnecessarily powerful hardware so the cost of development does not increase.
