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Dedicated handhelds the way of the Game Boy are dying! Mobile devices have rendered them obsolete! Etc, etc, etc.
To an extent, this is true, however, looking back at handheld hardware and game sales from 2006 (the de facto first year the GBA wasn't a factor) to 2013 (likewise for the DS), there HAS been a positve trend for handheld gaming.
First, take a look at this chart showing hardware sales of the DS, PSP, 3DS, and Vita combined from 2006 to 2013.
Pretty disappointing, I know. 2013 is only about half the year that 2007 was, and the past two years have been declining despite the introduction of new hardware. The effects are also visible in a software-oriented version of this chart.
It looks pretty similar, doesn't it. However, what if we were to display the information differently. Say, what if we focused on attach rate?
That's weird. Even though the number of handheld game systems and titles has been greatly reduced, the total number of handheld games purchased per unit of hardware has actually been generally on the rise since the DS generation stagnated!
Let's take it one step further. Let's pretend for a moment that after 2011, 10% of 3DS game sales are digital, and 25% of Vita games are digital. Both are fairly conservative estimates, but let's see the results.
It appears that although the handheld pie has shrunk, the remaining customers are at least as loyal as ever before. Especially when you consider how this data does not include digital exclusives, PS Plus subscriptions, the 20 gift Virtual Console games given to early 3DS adopters, etc.
What does this mean?
People are still interested in handhelds. Furthermore, considering how even the DS struggled to sell five games per unit of hardware, the remaining handheld fanbase might be the most loyal one ever, buting more retail games than their predecessors of a decade ago despite the presence of digital stores.
The handheld market has shrunk, especially in terms of hardware, but thanks to the rising attach rate of both physical and digital software, the market is still at least as viable as it was in 2003 to 2005, before mobile devices became competitors.
How Nintendo/Sony should Respond:
- Recognize that hardware is becoming a smaller part of the market, but software isn't.
- Focus less on making lots of hardware models and instead focus resources on games that sell to wide audiences. Alternatively, use those resources that make new models of existing hardware and instead focus on entirely new hardware, perhaps coming out every 5 or so years instead of every 6 or 7 years.
- The practical annualization of Pokemon is a great move for Nintendo (X/Y alone accounted for about 9% of all retail handheld software, including the DS, PSP, and Vita in 2013), but making other regular cash cows might be a good idea as well. For example, perhaps Nintendo could make Mario Kart 7+, with 8 new cups and 4 new characters. To avoid bad will, simply do this a while after the game's release and offer the new content as reasonably priced DLC. Then, you can sell two versions of Mario Kart for the same system, copying the evil side of Capcom without being evil. Just a thought. Sony might want to do the same with one of their series if possible.
- Sony's PS Plus technique, where hardware breaks even and people pay a bunch of money every year for their game collections, is a good idea. Perhaps Nintendo can create some similar annually. The Pokebank is a good start in this regard.
- Continue to invest in digital distribution, but preferably in ways that do not isolate retailers. The 3DS Virtual Console is a great example of this, but what if they took it a step further? They could offer a subscription service ala Netflix for the entire Virtual Console library, all while not competing with retail stores selling new games. The Vita, meanwhile, might want to consider doing the same with some first-party digital exclusives.
- KEEP BACKWARDS COMPATIBILITY!!! Selling new hardware is hard enough as it is, and old software continues to sell well for about two years after its respective hardware is replaced. Example: Mario Kart DS has sold over a million units since MK7 came out.
