I think so, too, although I'm not so sure about that last sentence. Certainly mobiles are eating into the dedicated market somewhat, but gen over gen comparisons are at least a little deceiving because the Vita is a horribly mishandled product that would have performed significantly worse than the PSP under any conditions. It's the same mistake made by those who, prior to the PS4/XBO launches, were predicting doom for consoles because the Wii U was selling so poorly.

On the other hand, there is a tendency for these things to become self-fulfilling prophecies. Third parties are clearly not very interested in handhelds anymore, and if they become convinced that mobile is the future and handhelds are a dead end, it will become so. I wonder just how much of the DS->3DS decline is due to the lack of third party games. It's definitely a big part of the reason I haven't bought one.

Sometimes you just want a cheeseburger and fries in 3 minutes ... not having to go to a restaurant, sit down, and get filet mingnon for $30. 

To be honest I think deeper games are actually probably anti-thetical to the portable experience ... people just want something that eats up 10-15 minutes of time, they don't want to be deeply immersed into a gaming session of 30-60 minutes+, as most people don't have that type of free time away from the house and still want to be relatively aware of what's going on around them. 

the bolded statement very succinctly and efficiently highlights one simple fact; your (and my) tastes do not represent the mass market.

allow me to sum up why dedicated handhelds are failing and will be extinct very shortly.

    vita.

allow me to expand upon that thought.

   vita underscore that "console quality" gaming on the go is not what the mass market wants. 

i'm right there with you augen, but most people would rather eat at mcdonalds than alinea.  i literally ate at mcdonalds for the first time in ~6 years last weekend and it was horrible.  i felt so sick afterwords.  i never want to go back.  unfortunately, i was the pompous dick with unreasonable standards when  choosing a place to eat last weekend with my friends...

There really is no question. There is still a market for dedicated handhelds, but it's a fraction of what it once was.

The next gaming handhelds truly need to be tablets or smartphones to compete... or bring something else revolutionary to the table.

With games, it's not only a matter being worth your money, but of being worth your time as well.

Given the choice to play Angry Birds for 3 minutes or start a Hunt and put my 3DS in sleep mode 3 minutes in... I'll take the latter. I do it all the time, actually.

If you have Netflix, you can spend all of your time watching bad movies for free if you are so inclined. Few people are.

Most people would rather play Angry Birds. 

It's not really an either or ... a 3DS basically just plays games. A smartphone lets you play Angry Birds, sure, but it also lets you check your email, Facebook, Twitter, texts, Instagram, websites, listen to music, take/edit photos, watch TV/movies, etc. etc. etc.

As an overall entertainment package, dedicated handhelds just don't fit people's lifestyles nearly as well. 

Beyond the fact that as much as people bemoan it, in their own way iOS/Android gaming has sorta taken gaming back to its original arcade/simple-to-play/immediate gameplay roots. Modern console and even handheld gaming is rife with title screens/menus/pre-game cinematics that take forever to get into the game. 

Functionally cell phone/tablet games are much more like the old-school Donkey Kong/Pac-Man/Space Invaders/Pong formula. One of the worst things to happen to the game business was the death of the arcade gaming scene, because developers have lost any concept of immediate gameplay, with an arcade game, once the player put their 25 cents in, the game had to be ready to go pretty much right away. 

Agreed. I try not to come off as a pompous wind bag as past decade majority of trends in gaming have no been to my tastes.  I get it, things change. Honestly I would love it if there were mobile game I enjoyed. I tried, I tried Angry Birds, Puzzle v. Dragons, Sonic Jump, and whole bunch of others.  I just found time and again after 15 minutes I was bored and evaluated what my time is worth.  So many of these games are Skinner Boxes that are unbalanced because they want micro transactions.

I have not ate McDonald's in ~18 years actually, I remember it was my French friends few years back who found this the strangest.   I cook a great deal and enjoy doing it, so the difference in cost is not nearly as vast as some people make it out to be.

Sorry if derailed a bit.

I'm aware of the public response to mobile games, I was just describing my own aversion to them. A big difference between mobile games and arcade games is the accessibility of development. Anybody can make an iOS or Android app. It takes actual capital to make an arcade game, plus you have to convince arcades that your game is worth the floor space. Since the establishment maintains their cabinets, arcades tend to have some quality parameters.

Also, I believe there is still a healthy arcade scene in Japan. They are only dead in the West.

One factor that I think a lot of people are overlooking is the collapse of one particular "genre" of handheld games: licensed games.

Looking back at the GBA, you'll find that other than Mario and Pokemon, licensed games made up a lot of the software lineup. Out of the 70 million-seller titles for the platform, about 23 were based on cartoons and recent movies, like Yu-Gi-Oh, The Incredibles, Finding Nemo, Dragon Ball Z, Spider-Man, etc. Finding Nemo was the 3rd best-selling non-Nintendo game on the platform, with almost 3 million sales.

Meanwhile, on the DS, licensed games were rarer, but still prominent. Big licensed names like Star Wars, Batman, Harry Potter, etc. were represented as LEGO games, and other licenses such as Hannah Montana, High School Musical, etc. stood on their own. About a quarter of the million-sellers on the DS were licensed games. The PSP had fairly few hit licensed games, but considering how it sold half as well, that's pretty much to be expected.

With the possible exception of Kingdom Hearts, NONE of the 25 million-sellers for the 3DS are licensed games.

What happened? Well, part of it was people finally getting smarter about these sorts of games, but not a large part. Many licensed games simply existed to help sell or thrive from a sucessful product, and were not meant to be great in of themselves. Thus, as the methods of delivering these games became cheaper via mobile device downloads, a large chunk of the handheld market was simply abandoned. In the process, this included most Western support for the dedicated handheld market, meaning that the 3DS and Vita mostly depend on one small region, Japan, for most of their games.

As for how this problem can be solved... I don't think it can. Licensed games were never the mainstay of the industry, and were arguably a simple inflationary process for what already exists. Without it, the numbers will be lower, but the core remains. On the downside, this will permanently weaken the handheld market to some extent, simply because it now relies mostly on Japanese support.

If we want to see the dedicated handheld market get reinvigorated, we need a new challenger to enter the ring. And they need to be a Western company. I say this because the Japanese market is not getting any bigger, and Western development is largely untapped. If some Western company were to deliver a new handheld that can attract support from new places, that would reinvigorate the industry.

For now though, the arrival of mobile devices has made dedicated handheld gaming a weaker domain. And until somebody new enters the domain, it will remain maybe half as large as it used to be.

markets dont fade away like that, thing is casuals have moved on to mobile, but will they stay? for how long until this fad has gone? now its time to stand still and strong cause good times will be back before you think