The DS game software market is 538m $35 games through December 31, 2008

The Iphone Application market is ~1 billion apps, many to most of which are not games and cost $1 or less.

As far as I can tell the money is split something like this:

DS SW Market through 3/31/2009 ~560m * $35 or about $19.6b

Nintendo games ~ 250m * $35

Third Party games ~ 310m * $35  about $10.85b

Of that $10.85b, maybe a third goes to Nintendo, which leaves DS third party revenues at ~$7.3b. DS has been out for 4.5 years, so that averages out to about $1.65b in revenue for third parties per year. If DS, over its liftime had maybe 500 third party titles on shelves worldwide per year, and if all titles were equally purchased, they'd each get about $32.08m which at $35 is 92,000 copies. Since most DS games probably cost less than $3-5m to make its a good model for established companies.

For the Iphone, we have say 500 million games now, in something like a year. If they each cost on average $2, and Apple publishes no games, then the market for Iphone games is $1b already. The trick is that Apple does get some of the money, so its probably only $700m for third parties or something.

Iphone has more games than DS does already, and therefore fewer "hit" caliber titles - but since you can make a game by yourself, it will continue to be flooded with games, because even selling 20,000 $2 games over a month is pretty good when your the only force behind the game.

Where it gets interesting is with the PSP. Sony announced in January that LTD PSP software sales were 200m. At $40 a pop, that is about $8b in available PSP revenue.

Sony probably has a third of that ~67m * $40 or $2.67b

That leaves $5.33b for third parties. Sony probably gets a quarter of that in liscencing fees. So you have $4b in PSP third party revenues. PSP has been out for 4.5 years as well, so that averages out to about $889m in revenue per year available for third parties. There are maybe 400 PSP games. If all 400 titles were equally purchased, and on shelves over the period they'd each get about $22.22m which at a price of $40 is 55,555 copies.

Essentially it comes down to this for third parties:

                                                     DS                        Iphone                  PSP

Base                                             102m                     ?                         47m

SW                                                560m                    500m                   210m

SW $                                           ~ $35                     ~$2                     ~$40

Rev/Game ("3rd parties")             ~$23                    ~$1.40                 ~$30

Dev Cost Avg(Pulled from my ass)  $0.5m-$2m            ~$1000+?              $1m-$4m

Units to Break Even " "                ~55,000+?             ~500+ ?             ~83,000+?

Titles Competitng for Rev              500?                     1000?                    400?            

Third Party Revenue Pie/year       $1.7b                    $0.7b                       $0.89m

Trend of 3rd Party Pie WW           Slowly Up            Quickly Up                 Slowly down          

The PSP and DS games earn more cash per unit, but cost more to make so it makes sense for big companies (Sega, Capcom, EA, etc) looking for big hits to support those platforms.  DS has far more million seller games on it than the PSP does, due to its base and less rampant piracy so it will continue to see more support. The recent upswing in PSP support seems to be either the last major push for the system or the initial push for the PSP Go/PSP2. For medium developers (Majesco, Koei), I would say its pretty close between DS and Iphone for which is more profitable right now, and for small to tiny developers Iphone is the best.

The iphone has a tremendous amount of potential, dont you dare treat it like its just any other cellphone. Ive played a significant amount of games on my friends iphones, and I may add they are extreemly good. Its also the first introduction of motion technology in terms of handheld gaming.

By the way, considering you just pay $129 for a DS, the iphone 3g the cheapest model is $199 plus the monthly bill which is easily $100 due to the internet 3g access.