The market for portable games players is getting eaten by smartphones and tablets that offer more and cheaper games apps.

Although over 38 million handheld gaming devices from Sony and Nintendo are expected to ship in 2013, this number is significantly down the previous peak of 47 million units in 2008. 

The blame lies with the phenomenal success of tablets such as the Apple iPad and smartphones like Apple's iPhone.

Unit shipments following 2013 are expected to decline, but dedicated handheld gaming devices are a sustainable niche, says ABI Research, with forecasts relatively flat through 2017. 

Smartphone and tablet use for gaming continues to expand, making the mobile gaming market an increasingly important companion to dedicated handheld gaming.  ??

Senior ABI analyst Michael Inouye comments, “Mobile devices will compete with dedicated handheld gaming devices, but select consumer segments like core gamers and those individuals who do not want or have a smartphone or tablet will still provide some demand. 

“The addition of mobile gaming is not necessarily a zero sum situation; in fact, many feel there is plenty of room in the gaming market for both portable and mobile gaming.”  ??

Following an initially strong Q1 2011 launch Nintendo’s 3DS experienced a far weaker second quarter, prompting the company to dramatically lower the price of the handheld (from $249 to $170). 

The lower price, with additional titles, spurred sales to over 15 million through the 2011 calendar year. 

In late 2011, Sony launched the PlayStation Vita in Japan with a wider launch in February 2012 to decent sales, although the price might prove an issue for Sony as well, despite significantly more robust hardware.  ??

Inouye adds, “The mobile and tablet markets have increased consumers’ price sensitivity. First party developers and key game franchises will be vital cogs for the industry in the future, since hardware alone is not going to cut it given the shorter upgrade cycles for mobile devices.”

Recent announcements at E3 from Nintendo and Microsoft, coupled with past mobile-centric initiatives by Sony, make clear that mobile experiences will be integrated into “dedicated” gaming experiences (both console and portable).

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