Portable handheld games. Portable handheld games everywhere. What was once a niche market dominated by Nintendo is rapidly becoming the mobile pastime of choice for a culture that’s constantly on the go. By this time next year, trying to decide between spending your money on the iPhone, the Nintendo 3DS, or the (currently unofficial) PSP 2 will be as treacherous as navigating a tightrope with railroad spikes jammed in your eyes. What if you throw your money behind a system that crashes and burns shortly thereafter? What if the other guy ends up with some awesome exclusive that you simply must have?
Wedbush Morgan analyst Michael Pachter thinks he can help you cut at least one pony from the herd. On a recent episode of his “Pach Attack” show, which is hosted by GameTrailers.com, he declared Sony’s PSP 2 an instant loser that will be “dead on arrival.”
“We’re way approaching saturation on the handheld market,” Pachter said.”We’re starting to see DS hardware sales crack, I think the ubiquity of the iPod Touch is starting to cut into the DS software market, I think the PSP is dead on arrival and I think the PSP2 is going to be dead on arrival. It looks to me like young kids are just as happy playing with an iPod Touch or a Nano.”
Pachter believes Nintendo will fare better, but not by a wide margin. “The 3DS will prolong the handheld market for the game manufacturers, but ultimately, I think handhelds are in trouble. I really think as the iPod Touch gets more and more powerful, you’re going to see a lot of free games over there.
“What’s the difference if you play Tetris on an iPod Touch or on a DS? Well, you pay a buck on the iPod Touch, you pay $20 on the DS. Parents prefer $1 or free software, I think the iPod Touch is going to sell really, really well. So, after the 3DS has had its little rush I think the handhelds will continue to decline.”
The difference isn’t about Tetris. It’s about Pokemon, Mario, Link, LittleBigPlanet, God of War, Monster Hunter, and any other exclusives Sony and Nintendo can dangle over Apple–IP-related, commissioned, or otherwise.
The difference is also about our perception of the handheld games market. Sure, the competition is fierce. We just need time to get used to that. When someone bashes out a message board post about how badly the PlayStation 3 is “killing” the Xbox 360, those of us who value our time and sanity laugh it off. So why can an analyst get away with declaring the PSP 2 DOA after assuming that Apple will eventually walk off with everything?
Nintendo has been at the top of the handheld gaming market for ages; it’s not going to say “shucks” and pack up its belongings just because Steve Jobs is turning up the heat. The PSP admittedly hasn’t been bursting with activity lately, but the portable still commands solid sales, particularly in Japan, where the Monster Hunter action-RPG franchise reigns over the sales charts.
None of this is to say that Pachter’s point is completely empty, and that Sony and Nintendo will be A-OK if they sit back and let their exclusives do the selling for them. Both companies are going to have to start taking game downloads far more seriously in order to keep up with Apple. If the PSP 2 does materialize, we’ll hopefully see extended compatibility with the PlayStation Network, especially as far as retro downloads are concerned. Nintendo already has obvious plans in place for the 3DS, including a Virtual Console-type download service for Game Boy and Game Boy Color games.
Heightened attention for DSiWare and the PlayStation Network will benefit both the 3DS and PSP 2 forces immensely. Neither Nintendo nor Sony should underestimate the little cross-shaped warrior on their side: The d-pad. Not every independent game off the App Store is well-suited for the touchscreen.
It’s far too early to decide that Apple will reign unchallenged as our handheld overlords. There’s going to be a heck of a battle for the market, though.
(The PSP 2 image in this post is a mock-up, and not an official design.)
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Scott Steinberg is the CEO of video game consulting firm TechSavvy Global, and founder of GameExec magazine and Game Industry TV. Hailed as a top technology and video game expert by dozens of publications from USA Today to Forbes and NPR, he’s covered the field for 400+ outlets from Playboy to Rolling Stone. A frequent on-air analyst for networks like ABC, CBS, NBC and CNN, he’s also the author of Video Game Marketing and PR.