Is the Handheld Video Games Market Shrinking? Or Just Changing?

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You’ve probably heard someone, somewhere, claim smartphones are encroaching on handheld gaming’s turf. It’s what you’re seeing anywhere you go, after all: in planes, trains and automobiles, or maybe at family get-togethers, watching siblings and cousins, or nieces and nephews. Let’s call it “the anecdotal truth.”

Just don’t tell Nintendo president Satoru Iwata, who’s bullish as ever about Nintendo’s prospects in the palmtop console biz.

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In a sit-down with Kotaku, the ever-elegant Iwata, who seems incapable of effusing so much as a molecule of negativity about the competition, acknowledges the arrival and growth of smartphone gaming, but says it’s just not the threat to handheld gaming some have made it out to be.

“I think a lot of this discussion is based on the premise that the handheld gaming device market is shrinking or vanishing and I don’t think that is true,” said Iwata.

History’s on his side. Nintendo remains the predominant handheld tastemaker. I can’t remember a time when the company wasn’t heading the pack. The Game Boy and Game Boy Color together sold nearly 119 million units (their only serious competitor, the Sega Game Gear — I owned one just to play Sonic the Hedgehog — sold a paltry 11 million). The Game Boy Advance, no slouch itself, racked up just shy of 82 million units sold, more than either the Xbox 360 or PlayStation 3 can claim worldwide today. The Nintendo DS, including the DS Lite, DSi and DS XL, has sold an incredible 152 million units to date, making it the bestselling games console in history, surpassing even Sony’s set-top legend, the PlayStation 2 (also: 80 million more than Sony’s PlayStation Portable).

And Nintendo’s 3DS? Currently topping 19 million units sold, according to Nintendo’s most recent public sales figures (though June 2012), which puts the glasses-free 3D handheld just behind the DS’s sales at the same point in its lifecycle. What’s more, says Iwata, the DS had two holiday periods under its belt at this point, where the 3DS only has one.

But what of the more important question: Are people actually playing these things?

It’s one thing to buy a product, another to use it. You know what I’m talking about. You probably have a gift card to some store sitting in your purse or wallet. Possibly you own a bread maker. Maybe you’ve dabbled with Bowflex, or a Shake Weight, or an Ab Master. And if you’re a bibliophile (in spirit, anyway), how’s that copy of Stephen Hawking’s A Brief History of Time doing?

Hawking’s pithy history of the space-time continuum as we knew it circa 1988 — massively popular by any standard, selling more than 10 million copies (as of 2007) — was also supposedly the least-read (or finished) bestseller yet written.

Or take the Wii. It’s closing on 100 million units sold worldwide (a couple million shy of the original PlayStation), but when Nielsen took a six-month look at active video game usage in 2009, it noted Nintendo’s console was the least played — even Nintendo’s own much older GameCube ranked higher. And in 2010, another Nielsen study that used metered console tracking to measure total console use (gaming, video streaming, etc.) found that players 13 or older spent just 1.7 hours (males) and 1.1 hours (females) a week with the Wii. Contrast with the Xbox 360 (6.1 hours for males, 2.6 hours for females) and PlayStation 3 (5.2 hours for males, 2.1 hours for females).

Product sales can tell us a lot. Or they can tell us next to nothing.

Iwata knows that, and he also knows that the real story’s software sales, where the 3DS is doing more than fine: At E3 2012, Nintendo noted the 3DS had in fact moved more software than the DS at the same point in its lifecycle.

(MORE: Nintendo’s Provocative Pre-E3 Wii U Reveal: A Tweaked Controller and New Social Network)

But I suspect smartphone wonks will give no ground here. “Look at iPhone sales, look at Android sales,” they’ll argue. “Look at Angry Birds. Look at Fruit Ninja. Look at Infinity Blade. Look at Doodle Jump and Cut the Rope and Bejeweled.” To which you might respond: “Yes, look at those games, still owning the top 25, same as last month, and last year, and really since the whole smartphone party got started.” For all the ballyhoo about smartphone gaming, it looks an awful lot today like it did last, and the year before that.

What you won’t find much of, if at all: First-person games. Or third-person games. Or real-time strategy games. Or anything, all respect to games like Plague Inc. and Plants vs. Zombies, of significant depth. Take Civilization Revolution for iOS, a downscaled version of Civilization Revolution for consoles — in turn a seriously downscaled version of Civilization IV. Or Dead Space (also for iOS), which looks gorgeous…save for the fact that most of the touchscreen’s necessarily obscured by your thumbs.

And that’s where Iwata makes his best argument: Smartphone gaming is really about killing time, he says, whereas handhelds like the 3DS are about having a “rich experience.”

Previously we had to think, ok, ‘How are we competing with Sony?, How are we competing with Microsoft?, How do we compete with all the other software titles and all the other publishers out there?’ That environment has changed. And the games available for smartphones, I’m not saying that none of these are interesting, rich or fun experiences, because I know that there are some. And one way we can ensure that there’s a market for handheld gaming devices is by continuing to bring out entertaining and engaging software that will provide users experiences that they cannot get on these other devices.

I think this much is certain: Smartphones will never be handheld gaming devices with multiple flip-out screens or triple cameras, and especially not dedicated face buttons, analog thumbsticks (raised or flush), left/right shoulder buttons, front and rear touchpads and whatever other features future game handhelds add to augment our play experience.

The two reasons smartphone gaming exists at all, frankly, is that one, it’s complementary to the pocket-sized mobile phone paradigm (but always secondary to the device’s primary function as a communications hub), and two, most of the games cost next to nothing, or in plenty of cases, literally nothing. Not to disparage smartphone gaming, but you can sum that up in four words: “There anyway, and cheap.”

It’s always possible, and I don’t have the numbers to prove this one way or another, that the sort of gamer looking for a “rich” handheld experience, say Zelda Ocarina of Time 3D and Kid Icarus Uprising on the 3DS or Metal Gear Solid HD and LittleBigPlanet on the Vita — games impossible on any smartphone — could be crowded out by economics, the way wargames and adventure games and flight sims all but disappeared when 3D gaming arrived, took the industry hostage and turned everything into Call of Duty.

But I don’t think so. I think there’ll always be a significant demographic that wants a “rich,” totable game experience, one that doesn’t trade a more precise or creative interface for the sake of one-size-fits-all smartphone conformity. I have an iPhone. I game on my iPhone. I dig stuff like Tiny Wings and Amazing Alex and Plague Inc. I have nothing against iOS or Android. I genuinely appreciate what those devices add to my personal gaming ecosystem.

But count me with Iwata when he says: “I don’t think we’re going to see the desire to have, again, rich and deep sort of gaming experiences… we’re not going to see that vanish. That’s not going to go away.”

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