Published as part of our sister-site GamesIndustry.biz's widely-read weekly newsletter, the GamesIndustry.biz Editorial, is a weekly dissection of an issue weighing on the minds of the people at the top of the games business. It appears on Eurogamer after it goes out to GI.biz newsletter subscribers.
With the details of Nintendo's 3DS launch plans finally in the open, and the rumour mill building up to a potential unveiling of Sony's PSP2 before the end of next week - not to mention inevitable updates to Apple's iOS device line-up within the first half of the year, and yes, Sony's Xperia Play "PSP Phone" - there's no doubt that the focus of the games business is firmly on handheld hardware for 2011.
This is, of course, a cyclical thing. Handheld devices come into focus in the ebb at the middle of the life-cycle of home console devices - something which makes perfect sense, not least since consumers don't have unlimited disposable income in their wallets. The sales figures for consoles like the DS and PSP mark them out as something far more important than a "snack between home consoles", of course, but the timing of their launches corresponds exactly to that idea all the same.
It's not just timing that makes 2011's prize-fight into a peculiar echo of the last set of handheld system launches, however. In fact, there's a significantly similar flavour to the approaches being taken by the companies involved. Once again, the indications are that Sony will deliver a hugely powerful system which leverages all of the technological advances of recent years - while Nintendo is doing something quirky and left-field with technology that's arguably far from cutting edge.
The difference, this time around, is perspective. Nobody needs to be reminded, I'm sure, of the hysteria which greeted the unveiling of the original PSP - the certainty in the minds of journalists, analysts and shareholders that Nintendo's death warrant had been signed live on stage at Sony's E3 conference. Everyone understood what PSP did - it was, in effect, a PlayStation 2 shoehorned into a gorgeous, sleek, portable case. Nintendo, meanwhile, was showing off some bizarre ugly stepchild of a system, with two screens, stylus input and 3D graphics a whole generation behind Sony's creation. Nobody was quite sure what it was for, or what the point of it was. Faced with the PSP's clear agenda and amazing hardware, it was doomed to failure.
This time, despite little having changed in the respective approaches of the two companies, the world has changed around them. The PSP, despite solid sales, most definitely played second fiddle to the stunning success of the DS - a console which not only opened up vast new demographic possibilities for games, but even paved the way for Nintendo's continuing dominance of the home console market with the Wii. 3DS, then, is seen as a sure-fire winner by most commentators, even in spite of hiccups like a rather inflated European price point and a frankly bizarre and retrograde step in regard to region-locking. PSP2 is expected, not unfairly, to be a solid performer with a still deeply valuable core market.
Let's be blunt, though - even those of us who didn't dismiss the DS out of hand all those years ago still misread the direction of the market, and it's outright naive to treat this year's hardware launches as if they'll be a direct retread of ground we've covered before. Just because Nintendo's last couple of innovative, unusual product launches have struck a chord doesn't mean that 3DS is automatically about to set the world on fire - and it'll probably be over a year before we really see whether the system is just selling to a core audience, or actually converting the masses who bought into DS.
Yet even more important than simply second-guessing Nintendo (not exactly a clever thing to do in light of the past half-decade or so) is to understand that the market itself isn't the same as it was when DS and PSP first took a bow. Back then, handheld gaming had basically been defined for over a decade by the Game Boy, and despite the ubiquity of mobile phones, the percentage of phone users actually playing games on their devices was so tiny as to be almost meaningless.
That's no longer the case. Apple's iOS range is going from strength to strength, and both personal experience and some pretty clear sales figures demonstrate that a huge number of users are treating their iPhone, iPod Touch and iPad systems as gaming devices. In most regards, you could argue that they don't compete directly with either the 3DS or the PSP2 - but the reality is that they are in competition in the way that matters most. A customer who can play games, have fun and be satisfied with what's available on his iPod or iPhone is a user who has little incentive to carry around another console. Even if he buys a 3DS or PSP2 console, the attach rate for software for such a user will probably be dismal.
Does it sound implausible that the same kind of users who flock to Nintendo and Sony handhelds might find their gaming desires sated by what's available on iOS (and to an extent, Android, although that ecosystem has a lot of maturing to do before it catches up to Apple's platforms)? It shouldn't. A great many iOS developers have nailed perfect handheld, short-session play mechanics, and the platform unquestionably boasts a vastly superior online experience to its rivals. Moreover, titles like the recent Infinity Blade demonstrate that Apple's devices don't have to play second fiddle to other platforms in graphical terms, either.
On the other hand, there's definitely a market for much larger experiences in gaming terms - titles like the PSP's Crisis Core or Metal Gear Solid: Peace Walker, or the DS' Pokemon or Golden Sun, which arguably wouldn't float in the present climate on iOS for the simple reason that you couldn't make decent money from them at the price points which iOS' audiences support right now. One way around this, of course, is to move to a freemium model, which is an immensely successful way to make money from games but requires a lot of careful rethinking of game design and some extremely delicate balancing of cost against reward for players.
Regardless, it's important to remember that there are forces at work in the market which just didn't exist five years ago. Millions of consumers carry devices in their pockets which are perfectly competent gaming platforms that are even showing glimmers of developing "killer app" brands, of which Angry Birds is arguably the first. It's not that iOS' presence in the market will stop 3DS or PSP2 from being a success, but it certainly makes the sell to non-core audiences a hell of a lot harder than it used to be. In some regards, "I don't really play games" is an easier argument to overcome than "thanks, but I've already got one", after all.
There's another way to look at the changes in the market, however, and that's as an opportunity rather than a challenge. PSP2 and 3DS both bring exciting new technology to the table (at least we assume so, in PSP2's case), while iOS has brought ubiquity and, crucially, a set of new business models which have opened up publishing to the creative masses. If Nintendo or Sony is very clever, they'll recognise the value of that model and the potential for vastly enhancing their platforms' standing by tearing down many of the walls to access for developers, creating the same kind of environment and attracting the same kind of creativity which has proven so successful for Apple.
This is not, of course, an easy thing for a company to do - not least since it would throw away decades of tradition in both cases, essentially removing much of the platform holder's role as authoritarian gatekeeper in favour of a role as mostly-benevolent shepherd. It's particularly hard to see Nintendo, whose stance on its platforms could be fairly characterised as "control freak", embracing such a concept. If Sony wants to steal a march on 27th January, however, it could do worse than to match the launch of cutting-edge hardware to the embracing of genuinely modern business models. If not, there's a strong possibility that both gaming giants could find themselves playing catch-up to Apple, of all the unlikely companies, in the years to come.
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