While Nintendo is working hard to make the 3DS a success, and Sony is preparing for the launch of the PS Vita, it may already be too late, according to data and analysis by mobile analytics firm Flurry. They looked at software revenue numbers in the U.S. for the Nintendo DS, the Sony PSP, and the combination of iOS and Android games over the period from 2009 to 2011 (estimated for the last two months of this year). Their numbers show a clear trend, with the combination of iOS and Android taking 58% of the total dollars for portable game software in this year, with the DS at 36% and the PSP at 6%. In 2009, the Nintendo DS took 70% of the revenue, the PSP 11%, and the combination of iOS and Android took 19%.
Examining the numbers for total revenue, it doesn't help the picture look all that different. Total revenue for portable game software in 2009 was $2.7 billion, $2.5 billion in 2010 and $3.3 billion in 2011.
"Nintendo may truly face a Nokia-like decision to jump or perish in the flames of its own burning platform.”
Flurry 's VP of Marketing Peter Farago puts it bluntly: “The most striking trend is that iOS and Android games have tripled their market share from roughly 20% in 2009 to nearly 60% in just two years. Simultaneously, Nintendo, the once dominant player, has been crushed down to owning about one-third of market in 2011, from having controlled more than two-thirds in 2009. Combined, iOS and Android game revenue delivered $500 million, $800 million and $1.9 billion over 2009, 2010 and 2011, respectively.”
While the whole market for portable game software has been growing, Nintendo and Sony have been making less money in that market, not just losing market share. “Over the last three years, Nintendo and Sony posted a combined $2.2 billion, $1.6 billion and $1.4 billion for 2009, 2010 and 2011, respectively,” noted Farago.
Worse yet, Farago notes that both Apple and Google have placed hardware in the TV category, and the tablet form-factor is making rapid progress. His outlook is grim: “In our last review of the portable game category, comparing 2009 to 2010 revenue, we believed Mario was already 'standing on a burning platform.' With 2011 numbers now added to the story, it appears that the inferno has intensified, and that Nintendo may truly face a Nokia-like decision to jump or perish in the flames of its own burning platform.”
Flurry used NPD reports along with its own data collected from mobile devices for this analysis. Flurry tracks more than 20 billion use sessions per month across more than 125,000 applications on more than 330 million unique devices per month; and almost 40% of those sessions occur in games. With this amount of data Flurry is able to accurately estimate revenue generated by applications, and compared that to handheld software numbers from NPD.
It's possible that the 3DS, with its more competitive price and better software, could show stronger numbers. Sony's PS Vita has yet to sell to consumers, so we don't know if it can equal or exceed PSP sales in the U.S. Both platforms will have to perform extraordinarily well just to keep up with smartphone game sales, let alone catch up lost market share.
