By Dan Gallagher, MarketWatch
SAN FRANCISCO (MarketWatch) ? Sony Corp. and Nintendo Ltd. are making large-scale bets this year that they can still find customers for high-end consoles and titles in a market that has become dominated by smartphones and ultracheap titles.
A scene from ?Uncharted: Golden Abyss,? which Sony is developing for its handheld Vita console.Many analysts are skeptical. The handheld gaming business has shifted considerably in the past few years. Smartphones have become powerful game platforms in their own right. That, along with a weak economy, leads plenty to wonder how many gamers are still interesting in paying an extra $250 for a dedicated game device to play game titles that cost anywhere between $25 and $40 a piece.
?They are chasing a smaller market,? said Michael Pachter of Wedbush Securities, who added, ?I don?t think anyone at Sony or Nintendo has yet bought into the premise that the market has shrunk.?
Sony, Nintendo double down
With 200 million Apple iOS devices in the market, gaming companies Sony and Nintendo are feeling the pressure, as Dan Gallagher tells Stacey Delo.
Both Sony?and Nintendo made handhelds a big part of their presentations at the E3 video game conference in Los Angeles earlier this month.
For Sony /quotes/zigman/197524/quotes/nls/sne SNE +0.27% ? JP:6758 +0.21% , the big news came as the company announced a name and launch price for its high-definition handheld gaming device ? the PlayStation Vita. The device is expected to hit the market later this year with an initial price of $249 for a WiFi-only version and $299 for one that works over AT&T?s /quotes/zigman/398198/quotes/nls/t T +0.68% ?wireless network. Read full story on Sony lifting the wraps on the Vita.
Nintendo /quotes/zigman/128670 NTDOY +2.27% ? JP:7974 +2.16% used the occasion to try and kick-start momentum for its 3DS, a handheld that allows users to view games in 3-D ? without special glasses. The device went on sale in March, and Nintendo executives admitted at the conference that sales past the initial launch have been disappointing. Read full story on Nintendo's E3 press event.
The company is planning a slew of game releases for the device during the second half of this year, using some of its most popular franchise characters, such as Mario, Luigi and Starfox. A 3-D version of best seller ?Zelda: The Ocarina of Time? went on sale this week.
?Yes, the market is there, but it?s declining. That?s the issue,? said Arvind Bhatia, video game analyst with Sterne Agee. ?The shift is undeniable.?
Outpaced by Apple
On the same day as the Sony press conference in Los Angeles, Apple Inc. /quotes/zigman/68270/quotes/nls/aapl AAPL +1.77% ?kicked off its Worldwide Developer Conference in San Francisco, revealing there that it has sold more than 200 million devices that use its iOS mobile operating system to date. All of these devices, which include the iPhone, iPod touch and iPad tablet, are capable of playing games purchased from the company?s App Store, where popular titles such as ?Angry Birds? and ?Fruit Ninja? sell millions of downloads for a dollar each.
Nintendo president?s outlook
Nintendo of America President Reggie Fils-Aime discusses features of the just announced WiiU console and explains how Nintendo hopes to further expand the gaming experience.
Those numbers mean that Apple has the largest mobile gaming platform currently on the market, with the rival Android operating system from Google /quotes/zigman/93888/quotes/nls/goog GOOG +1.42% ?also gaining share quickly.
By contrast, Nintendo had sold about 150 million units of its portable DS platform, which include iterations such as the DS Lite, DSi and 3DS, by March 31, the end of its last fiscal year. Sony says life-to-date sales of its handheld PSP platform have totaled about 70 million units globally.
?Apple has really turned the handheld business into a $5-or-lower sort of market. That?s really having a big impact,? said Eric Handler of MKM Partners.
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