2012 will be a good year for dedicated handhelds, say analysts

Portable gaming systems and software could see their revenues increase by around 20 percent in 2012 -- "a rebound year for dedicated handhelds" -- according to a new study by analyst firm International Data Corporation. That forecast counters the doom and gloom that many analysts predicted for dedicated handhelds during much of 2011, especially for Nintendo and Sony's respective newly launched handhelds, before sales for the 3DS began to pick up later in the year. "Especially given the 3DS price drop in mid-2011 and in light of respectable initial demand for Vita in Japan this past December, it appears that 2012 is shaping up to be a rebound year for dedicated handhelds," says IDC's gaming research manager Lewis Ward. The research manager adds, "It's absolutely true that a mind-boggling number of games have been downloaded to iOS- and Android-powered devices in the past year, but only a fraction of those games were paid for and most of those were of the $1 to $3 variety." Though he believes smartphones/tablets will eat into handheld's market share over the next several years, Wards points out that the "penetration rate of paying gamers is much higher in the child and teen segment for dedicated handhelds than it is for cell phone or media tablet gamers." "As long as dedicated handheld OEMs and physical format portable game developers/publishers can hold serve in the demographic niches where they currently have a substantial advantage, I expect their revenue opportunities moving forward to remain substantial," he predicts. While PS Vita's Japanese launch has impressed few analysts, the 3DS, fueled by a strong slate of software and its price cut, recently broke sales records in Japan, and was one of the only two consoles to see U.S. unit sales increase increase in December (the other was the DS). Wedbush analyst Michael Pachter has previously said the 3DS "definitely turned a corner," but he also believes the system's addressable market is "around 60 percent as big as the addressable market for DS," due mostly in part to the popularity of smartphone gaming. IDC's Worldwide Dedicated Handheld, Mobile Phone, and Media Tablet Gaming 2011 – 2015 Forecast expects game revenues from dedicated handhelds, mobiles, and tablets to rise from $14.7 billion in 2012 to $20 billion in 2015.