Report: PSP, DS Use 'Stagnant' While Phone Gaming Rises

Market research firm Interpret on Monday suggested gaming on mobile phones is stealing significant share from dedicated handheld gaming devices like the Nintendo DS and Sony PSP. "The proliferation of highly multifunctional smartphones and messaging phones is a very real threat to the dominance by the DS and PSP of the handheld gaming market," said Interpret research and analysis manager Courtney Johnson in a press release for the report, based on a U.S. survey of 9,000 respondents. "Devices which satisfy a variety of entertainment and utility are fast outstripping single-function devices as consumer favorites," Johnson added. Interpret said phone gaming is on a "meteoric rise" while "Sony PSP and Nintendo DS stagnate." The game libraries for Apple's iPod Touch, iPhone and iPad continue to grow, along with offerings for Google's Android platform. Meanwhile, Microsoft recently launched Windows Phone 7, which has a strong focus on mobile gaming. Interpret's data showed that 44 percent of the total gaming market for mobile phones, PSP and DS plays games on phones, a 53 percent year-on-year increase. The proportion of respondents in that market playing games on DS or PSP fell by 13 percent. Additionally, 27 percent of consumers who said they only play games on phone said they do own a DS or PSP, Interpret found. The current Nintendo DS hardware is growing long in the tooth, with the original DS launching in North America and Japan in 2004, garnering current worldwide sales of around 135 million units. The PSP launched in Japan in late 2004 and the rest of the world in 2005, with about 62 million units sold to date. Nintendo this year unveiled the DS successor, the 3DS, a handheld gaming device that has better processing power than the DS and a top screen that features glasses-free stereoscopic 3D effects. It launches early next year, while a new PSP with mobile phone capabilities is heavily rumored. Just this week, Wedbush analyst Michael Pachter said bluntly that dedicated gaming devices have an uphill battle waiting for them due to the proliferation of Apple's iPod Touch and Nano. "I think the iPod Touch is going to sell really, really well," he said. "I really think as the iPod Touch gets more and more powerful, you’re going to see a lot of free games over there." Pachter predicted the PSP2 will be "dead on arrival" and dedicated handheld gaming will decline after a "little rush" immediately following the 3DS launch. "Ultimately, I think handhelds are in trouble," he said. While Nintendo of America president Reggie Fils-Aime believes the 3DS and its games can offer longer and deeper gaming experiences than an App Store game, he also recently acknowledged the Apple threat, saying, "Do I think that in the near term [Apple] can hurt us more than Microsoft? Absolutely."