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Tuesday, January 17, 2012
Nintendo 3DS and Sony PlayStation Vita Poised To "Make Some Noise" in Gaming in 2012

After worldwide declines in 2009 and 2010 and single-digit growth in 2011, IDC projects revenue for dedicated handheld gaming hardware and software will rise roughly 20% in 2012.

According to a new mobile and portable video game market forecast by IDC, although smartphone and media tablet gaming platforms are poised to take some share from dedicated handhelds like Nintendo's DSi and 3DS and Sony's PlayStation Portable (PSP) and Vita over the next several years, the game is far from over for dedicated handhelds.

"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 Lewis Ward, IDC's research manager for gaming. "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."

As a result, revenue dynamics aren't as nearly slanted against dedicated handhelds as game download growth curves suggest. Much of the rebound in the dedicated handheld space in 2012 and 2013 will be driven by premium-priced hardware and software sales associated with 3DS and Vita.

"An interesting piece of this story is what's happening demographically," adds Ward. "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."

In aggregate, IDC forecasts that worldwide dedicated handheld, cell phone, media tablet video game software revenue will rise from $14.7 billion in 2012 to a little over $20 billion in 2015. The revenue split between dedicated handhelds and phones/tablets is forecast to move in the direction of phones/tablets by less than 4% in this period.

"Mobile and portable gaming is clearly a positive industry growth area," Ward says. "Since weak macroeconomic conditions are likely to prevail in many key advanced industrial nations over the next few years, much of this growth will likely occur in BRIC nations and a handful of other emerging economies, and be more casual/social cell phone gaming oriented."

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