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Pachter Needs To Get Hand-Held

Posted on Friday, December 17 @ 16:14:32 PST by KevinS
So recently Michael Pachter of Wedbush Morgan Securities said that the portable game market is getting more and more saturated. According to his web show, he thinks that the "PSP2 is dead on arrival" and that "young kids are just as happy playing with an iPod Touch or a Nano... the Touch is cool, it plays games, it plays music" and it has a camera. "What's the difference if you play Tetris on an iPod Touch or Tetris on a DS? Well, you pay a buck on the iPod Touch and you pay twenty bucks on the DS. Parents prefer one-dollar or free software."

He's not thinking this entirely through. But let's go over this; I've wanted to talk about my views of the handheld market, and now's as good a time as any.

According to NPD numbers, the portable consoles have been slipping in sales for some time now. Over the past six months, the Nintendo DS specifically - the dominant leader in the hand-held landscape - has been selling fewer units than in those same months last year. Chalking that loss up to just the iPod Touch (as he seems to suggest) is absurd, as there could be a hundred different possibilities. One easy target is the weakaned economy, which has affected the entire industry (as well as every other industry). including console and individual game sales.

Using the iPod Touch as a reason why people would stop buying new games for their actual video game consoles doesn't make sense, simply because the bulk of the games floating around the iTunes store aren't well fleshed out. Making the point of paying a dollar for Tetris as a download instead of making a $20 purchase of a box and cart is simply an isolated example for him to give; that might work for simple puzzle and word games, but for a graphics-intensive experience along with precise controls (which, frankly, the Touch can't provide in any traditional sense), you have to look toward a dedicated gaming machine like the PSP and NDS. If I want to play a 40+-hour RPG, I'm going to count on a system meant for that sort of thing, not my portable music player.

What we have seen on portables in years past (and continues today) is the amount of innovation of what games can do. Notice I didn't just say portable games there; the market of creativity needs a way to explore new possibilities and ideas, and that has always worked best on two platforms: the PC and the portable market.

The reason there's so much content on the iTunes and Android markets is because it's so inexpensive to develop for compared to the console market. $20 million for a newly-developed IP and idea versus maybe $250K for the same, including a shorter development cycle, a smaller team, and an easier way to get it into the hands of gamers. That means it won't ever make the same amount of sheer bank that the consoles do, but the world can see some amazing new content.

Pachter also predicts that "after the 3DS has had its little rush, I think the hand-helds are going to continue to decline."

With the quality of hand-held machines starting to approach that of the "big boys" - plus a screen of its own and the ability to fit into a pocket - I don't think the market is going bust anytime soon… if anything, it's time for a boom. There is so much good content on smaller platforms that players are starting to take notice. From ports like Persona 3 Portable and Dragon Quest V, to originals like Super Scribblenauts, Infected, and Professor Layton, and new takes on genres that have hardly touched American players (like interactive novels and even dating simulators), there is enough material for developers to take on in the portable landscape.

Yes, the hand-held market has been slipping in sales as of late, and I doubt that's news to people. Between the ability to pirate games and get them on the DSi easier than ever before on portable consoles (forgetting for a moment about units like the GP2X, which are primarily for emulation) and the simple fact that the current crop of units - both DS and PSP - have been out and competing for about five years now without any notable competition, of course the sales for both are going down. There hasn't been a single competitor that's stepped up to the plate since either system's launch that has splashed in any notable way.

As I went searching for portable consoles released since the DS launched in 2004, I was only able to come up with a few that were even remotely supported with new content during the same time span: the Tapwave Zodiac (discontinued in 2005), the Nokia N-Gage QD (discontinued and software migrated to Nokia smart phones), and the Gamepark Holdings GP2X (which was primarily a portable emulation device). Beyond that, it's been the DS and PSP. I can't rightfully count the entire cell phone market (the N-Gage a specific exception since it was marketed as a game-playing machine) because they aren't promoted as gaming platforms. Except for the iPod Touch/iPhone being marketed as a sort of hybrid platform, the market has been left as Nintendo and Sony.

Saturated? Maybe the batch of quick cash-ins on either platform - especially the DS - could make this argument a legitimate one, but that would have to be pretty well quantified. As far as hardware, even if you count the iPod Touch/iPhone as part of the market, you're still only working with three systems with unique audiences:

- The PSP, with its classic console game mentality with games like God of War and ports of Persona 3 or Lunar;
- The DS, a hybrid classic machine with touch-screen functionality for original takes on classic games and genres, like Henry Hatsworth and Picross, as well as reviving classic franchises like Chrono Trigger;
- And the iPod Touch/iPhone, with a flood of quick-play games and extremely cheap software, like seriously stripped and adjusted ports of Tetris and freebies like Angry Birds Lite and Words With Friends.

With as much diversity as there is between those three platforms, I don't see how the market can be seen as "saturated". There seems to be something floating around for everybody.

And I certainly can't see the market going down the tubes anytime soon, not with the hand-held market gearing up for another round with the 3DS and whatever Sony's been working on (over the past few years, I'm sure). I for one am looking forward to what new possibilities are out there for the portable market.

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