Can Nintendo and Sony can save mobile gaming?

Only a short while after its release, the Nintendo 3DS, the successor to the most popular handheld of all time, sold a mere 97,000 units in the US last month. That is a big deal.

After all, who could have imagined just a few years ago that a new Nintendo mobile console would sell so comparatively poorly? Years into its life cycle, the Nintendo DS would sell two to three times that. It is, at the very least, surprising.

The reasons for this sluggish start are many. The 3Ds’s launch lineup wasn’t spectacular. What’s more, US$249 is the highest price ever for an Ninty handheld.

But with the PS Vita coming out within the next 9-12 months, you have to wonder: are we seeing the first signs of the decline of ‘core’ mobile gaming? Or is this merely a blip, one that will resolve itself later as selection of games and price improve?

The looming problem: smartphones

Every time you mention that smartphones might affect mobile gaming, the response from gamers is exactly the same: mobile games are simplistic, disposable, and hampered by touch screen controls. They can’t offer anywhere near the depth or complexity of traditional gaming.

To which I say: absolutely. I totally agree. Hey, I’m on your side. Unfortunately, from the broad, macro perspective of the market, depth and quality are not the issues.

Each consumer has a limited amount of time and disposable income. The effect of smartphones is not that they are as good as dedicated games systems; it’s that they’re good enough to make the $250-300 expenditure of a 3DS or PS Vita too much for many. But maybe a bit more explanation as to why is necessary.

The attention economy and games

By and large, games are played for entertainment rather than learning or intellectual challenge. That’s not true for everyone, but is true for many.

So with a limited attention span and an ever-increasing way to occupy your ‘entertainment time’, mobile games are facing not only increased competition from games, but other services too. If, while sitting at the bus stop, you can watch Netflix, IM your friends, check Facebook/Twitter etc., the ‘fill the gaps’ nature of mobile gaming becomes a harder sell.

Moreover, in a weird bit of irony, if the selling point of the PS Vita and 3Ds is ‘deep experiences’, many people may have less time for those longer, more robust gaming experiences. Instead, they want the quick pick up and play nature of Angry Birds or similar games.

So mobile gaming is facing the pressure of the attention economy, as someone has to choose to spend $200-300 to occupy their time in a certain way.

The economics of game development

Another wrinkle is this equation is cost. While a mobile game can be created for comparatively limited money, a full-fledged mobile Mario or God of War game can cost millions, if not tens of millions to develop. That means that to make a profit, Nintendo or Sony need to sell millions of copies at $30-40 per unit. Given the above troubles with the attention economy, that is a significant issue for Sony and Nintendo.

What it means is that their games have to offer something completely unique. So far, however, we are yet to see this from the 3Ds or the previews of the Vita. Things may be coming in the future, but the possibility of a sustainable ecosystem remains up in the air.

So Sony and Nintendo have a problem. Aside from huge, rare successes like Angry Birds, there are few mobile phone games that make millions. But because these games have exerted a downward price pressure, people are less willing – if they are willing at all – to spend $40 on a portable game.

Possible solutions?

So given the constraints on attention, competition from smartphones and economic constraints, what do Nintendo and Sony do.

Well, I can’t claim to solve their problems, but some general ideas:

1. Each console needs something uniquely suited to its hardware strengths. The most successful DS games used the two screen system effectively. Right now, however, we’ve yet to see that from the 3DS. We’ll have to wait and see with Vita, but hopefully a game could combine high-end graphics, geo-location and touch/tilt to make something truly unique.
2. A mix of big-name, ‘deep’ games and small, bite-size downloadable titles is essential. If either company can offer a breadth of selection and depth of quality just not available on the mobile platforms, it may be enough to entice consumers to drop the case.
3. Media functions to stay on par with smartphones are key. If an iPhone offers Netflix/Hulu etc. but the PS Vita doesn’t, it’s just one less reason to buy.
4. Unfortunately, both Nintendo and Sony will have to drop their prices as soon as they can. If either appear to cost the same as a smartphone (even if they don’t, because of plan subsidies)

Of course, typing these ideas in a blog post is one thing; executing them on a global scale is quite another.

So what about you? Given the pressures from other tech and entertainment, how do Sony and Nintendo keep mobile gaming sustainable and profitable?