Nintendo recently revealed that it has sold 50 million 3DS handheld consoles. That’s a huge number, and you would think that it means the company’s portable business is doing just fine. But new numbers reveal Nintendo has a few reasons to worry.
For the second year in a row, 3DS software reached nearly 30 million copies sold, according to a report from industry-intelligence firms App Annie and IDC. But handheld-game sales overall dropped by 5 percent year-over-year in the Q4 of 2014. That wasn’t because of Sony’s PlayStation Vita and PSP games. Sales of software on those devices were flat at around 8 million in both Q4 2013 and Q4 2014. Instead, it’s because DS game sales took a significant dive.
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Now, it makes sense that the DS’s popularity would continue to wane. We’re several years removed from the time when that was Nintendo’s No. 1 handheld. But the problem is that the 3DS and Vita are not making up for those sales. This suggests there is a type of gamer that owned and purchased software for the DS that isn’t doing so on the following generation of portable consoles.
Thankfully for Nintendo, this hasn’t damaged revenues just yet.
“Game spending for handheld consoles rose around 5 percent from Q4 2013 to Q4 2014,” reads the App Annie and IDC joint report.
But it’s possible that spending could start dwindling as “the installed base for these devices declined by 10 million in 2014.”
Not all of those 10 million people stopped playing games on the go. Instead, many of them are now playing on their tablets and smartphones. App Annie and IDC confirmed that those devices continue to grow in popularity.
“In late 2014, the global number of smartphones and tablets used for gaming topped 1 billion for the first ever,” reads the report.
Clearly, dedicated gaming devices are feeling the tightening grip of mobile. But it’s not all bad news for Nintendo. The company likely felt a bit of a pinch by not releasing the New 3DS and New 3DS XL in the West until just a few weeks ago. That device is so popular that it is selling out. Nintendo confirmed it has already sold 300,000 New 3DSes in the U.S. and Europe in just a few days after the Feb. 13 launch.
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So the 3DS and Nintendo can still get a big pop with new hardware in the handheld space, but the App Annie and IDC report is an indicator that the overall market is still shrinking. When Nintendo inevitably introduces its new portable hardware, it’ll have to take that into consideration.