Handhelds are dying, and Nintendo can't rely on them to prop them up anymore

No matter how its console business is doing, Nintendo has always been able to lean on healthy portable system sales to prop up its finances. With the Wii U continuing to severely underperform sales expectations, though, it looks like the Nintendo 3DS is failing to pick up the slack as its predecessors once did.

A new revision to Nintendo's projected earnings, released today, sees Nintendo reducing its expectations of Nintendo 3DS sales for the full fiscal year, which ends in March. Nintendo now expects to sell 6.6 million 3DS units during the 12-month period, a 13 percent drop from previous projections and a 24 percent decline from the year before. That drop (and the accompanying drop in 3DS software sales projections) is a big reason why Nintendo is now also saying that its annual profits will be 50 percent lower than it had projected, though the company blames some of that decline on the weakening Japanese yen.

You might think this kind of decline is natural for a system like the 3DS, which is, after all, approaching its fifth birthday. But previous Nintendo handhelds have looked much more robust at this point in their lifecycles. The Nintendo DS was still near the peak of its hardware sales dominance in its fifth and sixth years, selling a whopping 31.18 million units in the 2009 fiscal year (and a healthy 27.11 million the next year). Game Boy Advance sales were still near a steady peak in the 2005-2006 period, bouncing up and down in the 15 million to 18 million annual sales range, thanks in part to the successful Game Boy Advance SP hardware refresh.

The 3DS, on the other hand, seems to have peaked earlier and lower than other Nintendo handhelds. After quickly soaring to sell about 14 million units in its second and third fiscal years, annual sales performance has dropped slowly and steadily, down to just over 8 million in the last full fiscal year. Nintendo seemed to hope it could at least keep 3DS sales relatively flat in the 2015-2016 period, but today's projection shows that the company realizes the 3DS' market decline is continuing. Blame the rise of mobile phones, the decline of the Japanese market, or whatever else you want. The fact remains that Nintendo's once-thriving portable business can't support the company as it once did.

To be sure, the 3DS hasn't been a total failure; the system just passed 55 million units sold since launch, after all, and that's been enough for Nintendo to keep generating modest (if smaller than expected) profits despite the decline. But with portable sales coming down faster than normal and the Wii U unable to help the bottom line very much, Nintendo doesn't have any cushion to ease the transition to a new and unproven generation of hardware. The shadowy NX, which is rumored to be a portable/console hybrid, will have to do a lot of heavy lifting right out of the gate if Nintendo wants to remain profitable going forward.

SOURCE

See, that's the thing- the handheld market is contracting. Nintendo cannot hope to survive meaningfully as a hardware maker and only rely on portable sales- they need to have a successful console too, or at least a console not as toxic and comatose as the Wii U is.

Having a moderately successful handheld and a moderately successful console is going to be far better for Nintendo in the long run than the position they are in right now- which is why Nintendo needs the NX done right, or their future in the hardware market is jeopardy.

All said and done, it's a bit of a shame, because I adore handhelds, and the 3DS is absolutely awesome. Five years later and still kicking with some awesome games. But the market has spoken, and unless Nintendo wants to be lost in the smartphone tide, it desperately needs a reinvention. One of the reasons we need to know what the NX is yesterday.

But now they're relying on that sweet Amiibo money, soon to be followed by that sweet mobile pokemon money

Dont use the word toxic to describe things or people, it REALLY triggers me. Charizard LoL player #785412

I see two reasons why this is starting to happen.

One: Smartphone games are really cheap and a quick diversion. Lots of people play portable gaming devices on the way to work or school and phone games have become intricate enough to provide the right level of activity to distract people.

Two: Companies are trying to make their portable gaming devices exactly like consoles and game developers are making console-style games on them. They need to make games that better fit the devices instead of making console-level games. Why play a game on a handheld when the same experience exists on your 42" television?

Handheld gaming is still going to be on stand along devices which may or may not start getting phone integration like what the PSP did with skype. Until they make a phone that has actual controls instead of using the number keys or touch screen, handhelds will still be around but Nintendo will be the only Co. to have dedicated Handheld gaming and as long as Pokemon exist on handhelds, the handheld market isn't dying just yet.

No kidding. Everyone has a mobile phone now and can't be bothered to carry around a dedicated gaming device. And when people are at home they would rather game on a TV than a handheld.

someone needs to build a proper gaming phone. the reasons handhelds originally existed was because phones were more specialised and not up to the job of playing anything but the most basic of games (like snake).

but the hardware is there to do it now and do it properly and it shouldnt cost a fortune. handhelds seems a bit redundant at the moment because they are not that pocket friendly. the vita is just too big and the 3DS is not much better.

i still maintain that sony were on the right track with the xperia play. it just relied on android games....which are rubbish....and not made for controllers mostly. also it was expensive. but playing GTA on it....it works and, with some improvements and refinements, it can work well.

maybe nintendo should look to make different handhelds (like they do now really). a big one to be played around the house and chucked in the backpack, a pcoket friendly one with phone features....maybe even limited collectors editions of both made from metal rather than plastic and so on.

if they can create a device that can play games well (i.e. a gaming device first and phone second...not the ngage basically), where people can use facebook, twitter, netflix, browse dinternet, youtube...that kind of thing (and make it as easy as possible for other companies to sell their services on these devices) then cool beans.

i mean ideally it would run android with a custom API for other developers and nintendo to use to get more performance and have access to everything android has access to plus the e-store and so on....but 0 chance of nintendo using android. so itll be their own custom OS and that would still need to provide the basics at least.

i also think the time is right to try something different. phones and tablets are boring now..they are all the same and every year its the same bloody thing again...a new slab. oh woopdie do. its ripe for having a wrench thrown into it.

Shame because I enjoy handhelds more than the current consoles.

Not to mention emulators are easily installed from the play store for free.

Nintendo was already well-known for its Game & Watch LCD handhelds long before smartphones and even before cellphones came into fashion. Heck. I already knew about Game & Watch before I even touched a computer for the first time.

I wouldn't worried about that, Handhelds still have there uses and are still a standalone better devices over Smartphone games when they have poor controllers which is why handhelds will never go away.

These will be mine soon if my kids don't start using them more often instead of their tablets and smartphones....plus their PCs.

Isn't that why they expand to mobile gaming...I don't think they will be relying on their next handheld. Just wait for Mario games to be on mobile phones..it will happen soon enough. :P

@jun_aka_pekto said:

These will be mine soon if my kids don't start using them more often instead of their tablets and smartphones....plus their PCs.

Funny, my daughter hardly plays her 3DS and want to play the Wii U way more then anything else. Even I gave her my own 2007 built PC, she use it that too but plays Wii U more so. I'm a Nintendo handheld fanboy and love the hell out of my New 3DS. [Thanks to Pokemon]

That would be great, good if Nintendo went the same way Sega did.

@lostrib: Amiibo is a fad. Wouldn't count on that long term.

Why can't Nintendo release a handheld phone? Something like the DS but doubles as a phone with two sperate screens maybe one for the phone and one for the games ............,. Oh never mind now that I'm trying to imagine how would that look probably it's gonna be a failure on the two fronts as a phone and as gaming system

Its not just handhelds. Consoles in general are contracting. We won't see the 260 million+ console sales of last generation. PS4 is projected for 100m. This means that Xbox One and Wii U would have to sell 80m each. That just isn't happening. This gen we'll be lucky to see half of those numbers. So while the console market is shrinking, the gaming industry is still booming. So how long will it be before the bubble bursts? Eventually the whole market will contract and it won't be pretty.

The real question when it comes to NX will be what Nintendo does to future proof the system. If Nintendo wants the handheld to last at least 4 years then they will need a trick up their sleeve to keep it viable for 3rd parties and prevent it from being shamed by mobile. If they can answer that question, then I can see NX making a return to handheld profitability.

@bunchanumbers:

You're not counting pc in your calculation pc gaming market is one of the reasons for video games market boom and how the hell ps4 is only projected to sell 100 mil when it's outpacing ps1 by miles which sold a bit more than 100 mil

In the past, my kids always asked for a console. Last Christmas was the first time they did not insist on one. Both have capable PCs (for schoolwork) and both have iPads.

Heck. My eldest kid has a better PC than me. Intel i5 4670k/R9 290x vs my FX-8350/4GB GTX 770.

Not that I use my cellphone to play games on the go, but I'm more incline to surf internet on my phone than play games when I'm on the go.

Anyhow, things looked like they were headed on a downward trend since they passed the 40 million mark, with New 3DS and Super Smash Bros did a lot to get it moving again but that's probably going to slow too.

Can we finally admit it's time for Nintendo to go third party?

How about NO? Not when history should all but be avoided in repeating.

Could also be because the system is a turd.

They could create a Nintendo Flashback with 20 games built in to start the series and make millions.

@nintendoboy16:

The problem is Nintendo is stuck in there loop think about it Nintendo didn't have any successful home console ( a console which dominated the market or at least was very close to its closest competitor) in the past 20 years other than the Wii which was a one hit wonder because of motion controls.

Nothing else really needs to be said

Everyone has a smart phone these days. Hell, even 8-10 year old kids.

And mobile gaming is improving every day.

And? That so justifies them selling out their hardware like that?

I'm probably wrong but I've always thought of handhelds being for young children. I would feel downright silly with one on the subway. My 14 year old daughter likes them but she is more of a PC gamer (I am more fond of consoles).

Yes handhelds are pretty much dead. Smartphones took over. Shame because I've always been fond of Nintendo's handhelds.

Curious to see what the NX will do to remedy this problem.

Too expensive, not enough feature

The future is not in hardware but in software and services. All three companies have got to understand that its the future of gaming.

I don't think it's just games but portable entertainment in general. Think about it back then what was the most device we used to entertain ourselves if we were anywhere outside our houses? A handheld system but now with smartphones not only can we play games but watch movies, shows, go on the internet, or many other things with our phones which can make an handheld system pointless for many. Don't get me wrong I like playing games on the 3DS instead of a phone but the fact is we now have something to replace handheld systems if we go anywhere.

Good hardware helps to create better software and services. I definitely wouldn't settle for shitty mobile gaming.

Hmm I disagree that smartphones have a lot to do with this. What I think really happened is that consoles now support small and mid tier games, what used to be pretty much exclusive to handhelds.

TBH I don't think 3DS has gotten much worthwhile these past 2 years.

Compared to the start of the 3DS lifetime or even the end of the DS lifetime.

But you have to remember that console numbers are contracting because the Wii's numbers aren't there. From the previous gen to this one, we've seen around a what....90% decrease? 101 million Wiis, how many Us so far? 11 million or so? Of course it will contract in such absence, but since all those systems were bought by an audience who held no interest in gaming in the first place, I don't find this shrinkage indicative of general market trends.....just of casuals' temporal predilections. I'd say that it's showing the market regaining its equilibrium after the fading of a fad.

3DS > any other Nintendo HH

^These.

If anything, the 3DS itself is dying; it's time for something new. I've said it time and time again: "If the 3DS had the VITA's hardware, or if the VITA had the 3DS's games it would be the best handheld ever." I think that all it's going to take is for Nintendo to release a new compelling handheld, with appealing games, great pricing, and great advertising. People will buy it, kid's will want it.

Playing games on Phones is trash imo. The controls are horrid, and most of the games offered are what I call "throwaway" games. Also, to compensate for the bad controls, most games touchscreen UI takes up a portion of the screen. Albeit, it's been a loooong time since I've even touched a mobile phone game, so my opinion is bit dated.

Or hell, my opinion could simply be wrong. :P

Also, It's funny how WE, the adult community, view dedicated handhelds. Some say "handhelds/handheld games are for kids", but we see those same adults spend all day playing games on your phone in your downtime. It's more "socially acceptable". Lol, I get it though. It's just funny how society works.

Eh smart phone games are more simplistic and casual. Not the same demographic as handhelds. The games haven't been there. And Nintendo needs to stop naming new products the same as the old. Wii to Wii U hurt them. DS to 3DS did as well.

Sad.......but true.And the reason for this is the Smartphones...................cheap games.

Nintendo should of made a HH with android with full access to Google Play. A winner right there.

@Kashiwaba: fanboy drivel is the answer. "Nintendos console isn't selling so the others must suffer too and the console market is obviously dying!" Meanwhile ps4 is like one of the fastest selling consoles ever

Smartphones are taking over it seems, although I'm not into portable gaming these days if I ever have a reason to game on a portable I certainly would not do it on my smartphone and would dust off my Nintendo DSXL.

That's not what I said at all. I never at all said other companies had to suffer because Nintendo is suffering. Especially when it was talk about the possibility of Nintendo going third party (which is somehow NOT fanboy drivel?) rooted from lamprey's post. Besides, like other companies really would suffer from Nintendo NOT staying in the games industry (if it does, well, the industry needs a kick in the pants anyway).

Come on now!

@nintendoboy16: my comment wasn't directed at you actually.

kinda sad when 3ds has better quality than smartphones yet those games make millions on dumb people and microtransactions

The need people have to play sales is just silly. I have 20 games on 3DS. It is a great platform and makes Nintendo money. You do not have to have 100 million sold to make money and stay in the market. A smart company expands and contracts when needed. Nintendo has been more or less doomed for well over 100 years. I bet 100 years from now people will make a very similar post to this saying more or less the same thing about Nintendo failing with their outdated virtual reality device. Times change and one fact remains. Nintendo will be fine.

To be fair the 3DS still sold pretty well, especially in the Smarthphone/Tablet era.

Though, Nintendo won't likely see similar sales with the NX handheld. Probably will hit 40 million tops at best.

IMHO, if the NX as a whole doesn't meet expectations, or just straight up flops then Nintendo will stop making hardware. It just wouldn't make much sense at that point. Nintendo's forte has always been their software anyways.

The console industry is still healthy its just Nintendo dropped the ball big time this generation. They couldn't even manage to get back 50% of the original Wii's install base.

PS4 will easily outsell the PS3 LTD and the XB1 will probably peak at around 50 million. It's just dependent on price drops and how long we have to wait until the XB2 and PS5.

@charizard1605: Not dying, just evolving. I think Nintendo needs to make a smartphone, it would sell really well if done right.

@bunchanumbers: PS4 and X1 are outselling the PS3 and 360 so far, it just looks like the market contracted because Nintendo screwed up.