The kids are turning away from video game consoles just as the major gaming companies are preparing to woo them with new devices. A new generation of youngsters going through their formative years without ever becoming habituated to the joys of playing the next generation of Xboxes and PlayStations would be an ominous sign for the entire industry.
Sixty-four percent of kids use smartphones or tablets for gaming, up eightfold from 2009, according to a survey released on Tuesday by NPD Group. PCs and consoles remain the most popular gaming devices by a small margin, with 67 percent of kids playing games on those devices. But unlike with mobile gaming, the ranks of children using PCs, consoles, and portable gaming consoles such as the PlayStation Vita and the Nintendo 3DS are in decline.
This leaves Nintendo (7974:JP) in the worst shape for the immediate future. Its strategy has largely focused on young, casual gamers, letting Sony (SNE) and Microsoft (MSFT) compete for the hard-core set. And the youth movement toward mobile gaming is already evident in Nintendo’s product line: The company’s portable devices are already more popular than its consoles, according to industry analyst Horace Dediu. But that’s hardly a bright spot for a company that’s seen nothing go particularly well of late. Nintendo recently had to reduce prices on its Wii U console and remove the third dimension from the portable 3DS as part of a price cut aimed at luring children away from cheaper rivals.
Many industry observers have already written Nintendo off completely. But the big test for Sony and Microsoft comes later this year. With their new consoles, the two companies are hoping to use video games to gain a toehold on other living-room activities, like streaming video. But what if the home proves equally vulnerable to the mobile invasion?
That’s the future Dediu expects: “More people will hire mobile devices for their primary gaming activity. And as mobile devices get inexorably better, they will be hired for use in the setting where consoles have been king: the living room,” he wrote this week. In his eyes, the console businesses of all three companies are “beyond the point of no return.”