OPINION: The year of the handheld

The 3DS is just weeks away and, as revealed earlier this week, the true successor to the PSP will be with us by the end of the year. But rather than just the clash of two hardware formats, 2011’s handheld confrontation is going to be fought on an entirely different battlefield.

And while the 3DS and PSP2 are going to be massively different machines arguably appealing to completely different markets, there’s one battle they’re going to have to face together – software pricing.

It has already been confirmed that 3DS games will cost more than DS titles, which at present carry an unofficial RRP of between 30-35 in the UK. And with Sony asking publishers for rich content” suitable for a machine pitched as being as powerful as PS3”, it’s hard to imagine PSP2 games selling at anything less than a premium either.

Which is all fine. If we’re in 2005. But this is 2011. And the market of today is radically different to that into which the DS and PSP were thrust into all those years ago.

There was no Apple iPhone then.

Now, of course, for the dedicated gamer the iPhone remains a poor substitute in terms of outright gaming performance (in the traditional sense at least). The lack of physical controls renders many console-orientated games almost unplayable and you’d certainly struggle to match the experience offered by something like Zelda: Spirit Tracks or God of War on an iOS device.

But are customers still looking for that sort of experience on the move? Of course, the answer to that is yes, some customers are most definitely looking for that. But how many? Fewer than in 2005? Most certainly. The real question is exactly how fewer.

Has the price of ‘gaming on the move’ has been permanently lowered in the eyes of consumers?” GamesBrief analyst Nicholas Lovell pondered when we discussed the subject. The iPhone has taken price expectations down to somewhere between $0.99 and zero.

Therefore PSP2 and 3DS games are competing in an environment where free or cheap is the expected consumer price (I note that Epic has managed to launch a ‘premium priced’ game in Infinity Blade but it is still priced at only $5.99).”

Take Angry Birds. A 59p game for iOS. And a game that millions of people have ploughed literally dozens of hours into. And a game that will regularly update itself with new content for no additional fee. And if you’re an Android owner then there’s literally no fee at all.

And Apple’s pricing revolution isn’t restricted to casual games, either. Take Grand Theft Auto: Chinatown Wars. It’s a 29.99 game on DS and PSP. On the App Store it’s a 5.99 download. Admittedly, I couldn’t face playing the whole thing without any physical buttons. But then I couldn’t face paying 30 for a portable game, either.

Just last year the core platform holders were seemingly embracing this change. Nintendo’s American boss Reggie Fils-Aime admitted his fear of the Apple tidal wave. And Iwata has spoken of a new and fresh” digital approach for 3DS that would be more efficient at pushing content” directly into user’s machines.

As for Sony, speaking to MCV SCE UK sales director Mark Howsen stated:

I think in handheld over all the industry is at a bit of a tipping point. We’re seeing a trend whereby consumers are relatively accepting of the fact that they have to buy high-price hardware but at the same time they expect to pay very little, or sometimes even nothing at all, for software. That’s a real shift in behaviour.”

But between now and then something’s clearly changed.

Just last week Reggie was insisting that customers are looking for is an in-depth great experience and that’s what we offer”. And expect similar rhetoric from Sony in Tokyo next week.

What Sony and Nintendo now have to ask themselves are two questions:

1. Is that really the experience that modern portable gamers want?
2. Are they willing to pay for that privilege?

The answer to both of these questions is by no means certain. That I can put 17 hours into a game as seemingly repetitive as Flick Kick Football on iOS would make me think very carefully about shelling out 30 on any portable game. Hell, I even have to think very hard before shelling out 1.79 on the App Store!

And as the ‘success’ of low-quality free pirated and streamed video online shows, punters are more than willing to endure a loss of quality to save opening their wallets.

Let me be straight about this, though. What I’m not doing here is saying I believe the 3DS or PSP2 will be a ‘failure’.

They both arrive on the back of extremely successful predecessors (yes – despite the misjudged internet attitude toward PSP, it has without doubt been a successful machine). And both will undoubtedly find a good-sized market.

The question I’m asking is what sort and size of market that will be. If I’m being honest, I find it hard to imagine either machine matching the successes of their predecessors.

I think there is a reasonable chance that core fans will flock to 3DS and PSP2 at launch,” Lovell concurs. The problem is I don’t think that will be enough.

Traditional console platforms depend on the occasional buyer as much is on the hard-core. You don’t need everyone to move from playing on a dedicated handheld console to playing on a sophisticated smart phone; you just need enough of them to tip the platform from profitability into loss.

Exactly how many that is depends on the platform and the company, but it means that anecdotal arguments that’s ‘me and my mates will still stick with handheld’ are not enough to sustain the business.”

Yes, the 3DS taps perfectly into the growing appetite for 3D. And no doubt the PSP2 will be multimedia’d to the hilt and, if what Sony has been telling partners is true, could yet prove to be by far the most powerful handheld ever made.

But will they offer 20-hour games for 59p? And how important is it that they do?

The motion controller gamble of 2010 looks like it may yet pay off. I wonder if the premium portable gamble of 2011 will.