Mobile's gaming bubble and the New 3DS

By Peter Allen Clark

 

With the release of a new handheld, Nintendo aims to carve out a space into what some see as a crumbling mobile games market.

From the same dimension

The Big N kicked off the New Year’s hardware announcements Jan. 14 with a North America release date for the actually named New 3DS over one of the company’s streamed Nintendo Direct presentations.

Nintendo of America President Reggie Fils-Aimé outlined the bevy of new features pummeled into the new system. Besides getting enhanced processing power, slightly increased battery life, Amiibo support and the addition of a micro SD card, the New 3DS’ hopes seem to hang on two specific new features. One is what Fils-Aimé called “brand new, super stable, 3d face tracking,” which employs the use of cameras on the handheld to tell how to adjust the 3D depending on the position of a player’s head.

Almost 1/8 the console size!

Almost 1/8 the console size!

“The big new addition,” according to Fils-Aimé, “is the C stick.” This feature, which sounds like the old yellow button sitting on the GameCube controller, essentially performs the same function. It acts as the right thumb stick camera control, basically replacing the relatively enormous Circle Pad Pro console addition.

Now, Nintendo initially unveiled the New 3DS in its Aug. 29 Direct presentation. Since then, the company released it in Japan Oct. 11, in Australia Nov. 21 and in the Europe region Jan. 6.

The immediate question is why release new hardware now? Almost four years mark the distance between the March 2011 release of the 3DS and the New 3DS. That’s a lot shorter than the 9 years between the 1989 Gameboy and the 1998 Gameboy Color. Though it’s  double the two between the 2001 Gameboy Advance and the 2003 Gameboy SP. The precedents exist for both so the new announcement doesn’t come out of a vacuum.

However, 3DS growth has slowed the past two years and it has proven the least successful handheld released by the company.

Throughout most of last year, the Wii U had lackluster sales. And in the 2014 year-end fiscal report last March, Nintendo posted a 46.4 billion yen operating loss, which converts to $395 million at the yen’s current position.

Judging by those dooming figures, far from the 2008 height of Wii sales, Nintendo must hope that releasing a new console might put a shot in the arm for the business.

Also, the sinking treasure of mobile gaming might give the new handheld room to rise.

Mobile bubble bursting

Just a few years ago, the writing seemed to be on the wall for the future of dedicated handhelds like Nintendo’s milieu and the Playstation Vita. Many stories were written about how the smaller, cheaper games housed in the necessity of a cell phone would surely bring down the long time gaming travel companions. Simple economic sense dictates that the $40ish games that accompanied the Nintendo DS, 3DS and the Vita might seem daunting to consumers faced with a $.99, or free, price tag from mobile games.

However, over the past two years, the advent of mobile games has begun to resemble an economic bubble in terms of its flooded marketplace and new hesitation among developers looking to achieve a sustainable business model.

Statistica provides some of the most recent data regarding the number of apps in given app stores, including games. They showed that over 1.4 million existed on Google’s app store in September of 2014, and 1.3 million in Apple’s marketplace. In 2013, Apple announced that customers spent $10 billion in their marketplace.

Pulling the Plug

The New 3DS announcement did not come without a bit of oddity. For example, Fils-Aimé proclaimed that the New 3DS would not ship with an AC adaptor. Instead, handheld veterans can use the adaptor that came with the last few models or iterations of the dual screen console. However, new entrants will have to separately purchase a new adapter, lest they will suffer a severe shortage of use from their new handheld. Pity the unknowing relatives who try to give a thoughtful gift. Furthermore, only the XL version of this new console will come to North America, where the other territories welcomed a smaller version as well as this larger cousin.

Theoretically, if all apps cost $1 and were bought in equal numbers, each developer would earn $7,692.3 per game or application. This might be great for a single person developing a small to do list app, but it wouldn’t make so much financial sense for a large company like the flailing Zynga who has many workers to pay.

The prevalence of gaming software available for a single mobile platform also appears outrageous compared to the 3,874 games that were released for the Playstation 2, the most popular selling console of all time.

With such a high number of applications and games available, the marketplace has become one in which success relies on striking it lucky with a hit or having a big financial backer.

Indeed, some part of the development community began to feel unease with the growing mobile focus as early as 2012. In the 2013, 12th annual Game Developer magazine Salary Survey, researched by the Game Developer conference, Patrick Miller summarized the quotes received from worried devs.

“[P]ractically every comment we received spoke to the decline of triple-A and traditional console-development paths, the rise of mobile games as the new industry focus (and an associated unease with the prospects of getting noticed on overflowing app stores), [and a] distrust of a growing free-to-play bubble…” Miller wrote.

This sentiment has since spilled over into development customer reports. For instance, Stardock, a Midwestern developer had some honest things to say about its experience with mobile trends and sales.

“Our poorest-selling DLC for PC games generates more income than nearly every iOS or Android developer app we’ve gotten numbers for,” Stardock’s May 2014 Customer Report read. “Let me emphasize this, we’ve talked privately to a considerable number of developers who have made ‘successful’ iPhone/Android games, games you’ve probably heard of, and their numbers are depressing.”


Stardock also presented this “rough” (their word) chart that outlines revenue gains compare with popularity.

Stardock also presented this “rough” (their word) chart that outlines revenue gains compare with popularity.

Additionally, the rampant piracy that has plagued mobile gaming does little to lure developers toward the platform.

While surely mobile gaming is here to stay, its relationship with developers seems to be waning.

 

Gameboy hits puberty

After the heyday of the Wii and the DS, Nintendo surely looks to tighten up the business. The New 3DS announcement came just days after the Mario maker disclosed they would not sell hardware in Brazil for the foreseeable future and shipping the units without an AC adaptor tells a tale of penny pinching.

The future appears brighter for the big N than it did merely six months ago. In this same week, the company announced that sales of the Wii U console experienced its highest rate of sales in the system’s life.

“This helped total hardware and software sales in 2014 increase by more than 29 percent and more than 75 percent, respectively, over sales in 2013,” a Jan. 15 press release read.

Nintendo also had two large hits the past year, with Mario Kart 8 and Super Smash Bros. for Wii U winning over Wii U owners.

None of this paints a clear picture for whether the mobile landscape has shifted enough to grant the New 3DS any room, or if the added features and allure of 3D are enough to bring new people to the platform.

All of it basically depends on the consumer. However, without the supply of good games, the demand might dry up as well and be diverted. At least that’s what dedicated handheld manufacturers would want

But clearly, if the mobile bubble has not yet burst, it’s wavering, and Nintendo plans to proceed with at least one more new dedicated handheld to find whatever space they can.