that drives the message home to consumers. In contrast, PC handhelds have a wide range of devices with confusing feature sets, large price variation and no overarching marketing message. This is an area ripe for a market leader to drive the segment.
WHERE IS SONY? With the PlayStation platform, Sony has driven the market for third- party game software for over thirty years. However, in the portable space PlayStation platforms have struggled. The PSP, launched in 2004, showed promise and strong initial sales
but quickly became irrelevant. Sony’s focus on the exclusive UMD format and limited appeal to third parties were the major culprits. On paper, the 2011 PlayStation Vita looked like a winner, but its sales were a fraction of the PSP (which had strong lifetime sales of 80 million units). The recent PlayStation Portal has enjoyed decent sales but is a limited streaming device. Sony’s challenge in portable games has clearly been due to the closed
PlayStation ecosystem. Unlike Nintendo, Sony relies largely on third parties to deliver content and build the marketing messages that generate demand. In a classic chicken and egg scenario game developers are hesitant to build for an exclusive platform with a limited installed base. In contrast, the open nature of PC game handhelds means developers
have an established market for their games. DFC estimates the current addressable market for PC gaming handhelds to be 120 million. As technology improves, prices come down, and the message gets out, this market can reach a potential base of over 300 million global gamers. Clearly the vast majority of potential consumers have not yet jumped on board.
ENTER MICROSOFT It has been known for some time that Microsoft would enter the portable game market, the question was with what and when. In June Microsoft revealed the ROG Xbox Ally, to launch in various configurations in late 2025. It will be based on the ASUS ROG Ally which starts at $600. The new Microsoft system is a standard PC game handheld with
the Xbox brand and Windows integration. It is clearly not a game changer but a small first step in Microsoft’s bid to become a larger powerhouse in video games. In the video game market Microsoft has always been a follower. The Xbox platform has been an ongoing, long-term effort to chip away at PlayStation market share. Microsoft clearly wants more. Historically, Microsoft has struggled with marketing and building
excitement for the Xbox brand outside of a core audience. However, Microsoft is persistent and has a large war chest. The acquisition of Activision Blizzard makes Microsoft the world’s largest game publisher. Game Pass would be just another generic subscription service, but Microsoft is willing to take a significant loss by offering key AAA titles for free to subscribers on day one. In short, Microsoft has some major cards to play. Microsoft appears willing to slowly spend its way to a market
leadership position in video games. The ROG Xbox Ally is a minor entry unlikely to impact the PC game handheld market. However, it
is a clear sign of the ongoing battle for what will be key to the future direction of the video game industry.
MARKET GROWTH: OPPORTUNITIES AND CHALLENGES DFC forecasts steady growth for PC game handhelds over the next five years. Nevertheless, this is still a niche market, nothing like what Nintendo has created for its portable console ecosystem. Much will depend on which companies successfully step forward to take a leadership position in the overall PC game market. The PC game software market has grown to a $35 billion global market
without a clear market leader. Furthermore, consumers spend more on PC game hardware than they do on software. This is an area ripe for visionary companies to establish market leadership to build a more unified ecosystem that could unlock the segment’s full potential. Industry growth has been on the backs of game developers delivering
great content. Valve was a small game developer who in the absence of a market leader took it upon itself to build what is now the de facto PC game distribution system. As developers start incorporating cool mobile features into games, more
consumers will get on board. Nevertheless, next level growth needs a large player willing to spend to build the overall PC game segment. Right now, Nvidia and Microsoft, two of the largest companies in the
world, are prime candidates to drive PC game growth. Nvidia has been a clear leader in PC game graphics and technology. Nvidia has dabbled in the game handheld segment and the Nvidia GeForce Now service is the best available cloud game offering. Meanwhile Microsoft’s ownership of Windows, Game Pass, and now a large library of game franchises makes them a natural driver of the future PC game landscape. A critical question is whether either Microsoft or Nvidia or other players
can leverage portable game systems to drive broader market growth. Make no mistake, this is a long-term proposition that will emerge in coming years. The overall PC game market has been strong but overall revenue has been stagnant. Portability and cross-platform play between PCs and consoles are key
market growth drivers. However, it will take significant investment from major players for full potential growth to be realized. Right now, many companies are taking initial baby steps. The PC hardware market has always been fragmented and that has
constrained market growth. The portable PC game market could be different. There is opportunity for a handful of companies to create flagship handhelds that become a rallying point for the entire PC gaming ecosystem. Just as Nintendo and Sony used dedicated hardware to anchor ecosystems that have driven decades of console growth, a breakout handheld could catalyze a fragmented PC space. Right now, Valve, the dominant leader in PC game distribution, is the early leader. However, Microsoft and others clearly have the handheld gaming PC segment in their sight.
October/November 2025 MCV/DEVELOP | 27
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