When Nintendo first introduced the world to the Wii and its wireless motion-sensitive remote controllers in 2006, it undoubtedly made game play a more accessible reality for people of all ages. Fast forward six years and the Wii and its competitors like Xbox 360 Kinect and Sony Playstation Move are still here, but so are more than 140,000 apps for the Apple iPad and an estimated 3.5 billion internet-enabled mobile phones roaming the globe. In fact, mobile app revenue is expected to generate US$38 billion by 2015, according to the new iLearn study from The Joan Ganz Cooney Center at Sesame Workshop. The surge of mobile apps for tablets, iOS and Android-based devices, and the rise of gaming on social network sites like Facebook, have created shifts in the ways kids interact with games—but they are also playing console games more than ever before. According to market research firm The NPD Group, 91% of US kids ages two to 17—roughly 64 million of them—are gaming, an increase of 9% compared to 2009. Despite the obvious challenges created by a crowded market, there are clear opportunities ahead in the US$25-billion video gaming industry.

Gaining control
This year could shape up to be a pivotal one for major console player Nintendo, as consumers await the launch of its Wii U high-definition console controller. Designed to co-exist with the Wii, its features include a touchscreen, circle control pad, inward-facing camera, wireless functionality, backwards compatibility with the original Wii and the ability for users to have a completely different game perspective from other players using Wii remotes. The launch comes as console accessory sales declined last year among gamepads and specialty controllers. It also follows Nintendo’s March 2011 introduction of the 3DS handheld system, which, after disappointing initial sales that resulted in price cuts of up to 40%, is now actually in a position to exceed its predecessor, the DS handheld, in first-year sales.

According to Matt Ryan, communications manager for Nintendo Canada, the company is staying relevant by keeping kids socially engaged with functionality such as the 3DS StreetPass, which has elements of social networking woven into its fabric.

“The 3DS is designed for gaming on the go so people can have shared game experiences,” explains Ryan. “If a kid with a 3DS passes another who also has a 3DS in the schoolyard or on the bus, the two systems will exchange information.” (Such is the case for new title Nintendogs + Cats.)

“We want to keep our products unique and innovative. Mobile gaming is changing the industry in that there are more people playing games, but this is actually really good for the industry,” Ryan says. “It’s pushing developers and marketers to ensure that content delivered through software is the best that it can be.”

Along these lines of innovation, Activision Publishing and Sega Toys have recently launched Wappy Dog for the DS, a game that uses virtual-toy integration. The first videogame-controller toy pet features an actual electronic toy dog that syncs with the game via features like a microphone and touch sensors.

Staying lean
In light of recent market changes that saw developer and publisher THQ slash 200 jobs this past summer, the company says it has renewed its focus by optimizing business for the changing consumer and changing platforms. “It’s about making platform experiences that are really relevant and making sure we go where our consumers are,” says Andy Hodgson, VP of global brand management for THQ’s Kids and Family division. “We have to diversify to stay relevant. In some cases, console is the perfect platform for gaming, and in other cases mobile works best.”

Hodgson also says THQ is seeing a significant shift in how savvy and sophisticated kids are as gamers.

“We know kids are now on iPads, smartphones and social networks, so we need to offer deeper, more compelling experiences and work harder to get the attention of the consumer.” Many of THQ’s latest offerings reflect this approach. The company recently developed the uDraw Game Tablet, which is a handheld device with a stylus, a gamepad and motion-sensing capabilities. “It actually offers the fidelity of drawing within videogames so you can create art on your videogame console and also use it to play unique drawing-based games like Pictionary,” he says.

THQ has also released an XBox 360 Kinect title based on DreamWorks’ Puss in Boots, and partnered with Halfbrick Studios on the Puss in Boots Fruit Ninja app for Apple iOS devices. “There is room for different platforms to co-exist as long as we optimize the experience, which is something we’ll continue to do in 2012,” says Hodgson.

Opportunity cost
But while some companies were pulling out of the kids console gaming space last year—THQ, for one, transitioned its portfolio away from licensed kids titles during its recent restructuring—smaller developers like D3Publisher saw new opportunities.

“When some of the bigger companies pulled out of the kids space to some degree, it put us in a good position to establish relationships with licensors we previously weren’t able to reach,” says Bill Anker, VP of business development and licensing.

The Tokyo-based company has a solid history in the kids gaming market with about four dozen kid-friendly games in its library, including a series based on the boy-skewing Cartoon Network TV series Ben 10. Roughly eight million Ben 10 games have been sold worldwide, and the fifth title, Ben 10 Galactic Racing, launched last October.

“Obviously there are challenges regarding platforms right now, and the overall console market is pretty much dominated by top brands like Call of Duty and Skyrim, but there are opportunities to do products based on great licenses,” says Anker, adding that it’s the job of publishers to figure out what the right licenses are for each platform. Looking ahead, D3 recently signed a game deal with DreamWorks for its next three films, Madagascar 3, Rise of the Guardians and The Croods, for 2012 and 2013. The company also has a new license for a game based on Nickelodeon hit tween series iCarly.

“[I think] 2012 will interesting,” says Anker. “But we’ve been able to manage our business in an efficient way that allows us to take advantage of opportunities to acquire great licenses, and we feel confident we can make these licenses work.”