A new paper published by ABI Research indicates that the popularity of smartphones and other connected devices - including media tablets such as the iPad 2 - is exceeding that of the handheld gaming industry.
This means the mainstream gadgets are outperforming consoles like the PS Vita and the Nintendo 3DS.
An estimated 38 million of the Sony and Nintendo products are expected to be shipped by 2013.
The IT research and advisory firm stipulated that this is a maximum figure and noted it is significantly lower than the 47 million unit peak the manufacturers reported in 2008.
Indeed, unit shipments are expected to decline slightly next year and forecasts are relatively flat through to 2017 - although the market could redefine itself as a sustainable niche.
However, the smartphone and tablet gaming sector is continuing to expand, making it an increasingly important companion to the dedicated handheld market.
Sony is responding to this trend already, having recently launched the PlayStation certification programme.
This endeavour aims to make classic video games from the PS One era - such as Crash Bandicoot and the original Tomb Raider - available to smartphone users.
HTC was the first firm to receive certification for the programme, but Sony's range of Xperia smartphones is also compatible with the software.
"Mobile devices will compete with dedicated handheld gaming devices, but select consumer segments like core gamers and those individuals who do not want or have a smartphone or tablet will still provide some demand," commented senior analyst for ABI Michael Inouye.
"The addition of mobile gaming is not necessarily a zero sum situation - in fact, many feel there is plenty of room in the gaming market for both portable and mobile gaming," the expert continued.
Nintendo may have some catching up to do, as ABI found that the 3DS console has not met with much success following an initially strong launch in the first quarter of 2011.
Posted by Samantha Dunne