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Sony (SONY +1%) adds to its upward momentum today after Bloomberg reported that the media giant was mulling a return to the portable console market. Sony, which owns the PlayStation brand, currently has a portable console on the market, the PlayStation Portal. However, it is merely a streaming device that requires a PlayStation 5 to operate. Therefore, the Portal is not much of a competitor to Sony's Japanese rival, Nintendo (NTDOY), which has dominated the portable console industry with its Nintendo Switch since Sony discontinued the PlayStation Vita in 2019.

Since the release of the Vita, the portable gaming market has seen a drastic change. Several Windows (MSFT), Android (GOOG), and Linux-based handhelds have entered the industry. Meanwhile, mobile gaming has snowballed, comprising more than half of all video game revenue globally. However, there are a few reasons why Nintendo continues to succeed and why it could spill over to Sony.

• Widespread retail availability and familiar intellectual property (IP) are factors behind Nintendo's success. Sony already has established its presence at retail and online shops with its PlayStation console and boasts plenty of popular IP, such as God of War and Gran Turismo, giving it a leg up on lesser-known systems based on Windows, Android, and Linux while helping it lure mobile gamers.
• Sony has experience in the handheld market. While it shipped half as many units as its Nintendo counterpart, Sony enjoyed outsized success with its PlayStation Portable device, which was released in 2004 and discontinued a decade later. Its successor console, the Vita, may have flopped compared to the PlayStation Portable, but past mistakes provide much-needed experience in developing a true rival to the Switch.
• The appetite for portable gaming remains robust. Even though sales for Nintendo have slowed in 2024 compared to years previous, this is largely due to the age of the Switch, which has entered its eighth year on the market. Nintendo mentioned earlier this month that despite yr/yr declines in Switch hardware and software, sales are strong compared to previous systems in their eighth year. Furthermore, Take-Two (TTWO), which owns mobile game publisher Zynga, remarked earlier this month that it was optimistic about the mobile game industry, further reflecting healthy portable gaming demand.

There is no confirmation that Sony will ultimately bring an actual portable console to market. Still, rumors of the company developing a successor to its PlayStation Vita are being met with some excitement today as it could prove disruptive to the long-standing portable console leader, capitalizing on a steady demand for handheld gaming.