How much longer can Nintendo ignore mobile gaming?

Say this much for Nintendo: It sticks to its guns. Roughly every two months, the Japanese gaming giant publicly reaffirms its unwavering resistance to expanding its properties to the mobile platform. In July, spokesman Yasuhiro Minagawa told Bloomberg that Nintendo's vow to develop software exclusively for its own hardware "hasn't changed and won't change," and in September, president and CEO Satoru Iwata told Nikkei "[Developing games for smartphones] is absolutely not under consideration. If we did this, Nintendo would cease to be Nintendo." And now, right on schedule, Nintendo of America president and COO Reggie Fils-Aime tells AOL Games that the company still isn't budging.

"We're an entertainment company. We don't make devices for the sake of making devices. We make our hardware in order to bring great entertainment experiences to life. Whether that's the DS, the Wii or the 3DS--or even back to the NES and the SNES--that's our philosophy," Fils-Aime says. "Therefore, the concept of having our core franchises on other systems really flies in the face of what we believe in, and that's because by understanding the hardware, that's how we're able to bring these great experiences forward."

But the reality is that Nintendo needs mobile gaming more than mobile gaming needs Nintendo. Games developed for Apple's (NASDAQ:AAPL) iOS and Google's (NASDAQ:GOOG) Android operating systems now account for 58 percent of all portable gaming revenues in the U.S., surpassing the Nintendo DS and Sony PSP platforms, according to data published last week by mobile app analytics firm Flurry. Portable game revenues across smartphones handhelds will reach $3.3 billion in 2011, Flurry estimates--the segment generated revenues of $2.5 billion in 2010 and $2.7 billion in 2009. Two years ago, iOS and Android titles combined accounted for just 19 percent of the U.S. portable game market, with Nintendo DS at 70 percent and Sony PSP at 11 percent; in 2010, iOS and Android grew to a combined 34 percent, with Nintendo DS slipping to 57 percent and Sony PSP falling to 9 percent. Twelve months later, Nintendo DS now yields just 36 percent of portable game revenues, and Sony PSP barely registers at 6 percent.

Flurry credits surging iOS and Android device sales along with the rise of the freemium pricing model for the recent acceleration in smartphone gaming revenues. This summer, the company reported that freemium games (titles that are free to download but offer premium in-app transactions like virtual currency and virtual goods) now generate 65 percent of total gaming revenues in Apple's App Store, up from 39 percent earlier this year. Parallel with the explosion of interest in mobile gaming, Nintendo DS and Sony PSP revenues have plummeted from $2.2 billion in 2009 to $1.4 billion in 2011. Those numbers shouldn't be surprising: Even with the U.S. economy showing recent signs of improvement, the world is still a far different place than it was just three years ago, when Nintendo began shipping its DS system. Spending $25 or more for a cartridge title makes little sense when gamers can download innovative, immersive iOS and Android releases for free or next to nothing,

Smartphones aren't the only threat to dedicated portable gaming devices, either--tablets are coming on fast. For now, Apple's iPad remains the benchmark, but the new, bargain-priced Amazon.com Kindle Fire and Barnes & Noble Nook should significantly expand the tablet userbase this holiday season. Gaming firms including EA Mobile and Rovio Mobile have already pledged support for both devices, and expect more titles to follow--almost half of North American developers are "very interested" in creating apps for the Kindle Fire, surpassing all other Android-powered tablets, according to development platform Appcelerator's new Q4 Mobile Developer Report. If all goes according to schedule, in another two months Nintendo will reiterate that it has no plans to follow their lead--and the longer the company stays away from the mobile platform, the further its brand will slide into irrelevance.--Jason