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3 Video Game Mainstays Set to Disappear After CES

Tickers in this article: AAPL INTC MSFT NVDA SNE

PORTLAND, Ore. ( TheStreet) -- The video game industry as you know it is coming to an end with a bit of help from the Consumer Electronics Show.

Yes, Nintendo already released its next-generation Wii U console. No, Sony (SNE) and Microsoft (MSFT) aren't going to announce successors to the PlayStation 3 and Xbox 360 until the Electronics Entertainment Expo at the earliest. No, Microsoft isn't even going to deliver a keynote at this year's event, and Nintendo isn't even attending.

That said, things are happening on the edges of CES that should give gamers a clue about where the industry is headed within the next few years. Consider it a welcome change, as everything in gaming that isn't playable on a smartphone or downloaded from an online store has been headed nowhere for at least the past year.

Despite the release of the Wii U and the $1 billion generated by Activision's (ATVI) Call of Duty: Black Ops II in its first 15 days of release, NPD Group says video game sales are still in decline. Total industry sales in November -- the last month for which data were available -- fell 11% from November 2011. New game sales also fell 11%, while console sales dropped 13% as the Wii U ate into other consoles' numbers and the lame-duck Wii quickened its slide into history.

That was the 12th-straight month of industry declines. While industry insiders note that November's drop was the smallest monthly decline during that span and that the industry's numbers are still double what they were the last time a generation of consoles was released in 2005, things admittedly don't look great.

Sales of consoles, physical games and accessories dropped 16% during the past quarter from the same period in 2011, according to NPD Group numbers. Meanwhile, sales of digital content such as downloaded game apps and add-ons jumped 22% over the same span. NPD Group research also finds that smartphones and their apps now account for roughly half of all game downloads. Last year the number of gamers playing on mobile devices just surpassed the number playing on dedicated consoles.

Looking into CES and beyond, here are a few pillars of the video game industry that should come crashing down after CES:

1. Handheld consoles
Why someone at Nvidia (NVDA) thought it would be a great idea to release not only a handheld console, but one dedicated to personal computer games is beyond us. The chipmaker already announced its Project Shield device that looks like a Microsoft Xbox 360 controller with a screen and streams PC games through services such as Steam, but there's still little indication of why.

The handheld market and mobile gaming in general is dominated by the casual gamer. These people typically aren't the kind to sit in front of their dual monitors with a case of Mountain Dew and lead raiding parties until sunrise. More importantly, they're not the type of folks who support frivolous little trifles such as handheld consoles in the least.

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