As the mobile gaming market grows, with successful apps like Angry Birds and Draw Something attracting millions of users, it presents an increasingly competitive challenge to dedicated handheld consoles, according to a report from ABI Research.

ABI forecasts a decline in shipments of Sony and Nintendos handheld devices in 2013, down to 38m units, from a peak of 47m in 2008, as usage of games on smartphones and Tablets continues to expand.

The growth of mobile gaming has increased consumers’ price sensitivity, says ABI, with most gaming apps available at low prices or for free.

“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,” says ABI senior analyst 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 console industry has begun to respond, with Sony and Microsoft both announcing mobile initiatives at the recent E3 exhibition, and Nintendo incorporating a Tablet into its Wii U console.