The portable gaming market has shifted towards mobile app stores, according to Flurry Analytics. iOS and Android games combined are projected by the company to generate more revenue than Sony PSP and Nintendo DS games by the end of 2011.

“The most striking trend is that iOS and Android games have tripled their market share from roughly 20 per cent in 2009 to nearly 60 per cent in just two years,” says Flurry in a blog post. “Simultaneously, Nintendo, the once dominant player, has been crushed down to owning about one-third of market in 2011, from having controlled more than two-thirds in 2009. Combined, iOS and Android game revenue delivered $500 million, $800m and $1.9bn over 2009, 2010 and 2011, respectively.”

Flurry says the freemium model has revolutionised revenue for mobile games companies. “The days of paying $25, or more, for a cartridge at a retail store may soon end,” says the company. 

The blog says that iOS and Android devices have reached critical mass, and continues to grow at an unprecedented rate. Apple and Google reported a total of 250m iOS devices and 190m Android devices activated.

In contrast, Nintendo is facing its first fiscal loss since the company began reporting in 1981. Apple and Google is also set to disrupt the TV-based console game market with Apple TV and Google TV initiatives – and Flurry says Nintendo may have to consider distributing its content across non-proprietary platforms.

“In our last review of the portable game category, comparing 2009 to 2010 revenue, we believed Mario was already standing on a burning platform,” says Flurry. “With 2011 numbers now added to the story, it appears that the inferno has intensified, and that Nintendo may truly face a Nokia-like decision to jump or perish in the flames of its own burning platform.”

You can read the full Flurry blog post here.