Monday, August 25, 2008

Can iPhone Ruin Mobile Gaming?

Can  the iPhone and the App Store ruin gaming?  The answer is, of course, yes.  The following-up question would be:  how likely?

Well, it's too early to tell right now but the risks should not be ignored.

I've enjoyed playing games on the iPhone for weeks now and I'm likely like buying or downloading a new game every other week.  These games do not cost more than $10.00.  It costs less than a movie ticket or a lunch in some cities.

Right now, iPhone is the biggest casual gaming platform in the eye of the media and the success or failure of mobile gaming may rest on how well developers do in the months after the initial rush of iPhone users get their fill of the app store (close to 3,000 apps and counting).

So, at what point will we know if the iPhone will be something for a developer to contemplate a long-term business strategy in?

  • Installed base.  Right now, we're looking at anywhere between eight to ten million by the end of the third quarter of 2008.  We may see another five to seven.  This will mean we're looking at a installed base since the app store was introduced of about thirteen to seventeen million iPhones along.
  • How many installed base of iPod Touches are there?  Apple does not provide a breakdown of iPod Touch sales but conservatively, if we were to estimate about 25% of all iPods sold since third quarter of 2007 are the touches, it's possible we're looking at another ten million.
  • Adding the iPod Touches together with the iPhones, we may have about another fifteen million iPod Touches by the end of 2008.
I realize there is a lot of flaws in my very rough estimation.  Lots and lots.  So, let's say we've got 30 million eligible Apple gaming devices by the end of 2008.  That's a number for a viable platform, isn't it?  Definitely.

So, what's the problem?  Well, cost is a major factor in deciding whether to support a platform like the iPhone.  You want to recoup the costs quick and then start to making the big bucks.  But with games from $5 to $10, it can take a while depending on the production budget.  

In the realm of PSP and DS, games can cost from $25 to $40 with tens of millions of established base.  While there is risk in just about any game development, at the same time, it is established and acceptable risks.  Developers have a good idea what they are getting into.  

For the iPhone, it can be a established gaming platform but chances are, Apple is not likely to promote it as a challenger to established mobile gaming devices because the iPhone is so much more than for gaming.  It's a new mobile computing platform.  The fact it can do gaming is only of many features the iPhone/Touch is capable of.

With independent developers, where they have limited resources but a wealth of talent and brilliant idea. After a few months of hard work on nights and weekends, they can churn out an overnight hit that only cost them some sweat, Cheetos, and a few six packs of Mountain Dews.  

Now, take Sega's Super Monkey Ball that has thus far raked in 300K, about $2.1 million after subtracting Apple's cut (they're likely closer to 600K or 700K by now, or $4.2-5 million).  This is like a small chunk compared to what they can get with DS or PSP.  To reach $5 million in revenues at $20 a copy on Nintendo's DS, only has to sell 250K copies.  

There's an added element to the app store.  The reviews on such a centralized app store can be a good thing just as much as it can be bad for developers.  Established games with big development costs need to charge out of the gate really fast.  The reviews on iTunes can often be brutal and keep an app from any kind of momentum from the start.  From what I've seen, much of the complaints are about cost of the games itself and not really with the game play.  Such "reviews" do nothing to help users decide if a game is something they might be interested in buying and downloading.

Nevertheless, studios do have to pay attention and participate in the mobile gaming industry because of the potential it may bring.  Billions of dollars.  With the iPhone, they can take comfort in the fact that it will have a big installed base and it will only increase in the years to come.  By some estimates, Apple is looking to move anywhere from 30-45 million iphones in the next 12 months.  

That's just iPhones.  We may be looking at even a bigger installed base for iPod/iPhone gaming once the number of iPod Touches are added a year from now.  With a potential of 100 million to 120 million devices to support mobile gaming once Apple's mobile market is established, the risk is mitigated some what.  

But the risks remain and Apple need to do more to make sure mobile gaming is just as much as important as corporate and iPod features.  If gaming cannot take off on such a large platform, how can developers make it on others?  If the iPhone fails to help move mobile gaming forward, developers may be less likely to take chances on other platforms.  

There are some things Apple can do that'll help a lot (some are things other platforms can follow as well):
  • Create gaming workshops or participate at consumer and gaming conferences to show that Apple is serious about mobile gaming.
  • Dedicate an entire section of the Apple's website to just gaming and promote gaming as it does with music and video.
  • Allow apps to also work on Apple TV.  
  • Foster in  house gaming development to show it has confidence in its mobile platform.
Love to hear what you think.  

Note:  Of course, developing for Apple also means putting up with their insane NDA and them pulling your apps for no reason.  

One more note:  Developers have been known to play with pricing from time to time in an attempt to increase demand and revenue.  

Related Articles:
  • Choppers a Huge Success (Touch Arcade)
  • iPhone Popular For Gaming (Onxo)
  • iPhone Will Not Clobber DS (Onxo)
  • iPhone Will Not Win Gaming (Gizmodo)

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