Grand Theft Apple: killing the console

Sony (SNE) this week announced PlayStation 4 ships this Christmas, but it's possible this won't be enough, as Apple [AAPL] iOS momentum drives the iPhone maker toward what could be leadership of the games industry -- iOS games already outsell those sold for any other handheld console platform, a report claims.

Apple eats the games industry

Bigger than Nintendo

App Annie and IDC's latest App Annie & IDC Portable Gaming Report tells us sales of games to iOS and Android smartphones eclipsed those sold on any other platform. The report covers 2012 with particular regard to Q4. It confirms that smartphones have become the default handheld gaming platform. You can download it here (PDF).

“While the most popular games and their business models are quite distinct, Nintendo and Apple were surprisingly close in terms of aggregate consumer spend on game software in the fourth quarter of 2012,” said Lewis Ward, IDC’s gaming research manager. “Seasonality is more pronounced in the dedicated handheld space and we hope this report series will help clarify the evolution of portable gaming dynamics in 2013 and beyond.”

The total iOS App Store and Google Play spending on games eclipsed that of dedicated handhelds, the report confirms. Handheld console game purchases showed what the researchers called "particular seasonality" last year, with Christmas being the high point for sales on non-smartphone platforms.

One might speculate that this seasonality reflects a scenario in which parents and adults purchased titles for children at Christmas. Consistent games sales were more apparent on smartphone platforms.

[ABOVE: Remember when Infinity Blade seemed so impressive?]


That's interesting when one considers that iPads, iPhones and other smart devices were among the most-desired gifts last holiday season -- parents may be getting Nintendo games for their kids, but children's interests are already moving elsewhere.

What might this mean? At its simplest it means the digital natives that comprise the 11-16-year old population may already be migrating from handheld console devices in favor of Android and iOS devices.

This reality is also reflected in Sony's recent news of plans to introduce a PlayStation app for iOS and Android devices.

I don't believe the Apple gaming story stops there. Games are the biggest category via the app store. This has attracted some games developers to create versions of their titles for Apple's other platform, the Mac. For example, EA this month announced that its Origin digital distribution platform will in future be available to Mac gamers.

iOS titles already run on three platforms: iPhone, iPod touch, iPad. In future there's plenty of speculation claiming some of these titles may run on an Apple TV or Apple television.

[ABOVEStratego-- this latest game's attracting much praise.]

Operation Console

In the event it enables app support in these products, Apple will not just be competing for oxygen in the handheld gaming space, but with traditional console platforms, too.

This time last year, Apple quietly showed its hand for its future within the gaming industry when it hired former Microsoft Xbox Product Marketing chief Robin Burrowes as head of App Store Marketing for iTunes Europe. The company has been actively courting the games industry for many years.

Apple has a good story to tell gamers. Not only does it offer more apps than anyone else, but it also has a consistent product upgrade path that's boosted by backward compatibility for its titles. While a console gamer may be introduced to a new console every 5-10-years, an iPad gamer has the chance to pick up a new tablet each year.

This makes for a robust road map that favors the development of more powerful games year-by-year, while also meaning older games should still work fine. It also delivers a more exciting arena for games development, as new screen resolutions and faster processors enable creation of ever more enjoyable gaming experiences.

Developers also make more cash on Apple's platform than they do on Android, giving Cupertino yet another advantage as against its widely distributed but far less used competitor platform. iOS games are now four times more lucrative than they were 12-months ago, according to a recent GREE survey.


[ABOVE: Detail from a recent Arbitron survey reveals iOS v Android activity levels.]

Active users

You can see the difference in terms of usage patterns in the latest Millennium Media report that shows Apple devices as the biggest used clients on that firm's ads platform. This suggests -- as previous evidence has confirmed -- that despite Android's larger market share, Apple devices still occupy a much higher active user share.

That last point is important. Hardcore gamers are active users. They like to compete and work together with other gamers who are also active users. This suggests the platform most likely to prevail in any games industry show down will be the one that nurtures the most active users among those on its platform.

iPhone users already spend more time playing games than Android users, according to the Arbitron Mobile US smartphone panel earlier this month. 85.7 percent of iPhone users played mobile gaming apps during December 2012. This isn't a huge gap -- 76 percent of Android users played games that month. When it comes to sessions the difference is greater: iPhone users access games 151.5 times per month while Android users log in 94.6 times each month, spending 12 hours and 23 minutes each month gaming, in contrast to Android's 8 hours and 4 minutes.

In the event Apple introduces games app support to the Apple TV and (much rumored but still unannounced) Apple television, it will have an immediate market of active gamers who will hope to use their favorite iOS titles on their television.

That's great for Apple and developers -- developers gain new connections with consumers with which to nurture in-game purchases; while Apple -- which doesn't attract its primary income from games development -- gains another set of reasons its installed base of millions of iOS users may use to justify purchasing another Apple product.

[ABOVE: Steam's Gabe Newell's speech in full.]

Consoles without the consoles

This is a huge advantage for Apple and reflects Steam founder, Gabe Newell's analysis that Apple could become the biggest player in the games market.

"The threat right now is that Apple has gained a huge amount of market share, and has a relatively obvious pathway towards entering the living room with their platform," he said.

The evolution of the connected Post-PC age is inherently bad for devices that can be loosely described as having one primary function. With Apple and Samsung now becoming the world's leading smart connected device companies, Apple is in a strong position to make advances toward hardcore gamers. 

Apple's recent iPad ads and CEO Tim Cook's statements last week suggest the company is working toward making app availability one of the primary differentiators for what it offers consumers.

With this in mind it seems inevitable the company will attempt to nurture its position in the games industry. That iPhones are 300 percent more reliable than Samsung's smartphones probably won't hurt, either.

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Copyright © 2013 IDG Communications, Inc.

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