Video Games Sales and the iPhone

  • Posted: 16 May 2009 08:49 AM

    The second consecutive month of weak video game sales is being blamed on the recession.  But there is a second explanation, or at least contributing factor, and that is the 30+ million iPhone/iPod Touch game machines now in use.  In just a blink of an eye Apple has sold more game machines than the Xbox 360.  Apple has also made a huge dent in game developer mindshare, and much of the buzz in gaming in the last six months is about iPhone games. 

    If this Xmas every gamer wants an iPod Touch, that won’t end the console video game business, but it will surely slow it down.

         
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    Posted: 16 May 2009 10:36 AM #1

    macorange - 16 May 2009 11:49 AM

    The second consecutive month of weak video game sales is being blamed on the recession.  But there is a second explanation, or at least contributing factor, and that is the 30+ million iPhone/iPod Touch game machines now in use.  In just a blink of an eye Apple has sold more game machines than the Xbox 360.  Apple has also made a huge dent in game developer mindshare, and much of the buzz in gaming in the last six months is about iPhone games. 

    If this Xmas every gamer wants an iPod Touch, that won’t end the console video game business, but it will surely slow it down.

    I would separate console sales from handheld (Ipod touch/PSP/DS).  Gamers will have multiple systems just to get the titles.  The XBOX 360 is not competing against the Iphone IMO, but the other handhelds.  The console battle is about exclusive titles.  The top titles drive sales of the console.  Apple’s Iphone/Touch is getting some serious game titles to compete with the other handhelds, but I wouldn’t be playing Halo or Gears of War on the Iphone not enough horsepower and the screen is too small.

         
  • Posted: 22 July 2009 08:50 PM #2

    The bigger issue is the game distribution model. Apple is disrupting the current game distribution model through direct download via of iTunes and “in game” purchases of new levels, etc.

    No need for a physical disc, no need for a retail store visit and no waiting on a package to arrive from Amazon, etc.

         
  • Posted: 30 July 2009 10:50 AM #3

    Nintendo today confirms that its revenues are taking a hit from the iPhone. 

    Not only are iPhone users less likely to use game machines of all kinds once they have games on their phone available at all times, but iPhone users are also getting accustomed to spending 99 cents for games, and may be increasingly reluctant to pay many multiples of that for a new Nintendo game.  If Nintendo has to substantially lower its game prices, its business model is at substantial risk.

    And if the next generation of AppleTV has games, perhaps interfacing with the iPhone or tablet, the pressure on Nintendo increases.

         
  • Posted: 30 July 2009 04:03 PM #4

    macorange - 30 July 2009 01:50 PM

    Nintendo today confirms that its revenues are taking a hit from the iPhone. 

    Not only are iPhone users less likely to use game machines of all kinds once they have games on their phone available at all times, but iPhone users are also getting accustomed to spending 99 cents for games, and may be increasingly reluctant to pay many multiples of that for a new Nintendo game.  If Nintendo has to substantially lower its game prices, its business model is at substantial risk.

    And if the next generation of AppleTV has games, perhaps interfacing with the iPhone or tablet, the pressure on Nintendo increases.

    This is in keeping with my views on Apple destroying the software monetization model in favor of a return to hardware monetization and a discounting of the costs of software.

    Let’s keep in mind Apple is also revolutionizing the app and game distribution model as well, eliminating the costs of packaging, shipping and the risks of inventory exposure.

    Through the Apple app store developers have immediate and unfettered access to millions of potential customers and the distribution fees have been reduced to 30% inclusive of transaction fees.

         
  • Posted: 06 August 2009 01:17 AM #5

    Check out this amazing story of kids selling their DS and PSP devices to buy iPhones and Touches:

    http://gamerlimit.com/2009/08/editorial-why-the-iphone-might-one-day-replace-the-ds-and-psp/

    Its beginning to look a lot like an Apple Xmas.  :grinsanta:

         
  • Posted: 06 August 2009 02:17 AM #6

    macorange - 06 August 2009 04:17 AM

    Its beginning to look a lot like an Apple Xmas.

    Yes. It is. I expect the iPod touch to be a huge seller and as more games appear for the device (and the iPhone as well) it’s a no brainer for parents. One device or multiple devices around the house and all of those little cartridges that go with it and get lost everywhere.

    Everything is downloaded, expenses are controlled by the flow of iTunes gift cards and the child also has all of their games with them. How about the automatic backup of the games themselves on the Mac or PC? Any issues with the device and a restore does the trick. Not bad.

         
  • Posted: 06 August 2009 09:00 AM #7

    macorange - 06 August 2009 04:17 AM

    Check out this amazing story of kids selling their DS and PSP devices to buy iPhones and Touches:

    http://gamerlimit.com/2009/08/editorial-why-the-iphone-might-one-day-replace-the-ds-and-psp/

    Its beginning to look a lot like an Apple Xmas.  :grinsanta:

    nice catch macorange. I get more useful information from a 14 year old than a handful of analysts on CNBC. and yes to Apple Xmas especially if they introduce a camera in the iPod refresher coming up

         
  • Posted: 26 September 2009 10:34 AM #8

    Today’s New York Times main business story is on the impact of the iPhone/iPod Touch on the gaming market.  Money quote (from a game developer):

    “The next breakthrough in gaming is not going to be in hardware, its going to be in how to create a successful business model.”

    Sounds like a newspaperman.  The iPhone/iPod is THAT disruptive to a huge industry. 

    Wii sales in the second calendar quarter were done more than 50%.  Some of that decline was caused by the economy, but the real change in the marketplace since last year is Apple.

    Coming soon: games on the new tablet and an upgraded AppleTV.

    Game over.

         
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    Posted: 26 September 2009 11:58 AM #9

    My kids won’t put down their iPhones.  It is this fact that often guilts me into buying stock regardless of the economy or market.  Their Nintendo DS’s are collecting dust and they hardly touch the play station.  They do play a few games on the computer, but their time on the computer is watching Japanese cartoons.

    The 75,000 apps are only part of the reason that the iPhone is successful. We forget that it is a cool devices with an amazing screen which does a lot more then play games.  My son uses his to text and email friends and look up info such as weather.

    I think we have a real winner here.wink

         
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    Posted: 26 September 2009 12:25 PM #10

    I wish my son just looked up the weather!  He’s 14 and it took him no time at all to find p***hub.com on his Touch!

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    "There is one thing that I can confirm without breaking any NDA: the iPhone is hands down, without a doubt, the single most powerful mobile development platform EVER." - Leading Microsoft .Net developer Kevin Hoffman.

         
  • Posted: 26 September 2009 12:47 PM #11

    macorange - 26 September 2009 01:34 PM

    Today’s New York Times main business story is on the impact of the iPhone/iPod Touch on the gaming market.  Money quote (from a game developer):

    “The next breakthrough in gaming is not going to be in hardware, its going to be in how to create a successful business model.”

    Sounds like a newspaperman.  The iPhone/iPod is THAT disruptive to a huge industry. 

    Wii sales in the second calendar quarter were done more than 50%.  Some of that decline was caused by the economy, but the real change in the marketplace since last year is Apple.

    Coming soon: games on the new tablet and an upgraded AppleTV.

    Game over.

    Again, Apple is implementing a successful model of monetizing the hardware and commoditizing the software. At the same time Apple is creating value for itself and the software developers through iTunes by (in many cases) reducing distribution costs for developers, eliminating packaging and transportation costs as well as eliminating inventory risk.

    The volume of apps available is almost overwhelming and the in-iPhone purchase option obviously adds to the appeal.

         
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    Posted: 26 September 2009 01:24 PM #12

    DawnTreader - 26 September 2009 03:47 PM

    ... Apple is implementing a successful model of monetizing the hardware and commoditizing the software. At the same time Apple is creating value for itself and the software developers through iTunes by (in many cases) reducing distribution costs for developers, eliminating packaging and transportation costs as well as eliminating inventory risk ...

    Do you foresee a future where Apple’s business model can coexist with cloud platforms’ (such as Google, Facebook and Twitter) business model peacefully or a showdown is inevitable?  Do you foresee MobileMe or iTunes evolving into a formidable cloud platform like Facebook?  From this perspective, would acquiring Yahoo! beginning to make sense?

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    Stay Hungry. Stay Foolish.  - Steve Jobs

         
  • Posted: 26 September 2009 01:33 PM #13

    Mace - 26 September 2009 04:24 PM

      From this perspective, would acquiring Yahoo! beginning to make sense?

    There’s no benefit to acquiring Yahoo! What would Apple get for the investment?

    Apple is a hardware company that has created a highly effective monetization model. There’s no reason to look beyond the company’s core competencies for growth considering the opportunities available for hardware sales growth in the US, the EU and a global market for the iPhone in which Apple is still challenged to provide ample supplies of the product.