The gaming meme of late has been that Apple is becoming THE serious gaming competitor and that everyone in that industry needs to watch out. As Nicholas Deleon of CrunchGear puts it…
The last time Nintendo took a big hit in profit, it resulted in the development of perhaps the most successful video game console of all time in the Wii. What’s Nintendo’s response going to be this time around? Yes, the big N has seen its profits drop from $3.03 billion to $2.48 billion—still a fair a bit of money perhaps to you and me, but cause for panic in the house that Mario built. While a traditional rival, Sony (with the PlayStation), was responsible for the previous rough patch, this time it’s Apple. Will Nintendo allow the iPhone to push it around?
So I wasn’t surprised when this completely unsourced quote appeared in the Times Online…
Satoru Iwata, the Nintendo president, is understood to have told his senior executives recently to regard the battle with Sony as a victory already won and to treat Apple, and its iPhone and iPad devices, as the “enemy of the future”
This seems odd since just a few days ago the highest ranking Nintendo executive in the United States was publicly saying this in response to questions about Apple…
"We have not seen any impact on our DS business. In the first three months [of this year] we've set two new sales records for the Nintendo DS. We think that through April that we’ll have the best four month time period to kick off a new calendar year that we’ve ever had with the device. So certainly we’re seeing momentum, [Apple is] seeing momentum. I think two products can succeed at the same time."
The above quote is notable because he didn’t dismiss Apple. He specifically pointed out that Apple is showing momentum too and that he thinks they can both exist. That’s not something you necessarily say if you’re scared of a competitor (you want to lessen competitors not acknowledge their success)
The question of Apple and the Game Industry is a lot more complicated. On one hand Apple has created a very threatening mobile platform. Life-To-Date the Nintendo DS (in its various incarnations) has sold 128.9 million units compared to the iPhone/iPod Touch platform which is now at around 85.5 million (plus a million or so iPads). That looks impressive on the surface.
But you have to consider a couple things…
1. Repeat Business: While I’m sure some people have bought more than one Nintendo DS device the truth is they’re pretty durable and Nintendo hasn’t given customers any other compelling reason to upgrade. So the customer-to-DS ratio is probably around 1-to-1. While it’s not uncommon for someone to buy every other version of the iPhone PLUS an iPod Touch (I’m responsible for 3 of that 85.5 million plus 1 iPad). So the numbers don’t equally translate into people.
2. Purchase Intent: When someone buys a Nintendo DS they want it for gaming. That isn’t true with the iPhone or iPod Touch. So you really can’t compare gamer to gamer. Again I use myself as an example. I really don’t game on my iPhone or iPod Touch (there are a few on there but I rarely play them). So that’s 4 sales taken off Apple’s total and I doubt I’m the only one in the non-gamer category.
Meaning the numbers don’t tell the whole story. Then you have to look at the companies themselves. There are a few factors that work against Apple…
1. Licensed Material: As anyone in the game industry will tell you the most valuable commodity in gaming is a good license. You can get decent sales out of a game where someone flies through the air shooting but make it a game about Iron Man and you have a blockbuster. License holders know that and accordingly they (a) expect to be paid a lot and (b) expect to be sucked up to. Apple is too used to being in that role themselves to treat others in the same way.
2. Game Creation Prowess: Say what you will about a platform the biggest names in gaming continue to make most of their money off making actual games and not the hardware. That’s why Microsoft scooped up Bungie Studios (makers of Halo) and Nintendo continues to turn out Mario games with reckless abandon.
3. Customer Focus: Right now Apple is peddling one device to everyone. Business Customers, Kids, Gamers, etc… That could change but in the meantime that gives Nintendo a big advantage because they can make concessions based on their specific market. To use the above example a Nintendo DS is a lot more durable than an iPod Touch and that’s why the parent of an 8 year old is going to buy the DS instead.
Bottom Line
Apple is in a great place. They’ve managed to become a player in the gaming industry without even trying and they’ve made major inroads with the casual gamer who would never buy a dedicated device.
But that’s a far cry from being ready to take on companies that are dedicated to just gaming. Nintendo spends millions if not billions on research, development, licensing and so on and Apple just isn’t matching that.
I have no doubt Apple could compete if they were willing to put the effort in but so far they haven’t shown that willingness.