With or without the Cell technology, this is an intriguing thought!

*The Console Market*!

Sony and Microsoft (and Nintendo) are all battling for the same GamesConsole/"intelligent TV"/InternetTerminal/ServiceNode/Whatever market. Apple has been quite offensive and successful in the online music market. They have the funds, they surely have the technology, they have media connections.

The games industry is larger than both music and movie today! A fact to take into account!

As soon as they start buying games publishers I'll quadruple my Apple stock! Nothing could be more clear than trying to obtain exclusive games (á la Sony pre-Playstation).

This could be it!

Hello,

I work with BB & RV from time to time on things like this, and this came from one of our conversations:

BB & RV,

All I was trying to get across (and this crowd doesn't seem to understand this) is that Apple's core business is no longer overpriced PCs :). They've changed their business model to be a commodity.

The most popular games out there that make money hand over fist are the ones from the company whose core processors are a ~733Mhz G3 and 66Mhz ARM chip, Nintendo :). The Wii is sold out all over the place, and the game houses that can make commodity games, not $10+ million productions like Crysis, are the ones making money.

Therefore, it makes sense that Apple wants to really jack up the processor speed of the iPhone and iPod Touch to run Flash and Shockwave, which they have some incredible licenses for.

I don't see Apple making a game machine, because they don't have to, and it would make them lose money. Why bother making a dedicated machine for games when the real money is in little games that sell in the impulse buying range which can be made to run on an iPhone, iPod Touch, Apple TV, Mac, or PC because they're written in Flash (or Shockwave), which has replaced Java as the cross-platform end-user presentation platform of choice? :) If your iPhone or iPod has more processing power than a Wii with the same accelerometer, why build a dedicated machine when you can sell more iPods and make more money?

Apple's main weapon is iTunes, which can be used to purchase/deploy applications across all of those platforms, and additionally can deploy applications to their portable devices either through a Media Hub or attached device configuration.

They can really hit on two fronts here, which are:

1. Establish a beachhead against Windows Mobile by having a well-integrated Adobe Flash solution for their platform.
1a. Remember, Adobe and Apple have a co-dependent relationship.
1b. Also remember that the #1 porn site on the Internet is YouPorn.com, which uses Flash Video. YouTube is nice, but the big players out there are starting to use Flash Video to distribute their content.
1c. The #1 sports site on the Internet is ESPN.com, which lets you view highlights and parts of SportsCenter in Flash Video format.

2. Utilize their digital distribution platform, the iTunes Store, to deploy games and apps based on Flash to their entire product line, and also PCs. This is something Microsoft does not have, and neither do the other competitors. Their competition requires PCs or game consoles. Apple doesn't :).

Additionally, they can:

3. Utilize the additional processing power of these new ARM chips to greatly reduce the dependence on other supporting hardware by doing certain tasks in software.
4. Make a lot of money cross-licensing the patents to Cisco, Microsoft, Sony, and everyone else but IBM and Freescale. Steve Jobs is the kind of guy who would really want to kick them where it hurts, and he's probably still really pissed off at IBM.

Amazing how people come to all of these conclusions, when it appears to be the most simple answers of all when you apply a little bit of sense to it.

I'm just waiting for Amiga Inc. to become the next SCO and attempt to sue.

Hello,
According to consumer studies, the average Wii player owns considerably less games than owners of XBOX 360 or PlayStation 3 consoles. While the sales numbers for Nintendo's Wii console are very strong, third party software developers do not profit from the console's widespread adoption in terms of massive software sales.

A substantial amount of Wii owners are people who just keep playing Wii Sports and are unlikely to purchase any additional games at all. Of course, Nintendo has no need to worry as they do not lose money per hardware sale. But for game developers, Wii is not as attractive as the pure hardware sales might indicate.

Also, I would like to note that, although the media seems entirely focused on how well the Wii does compared to the PS3 and XBOX 360, the 8 years old PlayStation2 is still selling in fantastic numbers all over the world. In February, Sony sold 350K PS2 consoles in the US alone. For comparison, Nintendo's much hyped Wii had a "mere" 20% higher sales. If one were to combine PS2 and PS3 sales numbers, Sony would be the clear winner of all makers of non-portable game consoles.

There is most certainly a sizable market for casual games. Nevertheless, I have to disagree with your statement which I find too broad and generic. The matter of the fact is that the best-selling game of 2007 was Microsoft's Halo3 which managed to outsell all other titles even though it had only been on sale for a short 3 months period during that year.

Needless to say, Halo 3 is not exactly a commodity game and its development budget far surpassed the one Crytek had for Crysis.




First of all, I do agree that it makes no sense for Apple to create a dedicated game machine.

What I do not agree with, is your hypothesis that casual games are where the real money is. It is just not supported by facts. The world's biggest game publisher, Electronics Arts, also happens to run the world's most successful commercial online service for casual games (Club Pogo). You may be surprised to find out that this is not where the "real money is" for Electronics Arts.

Again, casual games are very attractive. For one, this market segment is expected to see the biggest growth rates in the forseeable future. There are huge opportunities in this area while the cost barrier to enter this segment is very small thanks to low development costs.

But, casual games are not replacing titles that are designed for experienced players. Casual games are *extending* the games market and attracting new audiences who have never played on game consoles or computers before. What they do not do is eating up the games market from the inside.

Just like there are cheap daily soap operas and expensive blockbuster movies today, there will continue to be casual games and big expensive game titles in the future.

From a purely technical point of view, I would consider that an extremely unlikely 'if' as far as the forseeable future is concerned.

I agree 100%.




I am sure this sounds wonderful in theory, but producing software which runs equally well on a variety of different screen sizes, resolutions and orientations is a mammoth task in reality. In fact, even porting a game from one mobile phone to another can be a challenging and time-consuming endeavour, depending on the type of game and how different the offered input methods and other hardware features are.

The dream of truly hardware agnostic software is most definitely a good one to have, but its fulfillment is heavily hindered by usability and technical barriers today.

Actually, there are competing online distributors who do not require PCs or games consoles. All their customers need are Flash-capable devices which makes their service work on a lot more hardware than Apple's iTunes (which is strictly limited to the Apple's own products and Windows PCs).

Based on this, I would not consider hardware compatibility one of Apple's strengths with regard to other companies distributing digital content.

That being said, even the highest degree of hardware compatibility does not help much if nobody knows your service. Apple's real strength is that they already have a gigantic installed user base which makes it very easy for them to promote and sell content of *any* kind.

Andre,

I'll admit I don't know that much about the games industry, but I did find one major point there. Are there any sales figures for Wii Virtual Console games? Even if people aren't buying regular Wii games, they can buy Sonic the Hedgehog and other classics (I have a few of those games on my Wii).

Also remember that the #1 portable platform of all time is the Game Boy, with over 118 million sold (http://images.businessweek.com/ss/06/10 ... urce/7.htm) while having a less powerful CPU than the competition :). If you add in the DS and GBA, it's not even funny (~21 million DS units and 75.86 million, respectively).


Additionally, Adobe's really attempting to push Flash as a game development platform, esp. with ActionScript 3.0, which is only well-supported on Windows, Linux, and Mac OS X. They're also making a major push on the Media Server front by building out a competing production suite with h.264 support, which we know as Adobe CS3 and its server-side component, Flash Media Server.

The basic tools are there, and Adobe's been greatly enhancing them in CS3, for doing major cross-platform game and video development. There's not anything holding them back there. They've been quietly building this market.

I know the internals of that, and how the phone carriers proxy the living heck out of the web traffic, so much so that the only decent client-side component that can view them are .SWF files based on ActionScript 3.

And about your PS2 point...aren't most, if not all, of the PS2 games at the $20 and under point now? The PS2 is incredibly cheap, and the games are in the Impulse Buying range, even if they are more complex.

My point was more about the economics, which is that people are more willing to pay $20 and under for a game, as opposed to $50-$60 of a new PS3 game.

And in the case of EA, how much of that market is Madden and Tiger Woods?

mbpark,
by autumn last year, Wii Virtual Console had generated $35 million of revenue for Nintendo. Needless to say, this is not exactly an impressive number by any standards. That is not to say that digital distribution is not going to become much more important in the future, but the classic games offered today are really targetting a small niche audience. (Many classic blockbuster games would be considered underperformers in today's market place.)

Also, only a minority of console owners have their PS3, Wii or XBOX360 connected to the internet which, of course, limits the potential customer base for online services such as Wii Virtual Console.

Yes, I am aware of this. Portable gaming is a very specific beast, however, and I would not use it to make assumptions for the rest of the games industry. A good analogy is that portable gaming is to the games industry at large like comic books are to literature or like McDonald's is to food.

I realize the importance of Flash and have emphasized the need for a port of the player software to Linux on the Power Architecture platform myself many times.

That is probably an oversimplification. The best-selling game for the PS2 in 2007 was Guitar Hero III which is not even an exclusive title and is available on many other platforms as well. The base versions costs $50 but there are many extras such as guitar controllers which retail for around $100 (!).

Again, that is a very generic statement. Would consumers prefer to pay only one third of the price for a blockbuster game such as Halo 3? They obviously would. But, what if they had to choose between Halo 3 and a casual game that is much shorter, tells no story, looks considerably worse and offers a less challenging gameplay experience?

Let me rephrase your statement: People are more willing to pay $10.000 and under for a car, as opposed to $20.000 for a Toyota Camry.

No counterargument, right? Yet, the Toyota Camry has been the best-selling car for 9 of the last 10 years in the US, not the Chevrolet Aveo which can be bought for half the price.

Price is only an issue if you compare nearly identical products. A $10 puzzle game is not the same as a $60 action shooter or a massively online role-playing game which costs $10 per month and focuses more on social interactions rather than high scores.

Also, the forementioned Guitar Hero and similar titles such as Rock Band are highly successful full-price game franchises which prove that casual games, which in general are defined by their ease of use and not their price, do not have to be cheap in order to sell extremely well.

The EA Sports brand contributes between 20 and 25% to their total revenues.