iPhone & Android Dents Portable Gaming Industry

Two years ago, I wrote about the looming death of portable gaming devices... seems like it happened sooner than we thought. Yesterday, the Wall Street Journal covered Nintendo's revamped 3DS handeld gaming device - which Nintendo is hoping will revive their declining gaming platform and business:

"The Japanese company also reported its first interim net loss in seven years, hurt by weakening overseas sales and the strength of the yen. First-half revenue fell 34% to 363.16 billion yen ($4.44 billion) from a year ago."

While the Nintendo 3DS may be a great device (to be determined).... the fact of the matter is that improved hardware won't solve Nintendo's problem. Asking consumers to buy a handheld device, carry that device, and individually buy game titles (at $29 / disc) is unreasonable.

Consumers already carry iPhone's, iPod Touches, and Android Devices - and those platforms now have large libraries of gaming content. The games are far cheaper (free to $9.99) and wildly popular: 14/15 top grossing iPhone apps are games.

We have learned that with Apple and Android - and to a lesser degree Znyga, LOLapps, etc - consumers value gameplay and social more than game graphics and flashiness.

Apple iPad: 3rd Fastest Selling Device (Behind Nintendo Wii & DS)

If there is a voice for mobile growth, Mary Meeker is it. And she has 50+ slides of charts and data to prove her bullishness.

Below is the latest version of her Internet Trends deck (updated June 7 for the CM Summit in NY). I have included screenshots of three particularly interesting slides which are relevant to previous posts on this blog. The entire deck is embedded below via Scribd: Other than Nintendo's Wii and DS, the iPad is the fastest growing device - taking just 28 days to sell 1,000,000 units. That is more than 2x as fast as the iPhone and 1/2 as fast as either Nintendo device (which is impressive):

Android's growth is impressive... and ramping significantly. The wild card will be the new iPhone 4 (how many units will it move?) and whether rumors of a non-AT&T iPhone come true by year's end:

Normalized to the iPhone, iPad usage is more alike desktop PCs than smart phone usage. This is conceptually straightforward - but clear proof that these tablet devices are effective ways to surf the web and accomplish other 'desktop' activities:

MS Internet Trends 060710

The Next Step in iPhone Gaming: Nintendo NES

At the break of the new year, I listed 20 predictions for Digital Media in 2009. The third prediction was: iPhone Gaming Will Progress Beyond Novelty

At the time of that article, the biggest application was iFart which, while not a traditional game, represented what one of three game types to successfully hit the iPhone:

1. Accelerometer based games (SGN is the king here) 2. Role playing games / storyline games (such as iMob and SGN's Agency Wars) 3. Novelty games (iFart, Beer Pong)

I find games like iMob and Agency Wars fascinating because they are perfect for the iPhone: always connected, progressing storylines and ideal for several short play sessions.

I also think that what SGN has built for with their accelerometer-based sports games is terrific - bringing together the Wii's form-factor with the connectivity of mobile (and now Facebook Connect).

But I want more. I find the current gaming offers interesting.... but mostly ephemeral. Nothing, for instance, I would shell out $9.99 or $29.99 for... after all, Playstation 3 games now run $59.99 - and I spend a lot more time with my iPhone.

The next generation of iPhone gaming needs to look back to the original Nintendo. Place the original track pad and A/B buttons on the iPod's touch screen... and use traditional gameplay navigations that have been a staple of controllers for ages:

Even though it is less sexy than developing against the iPhone's accelerometer, gameplay would be richer and longer-lasting. Super Monkey Ball is fun... but the novelty wears off soon there after - particularly when the controls aren't terrific.

Imagine connected, online equivalents of Super Mario 3 or Zelda that play on the iPhone and tap into Facebook Connect... it might not be sexy (and I might be dating myself) but it would be powerful. And with the creativity and horsepower developing against the iPhone - why can't the next Mario, Zelda and Metroid emerge?

Update: To be clear, I am not suggesting that the iPhone bring back Nintendo games (see comments); rather, the point was that Nintendo-inspired controls would introduce more compelling games on the iPhone.

2009 Predictions: iPhone Gaming Will Replace Nintendo and Sony

My 20 Digital Media Predictions for 2009 series continues with a story (The Dream iPhone) that tangentially sits atop Techmeme at the moment. Most of the talk about the below iPhone v2 mock ups are about the full keyboard. My initial take was around the Nintendo-Gameboy-like controller: A/B buttons and control pad:

While I do not think that mocked up 'joystick-lite' is the solution, it brings me to one of my 2009 Predictions:

iPhone Gaming Will Progress Beyond Novelty

I've written before about the iPhone's rapid destruction of handheld gaming systems (sorry Sony PSP, Nintendo DS, and others). Portable gaming systems are struggling as the iPhone (and others) offer full gaming consoles within a phone, messaging system and internet device. How can the PSP and DS compete?

Right now, they are only competing on game quality, which comes in two forms:

1. Production quality (titles, graphics, etc) 2. Control quality (the DS for instance offers a more engaging, hands-on experience)

Currently, the iPhone is taking market share because its price point and ease of use. It has yet to truly compete on game quality because, like it or not, the games are all novelties. The games have solid graphics (not amazing - but consumers don't expect a portable PS3) - but the game-play is generally weak: tilt the phone and move jerkily right, left, forward, backward. This is fun for a little - but doesn't offer longterm game-play. In the current format, will a Mario Brothers or Madden Football exist? Simply put: no.

But in 2009, game-play will be solved and we will be willing to fork over $10.00 - $25.00 for big titles that offer extended play.

Someone will figure out how to add a control pad atop the screen. Someone will figure out how to layer that with the accelerometer. Someone will figure out how to make successful titles like Madden Football, Metroid, Mario, Little Big Planet, etc iPhone compatible. The Gameboy solved it for years and iPhone developers will do it in 2009... beating Nintendo and Sony in the process.

Nintendo Wii and Wii Fit Dominate eBay Shopping

TechCrunch posted this morning about the top tech gadgets as measured by eBay's top sales (always a good indication of macro-level trending and habits... one reason why I enjoyed working at eBay so much). Michael Arrington focuses mostly on the remaining popularity of the Nintendo Wii - which is stunning considering how its their second consecutive holiday season and so few games have been released.

Here are my thoughts:

- 83% of the top 15 items are video games. I've said it before: video games are a massive business

- 12% is mobile and the Blackberry Curve + Blackberry Pearl are bigger than the iPod 3G (clearly the price point and used market)

- Only two tech items are non-mobile / non-gaming: the iPod Touch (really surprised) and the MacBook Air

- The Wii Fit is amazing. More Wii Fits were sold than Playstation 3s and Guitar Hero IIIs combined.

- The drop off from the Nintendo Wii and Xbox360 is huge. The Wii sold 2mm+ items, the Xbox 1.3m and then next biggest item was 350k. Furthermore, the 15th item only sold 1,650 units

The Top 15 Tech Purchases Nintendo Wii: 2,056,866 related items sold Microsoft Xbox360: 1,297,903 related items sold Sony PSP: 350,591 related items sold iPod Touch: 281,361 related items sold Nintendo Wii Fit: 266,584 related items sold Apple iPhone 3G: 212,837 related items sold BlackBerry Pearl: 207,688 related items sold BlackBerry Curve: 193,788 related items sold Sony Playstation 3: 103,333 related items sold Guitar Hero III: 98,159 related items sold Halo 3: 91,067 related items sold Grand Theft Auto IV: 43,005 related items sold MacBook Air: 12,423 related items sold Guitar Hero Aerosmith: 3,749 related items sold Rock Band 2’s: 1,650 related items sold

Video Game Consoles Up 26%; iPhone Killing Portable Gaming Devices?

Strong numbers were announced today from The NDP Group that show significant year-over-year growth in video game console purchases: +26% in October '08 vs. '07 for consoles, software and accessories. However, portable gaming consoles (like the PSP and Nintendo DS) fell 14%. This clearly is an outcome of devices like the iPhone which are now full gaming systems in their own right... with publishers developing high-quality content specifically for the platform. What is the benefit of buying a PSP or Nintendo Wii when, for the same price, you can have an iPhone which has cheaper content, is social (phone, sms, email, etc), smaller and sexier. This trend will continue....:

"The video games industry grew an impressive 18 percent year-over-year in the first month of the critical fourth quarter," she wrote. "With 10-months under its belt, the video games industry is still poised to top $22B in annual sales in 2008.

"The sales results are mixed this month, however. The console portion of the market made significant gains at 26% across hardware, software and accessories, while the portable side of the market stalled, declining 14%. Year-to-date the portable segment of the market is still up 7%."