Apple's Iphone Faces Off With The Game Champs
Apple Inc.'s iPhone has shaken up the cellphone business. Its next target: Nintendo Co. and Sony Corp.
The iPhone and its sister device the iPod touch, which feature big screens and powerful graphics, are emerging as serious competitors to Nintendo's DS handheld and Sony's PlayStation Portable.
Established game publishers such as Sega Corp. and Id Software Inc. are devoting more resources to Apple's devices while start-ups dedicated to making iPhone games have sprung up. Already, there are nearly 2,000 iPhone games available.
Developers are being lured by Apple's online method for delivering games, which has lowered distribution costs and made it possible to profit on games that sell for just a few dollars or are given away with advertising.
Apple keeps 30% of the proceeds of software sales through its App Store clearinghouse. But even with that split, 'games sold via the App Store are the most profitable in terms of any of the formats we work on,' said Simon Jeffery, the U.S. president of Sega.
Sega has sold more than 500,000 copies of a $10 game called 'Super Monkey Ball' for the iPhone and iPod touch. The game, in which a player navigates a rolling orb around mazes by tilting the device, has reached a sales level that Sega says would be considered a hit for a DS or PSP game, which can cost up to $40.
'It feels to me like there's a real threat to their [Sony's and Nintendo's] business from the iPhone,' said Neil Young, a longtime executive at games publisher Electronic Arts Inc. Mr. Young quit EA this year to form a start-up, Ngmoco Inc., dedicated to publishing iPhone and iPod touch games.
Apple, which has sold more than 13 million iPhones so far, has attacked the mobile games market in recent months by wooing game-industry executives, hosting technical meetings with game developers and touting games in a new iPod touch commercial.
'I think the iPhone and iPod touch may emerge as really viable devices in the mobile games market this holiday season,' said Steve Jobs, Apple's chief executive and co-founder, in an interview.
Of the more than 200 million copies of programs that have been downloaded through the App Store, Mr. Jobs said about a quarter were games. Most of these downloads are free software that Apple hopes will feed demand for its devices.
Even before Apple moved into games, Nintendo saw itself competing with them, said Reggie Fils-Aime, president and chief operating officer of Nintendo's U.S. division. 'Whether you chose to play on your DS or listen to music on your iPod, we're already in the same competitive space for time,' Mr. Fils-Aime said.
Sony doesn't consider Apple as big a threat because gaming is secondary to its devices, said John Koller, director of hardware marketing for Sony's PSP. 'The consumer is using the mobile gaming on the iPhone and iPod Touch as a time waster,' he said.
Still, some game developers are choosing Apple over Nintendo or Sony because there are no pricey game cartridges to manufacture for the iPhone and there is no need for a retail distribution network.
Apple is going after the mobile games market just as it could use a new type of entertainment to stimulate growth for its portable devices. The Cupertino, Calif., company may be close to saturating the market for people who buy iPods for music and video, some analysts believe. Revenue from iPods grew only 3% in the most recently reported quarter.
The iPhone and iPod touch offer more powerful technology for games than standard cellphones and, in some respects, the Sony and Nintendo handhelds, say game makers. |
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