Backhand of Justice

 
Apple announced Monday that more than 2 billion applications have been downloaded through its App Store. More significantly, 25% of the applications on the store are games, and 80% of the applications are free. The costs to develop for the App store are significantly lower compared to traditional handhelds as the games are far less complex, and the iPhone already has an install base over 30mm and that number is growing rapidly.
 
Is this a sea change in the industry in terms of where people are going to game, is this just a passing fad, or is it an expansion in the overall market? I’m going to analyze multiple questions on this matter and offer my conclusions on what the handheld gaming industry will look like 3-5 years down the road.

 
Are they targeting the same markets?
 
I have heard from multiple analysts that Nintendo and Sony should be terrified that Apple is going to eat their lunch with iPhone gaming. But are they even targeting the same market? The typical cost of a Nintendo DS game according to Ubisoft is 0.75 to 1.5 million dollars. An iPhone app, on the other hand, costs somewhere between $10k and $150k to develop depending on its depth.
 
If an iPhone game sells 50,000 copies, that’s a huge success and 70% of the proceeds go back to the developer. A portable game that sells 50,000 copies, on the other hand, is generally seen as a failure, with Nintendo requiring sales of 100k units to make a profit on a traditional DS game.
 
It is clear that at least on the development side, these games are targeting different play experiences. The real problem for Nintendo and Sony from the business side is that they see smaller downloadable game offerings as the lowest hanging fruit for growth and therefore would like a piece of the pie where Apple is incumbent. See the PSP Go and DSi Ware for illustration.

While fun, are these $40 Nintendo DS quality?

 
Do they offer the same game experience?
 
There are going to be exceptions to the rule, but for the most part iPhone games are designed to be played in short bursts. They are meant to be played on the train or while wasting 20 minutes in a waiting room. I can’t imagine playing an iPhone game for 6 consecutive hours but that is exactly what I did with Henry Hatsworth on the DS.
 
I’m not trying to argue that Hatsworth is somehow a ‘deeper’ game than something like Arkanoid. There are lots of crossover games on both platforms, and something like Tetris could be enjoyed on either and is arguably one of the deepest games with the most replayability. I’m just saying that games with significant story elements, varied art and scripted sequences generally aren’t going to make an appearance on the iPhone.

You think I could be played effectively on a touchscreen? Poppycock

 
What differentiates the platforms?
 
I have read articles that the iPhone is technically more powerful than the Nintendo DS or the Sony PSP. That may well be true; it’s probably beyond my ability to find out so I’ll take it at face value. In the end, all of these are just hardware devices and the only reason the iPhone is seen as this huge threat is because there is a phone in it and therefore you probably carry it on you all the time and the gaming is incidental.
 
You could just as easily put a phone in the Nintendo DS though (if you had Apple’s engineers) and so in the end the real question to a gamer is whether touchscreen gaming can offer an equal or better experience vs. traditional controls, and if not, is the incremental benefit of having traditional controls worth the added cost of a separate handheld gaming device (assuming you already own an iPhone)?
 
Device Convergence
 
 I think it has become increasingly clear over the past 18 months that the Nintendo DS, the Sony PSP and the iPhone (or whatever the next generation of each of these devices are) are going to look increasingly similar. There have already been rumors of a PSP Phone, and technology has always trended towards convergence.
 
We’re soon going to be buying TVs with modems in them, our game consoles already have streaming Video on Demand services and pretty soon my toaster will be able to update on Twitter. Handheld electronics are all going to merge and I believe in the near future, much like the regular keyboard (Blackberry) vs. virtual keyboard (iPhone) debate, you’re going to have a regular gaming controls vs. virtual gaming controls debate.
 
The iPhone ports of classic id games like Wolfenstein already have a virtual D-Pad. Much like there are multiple smartphones, why can’t there be multiple gaming devices that all do the same thing?  It certainly looks like in the immediate future that’s what we’re going to have and eventually microengineering will allow all mobile devices to join with each other.

The only thing that can stop the iPhone? Mecha-Hitler

 
Much like the music genre and the Wii expanded the console gaming audience, iPhone gaming is going to bring browser style casual games to the handheld market. This can only be a good thing. There are huge untapped markets and the reason they don’t already own a DS or a PSP is simply because they have no interest in the current game offerings.
 
If the iPhone can offer them a style of gaming that suits their needs, I’m all for it. Just don’t expect traditional handheld gaming (watered down versions of console games) to go anywhere. There will always be a huge line of people waiting to buy the next Pokemon or Dragon Quest game.

I’m interested in your thoughts on the matter. Hit up the comments!