iPod Touch Games: Reality Distortion Field Edition

Someone is giving Uncle Steve bad game industry advice and we have to wake him up. He has the chance to do something to pull our industry forward with the same impact he had on the music industry - and perhaps dominate our future - but instead, he is choosing to run down the same rat hole as the rest of the industry - and by extension use his reality distortion field to pull us along with him. At at time when we so desperately need to pull the mainstream iPod buyers into games, he is chasing after the same limited number of gamers we so jealously covet and cater to. He started out so perfectly, mainstream device, mainstream applications, reviewed and approved all the applications, pick up and play games, cheap to make, easy to earn out, and all of sudden, he decided to spin into the already crowded game industry hell last Wednesday. The iPod/iPhone is a unique device with the opportunity to magically create an economic opportunity for never before seen games, catering to unique attributes and leveraging unique distribution. Instead, he chose to apply his reality distortion field - believe me, it works - to have us believe there is a consumer mandate to make the iPod touch a game platform and support it by highlighting relatively expensive, crippled versions of games from other platforms.

In his post announcement interview with the New York Times:

Mr. Jobs reiterated what Phil Schiller, the marketing vice president, had said earlier in the onstage presentation: that Apple is really pitching the iPod Touch as a game machine these days. And to do that, you have to make it as inexpensive as possible.

“Originally, we weren’t exactly sure how to market the Touch. Was it an iPhone without the phone? Was it a pocket computer? What happened was, what customers told us was, they started to see it as a game machine,” he said. “We started to market it that way, and it just took off. And now what we really see is it’s the lowest-cost way to the App Store, and that’s the big draw. So what we were focused on is just reducing the price to $199. We don’t need to add new stuff. We need to get the price down where everyone can afford it.”

So he would have us believe he just threw this thing out there with no idea why people would want it. Forget iTunes number one position in music sales and mobile video distribution. Also forget that only 10 of the 100 games are anything other than extreme casual and less than half of the top 100 applications are games at all. Also, set aside the 50 some million people who bought the device, most of whom would never touch a DS no matter how many Beyonce ads Nintendo makes. Forget that the tie ratios for DS suck for anyone other than Nintendo because the owners really don't buy a lot of games. Finally, forget the 110 million people who purchased DS's and both people who bought PSP's bought them only for games while the people who purchased iPod/iPhones purchased them primarily for consuming media or talking on the phone with only a subset even caring about a game. If we don't forget all this stuff I would have to stop writing now, and if you are reading this post you know how much I enjoy writing long posts. Moreover, I am going to humor Uncle Steve - he really is right much more often than I am, I found this out sitting in a conference room with my Newton in front of me and him on the other side of the table when he told me people would by the Bondi Blue iMac, six months later I learned which was the better side of the table- and take a look at the event.

I understand where he is coming from, he's done it before, hell, we've all done it before. Conventional game wisdom says new platforms need exclusive killer apps to launch. When he launched the iTunes store he pulled in the best music and featured U2, delivered in a manner which catered to the unique attributes of the iPod - all the music in one place. When we launch consoles, we try to lock down the key developers and games. There is a must have list of games required to get the console to critical mass, the point at which publishers can make money and keep supporting the console. However, in the case of iPod/iPhone event, he did not show killer apps. He showed stuff very few people care about. He also ignored the acquisition of critical mass months ago. He's got 50 million units installed and a game can be built in the single digit thousands. He's already there.

At the event he chose to feature representatives from EA, Ubisoft, gameloft - which for those of you in the back row is pretty much Ubisoft - and a lone iPod game developer, Tapulous. They showed crippled Madden, crippled Assassins' Creed, an FPS called Nova which is kind of like flying a plane with a paper and pencil, and Tapulous which gives us gameplay like we haven't seen since Amplitude. I am sure these games are wonderful, but with the exception of Tapulous, each of these can, and are delivered better on other platforms. I remember before Halo when people used to say FPSs can't be played on consoles, and then they were proven wrong. But you know what? The iPhone really sucks for FPSs. Of the apps shown on stage, Tapulous is the closest to illustrating the potential of the platform, but even this one is not quite there.

If he really wanted to highlight the strength of the opportunity on the platform, he could point to the games people are actually buying for the device. Perusing the current top games, the are games like Mr. AahH!, Geared, Sheep Launcher Plus, Trism, Radgoll Blaster, Stick Wars and others that for budget, distribution and game play reasons could not find a home on any other platform and have one - sometimes lucrative - on the iPod/iPhone - and these are just the ones people pay for. There are a ton more free downloads. Don't kid yourselves, Apple doesn't care whether the apps are free or paid for, they make money on the hardware. Paid apps are only there to encourage others to develop for the platform. Uncle Steve has shown us over and over he is not a dumb guy and is always a dozen chess moves ahead of the rest of us, so why is he ignoring his unique position in favor of what could be perceived as a weak one. Well, I can only make a random, speculative guess, and again, if you have read any other posts on this blog, you know I will.

The simple answer is new technology adoption is driven by sports, gambling, porn and games - not always in that order. But this is not a new technology and I don't believe the answer is quite so simple. Games are a blue water opportunity for Apple. The iPod already dominates the music world and there is not much room for growth. He has to find new markets. With the touchscreen and openGL, he set his sights on the 150 million unit strong market of DS and PSP owners. The app store is a success when it comes to numbers of downloads, but the majority of the apps downloaded come from the free side, not the paid side. The unwillingness to pay for apps is evidence of the type of consumer purchasing the device. They are not gamers. A mainstreamer will purchase a mobile navigator and download a solitaire demo. They may download the bubble wrap and purchase a Tetris, but they are not checking the store daily to see what came out. If Gamers believe there are cheap, easy to acquire games that are as good or better than those on the DS and PSP coming out regularly, they will buy the iPod touch . . . or so he thinks. In reality, as a matter of simple economics, the iPod/iTunes games are doomed to being worse.

Phil Schiller touted the price disparity between the DS and PSP games and the iPod/iPhone games as a benefit. It is to the consumer, but not to the producer. The platform is great way to release inexpensive games which do not justify packaging and distribution as a physical sku. You just can't sell a 1 USD game at Wal-Mart. However, the platform is also not supporting a 15 or 20 USD price points needed for a return to justify development investment on a par with other platforms. With an installed base of one half the DS and only a subset of that base inclined to buy a game, let alone an expensive game - Madden lasted in the number one position on the charts for less than a week, only to be displaced by Appbox Pro - the hope of making up the difference on volume is years away. The only way to justify the model is reduced development budget, meaning reduced game.

The question of how long they will be worse is up to the guy who already has a DS, PSP or both and whether he cares enough about the iPod version to want to purchase the iPod touch. Moreover, will he want to buy it instead of a PSP Go with similar functionality, more buttons and deeper hard core games. While Madden quickly moved into the number one spot on the Apple store, I have to wonder how many of those sales went to new iPod owners. I am certainly not Steve Jobs by any stretch of the imagination, but if it were me, I would have kept swimming in the undisturbed clear water of the new game market I created with the app store, rather than frothy mess in which we tread.


Jussi Laakkonen said…
Keith, I'm a regular reader of the blog and we met passingly 3-4 years ago at the reception at the Finnish Consulate in LA.

I just wanted to thank you for your outstanding blog. The posts are always top notch and insightful, like this one.


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