This post is in response to the wonderful post over on Engadget about the latest release of NPD numbers concerning portable gaming.
http://www.engadget.com/2011/11/10/timber-ios-and-android-take-60-percent-cut-of-mobile-gaming-dol/
Saw an interesting story fly across the wire on Google Plus. Apparently, nearly 60% of all portable game software sold is on Android or iOS. This shouldn’t really come as a surprise, most of the world’s high-tech industries are seeing major changes as mobile platforms become the dominate form of computing, business, and entertainment. Gaming is just one of many industries being completely changed from the ground up.
In the classic system, becoming a game developer on a console or handheld system is extremely difficult and expensive. First, you must contact Sony, Microsoft, or Nintendo to obtain a very expensive development kit for your particular system. This is a hard enough barrier to entry. If you have the creative ability and development skill to put a game together, but don’t have the funds for the development kit, too bad. You don’t get to create a game. Even worse than this though is the fact that game companies can deny you the sale of the developer kit for just about any reason, especially if you are just one guy who wants to make a game. Its happened before and it will happen again. The next thing you need to worry about is licensing fees. Can your game make enough money to pay the console manufacturers off so they will sign off on your game and allow people to play it on their console? Hopefully. This is why games today have publishers and game publishing has become an industry of its own. Just like artists used to need record labels before the internet music scene changed everything. Video game developers need someone to pay the bills for all the big fees and purchases. As an indie developer who wants to put out a boxed copy of your game, the barriers to entry make it almost an impossible reality.
Game companies have been attempting to help the small guys out with online stores such as Xbox Live Arcare and Xbox Live Indie Games, the PlayStation Store, and DSiWare and WiiWare. These stores have helped a great deal, but it doesn’t help capture the one thing that will make an indie game endlessly profitable: Market. Yes, all of these stores have huge numbers of users, but for the most part, people are tied to a device that are tied to a wall. In the case of the PSP or DS, indie developers run into many of the same licensing and dev kit cost issues that console developers do. The price of entry is too damn high.
Enter: The Smartphone. With the meteoric rise of smartphones and powerful always-connected mobile devices, it was only a matter of time before games on these devices took over the industry. Recent NPD numbers indicate that iOS and Android mobile game sales account for 58% of the total revenue of U.S. Portable Game Software. 58% of the industry’s revenue is because of iOS and Android games. Even the once-proud king Nintendo is down to 36%. Nintendo has always had a very cocky attitude towards competition in the mobile space after they launched the original Game Boy in 1989, always quashing the competition without so much as a second glance. Even the PSP, their biggest competition yet, stood no chance against the DS’ onslaught of sales. Nintendo has always battled against other gaming companies, but they’ve never battled against a different business model entirely, and they’re losing the game. For the first time since 1989, Nintendo isn’t winning the mobile games race.
One point to consider: These numbers signify revenue, not sales numbers or profits, but actual money brought in from sales. Some may claim that the statistics are unfair to Nintendo and Sony, its two companies versus the entire world of developers, but that’s exactly the point: Smartphone developers have no barriers to entry (aside from the $100 or $25 developer fees depending on platform) to get into the market and sell their game to the world of smartphone users. People who want to develop for the DS or PSP need to jump through rings of fire to do so. The old theory from the IBM and Microsoft days stands true, if you make it easy for developers, that’s where the programs will go, that’s where the people will go, and that’s where the money will go. And that’s exactly what’s happening in today’s smartphone-powered world. Great games can be created with small teams and put out for sale in the public market for the cost of a developer account and the time it took you to make your game, nothing more. No publishers, no additional licensing fees, no hoops. Just you, your game, and your potential customers. At this point, the developer doesn’t need to worry about making enough money to cover fees (if you make a game for $1 on either platform, 30% is taken from that, not up front like most manufacturers require), they don’t need to worry about playing politics with exclusivity, they don’t need to find a publisher for their game, they only need to worry about one thing: Reviewers. Just like its always been, the great games rise to the top. The thing developers need to concern themselves with making a great game and making sure bugs are fixed. If that happens, if the game is good enough, it can make an incredible amount of money, with almost no overhead costs, and end up fueling their bank account for the next several months.
One of the reasons that people are buying games on smartphones instead of handhelds is that the smartphone markets offer better choices for consumers, a better buying experience, and a better way of treating your customers. When I buy a Virtual Console game on the Wii, I can’t play it on my 3DS. It doesn’t work that way, Nintendo wants me to buy it twice. No thank you. If I buy Fruit Ninja, however, all I need to do is download it onto my tablet, and I’m gaming in no time. Its that easy. I buy it once and I have it forever. I upgraded my phone to the Nexus S and all of my games re-installed, it was so simple. When I bought my 3DS and the e-store opened, I couldn’t have been more disappointed. Even though I had bought games on the Wii, I thought a few would allow me to re-download them and play without being tethered to my Wii all the time, but no. They wanted me to re-buy them. The e-store on the 3DS is slow, buggy, crashes, sometimes downloads don’t complete successfully. All in all, its a bad buying experience. Because the e-store is so slow, I never open it, I check for new games every two months, if that. The e-store is simply awful to use. Now, with Android, I can read a game review of Angry Birds Rio, go to the Android Market website, and have it download without ever having to touch my phone. I get up from my computer and the app is right there on my phone. Seamless, easy, simple, helpful. These are the things I, as the consumer, should think of when I use an online store.
On Google Plus, Darnell Clayton shared this link with me and said, “Apple and Google are killing the gaming industry.” This got me thinking, are Apple and Google killing the gaming industry. Yes, but only this chapter of the industry. Here’s my response (which was a comment on the original post):
Actually Apple and Google are becoming the gaming industry. The gaming industry itself is just fine, alive and well, its just trading out cards, just like what happened with the fall of Atari. The big companies aren’t Atari and Commodore, and it isn’t going to be Microsoft and Nintendo anymore, with platforms that support open development without the need for hugely expensive SDKs and hardware, just about anyone can make a game in a few weeks that could become the hottest thing ever (see Angry Birds). Sony is in an interesting position because they aren’t only accepting this change, they are embracing it. With the release of the Xperia Play and their official PlayStation app, they wholly admit that the best gaming device is the one you have on you (like the best camera is the one you have on you), and they are making moves to thrive in that market.
If existing gaming companies don’t get a handle on the changing market, they’re dead. They will be killed by companies like Gamevil, Glu Mobile, and Halfbrick Studios. These tiny dev houses haven’t just survived the harsh gaming industry, they’ve thrived in it. Even EA Games, classically one of the more stubborn and un-inventive publishers, has made moves to exist in emerging markets like social network games (Facebook and Google+) and smartphone games. The games industry is like any other industry, when your industry is undergoing rapid change, you either evolve with it or die.
The next few years will be interesting. With Nintendo claiming that they’ll never embrace the future, clinging to their rotary phones and cassette tapes, and Sony jumping headfirst into the mobile phone space, things are going to get very interesting very quickly.
[...] here: The New Face of Portable Gaming admin posted at 2011-11-11 Category: [...]