It was widely reported that Apple's App Store downloads jumped over 1,000 percent on Christmas Day and that for the first time, iPod touch app downloads outpaced iPhone App downloads. While this is all certainly good news for Apple, App Developers and the platform as a whole, it's a telling sign that companies like Sony and Nintendo should be very afraid.
The Handheld Gaming Pricing Model has changed!
The reason that these two gaming giants should be afraid is that they have built their handheld gaming businesses on a model that includes selling a moderately priced device and charging a significant price on games.
A quick look at bestbuy.com reveals that the lowest priced game for the Nintendo DS is $9.99.
However, their best selling games are starting at $19.99. Now you could look at this and say that people will spend more for a game that they really like and there's probably some truth to that. However, the games for the iPod touch range anywhere from FREE to $1.99 on average with $9.99 being considered to be an "expensive game."
Top Games for the iPod touch and iPhone
The most expensive game of the Top 10 Paid games is $9.99 for Call of Duty: World at War: Zombies. The second most expensive was $6.99 and on down from there.
Parents are starting to realize that if they get their kids an iPod touch it may cost a little more (not a ton more) up front, but they'll save money in the long run on the games themselves. Not to mention that the iPod touch is much more capable device than either the Sony PSP or Nintendo DS. The Nintendo DS and Sony PSP start at $169.99. The Nintendo DS Lite starts at $129.99. The 8GB iPod touch starts at $179.99!
The Bottom Line
The iPod touch and App Store combination is literally a "game" changer. This model of low cost games is proving to be wildly successful. For reviews on iPod touch and iPhone Apps (not just games 🙂 ) head over to my new site: bestappsite.com.
this article should be titled “portable gamers should be very afraid”, since what is being suggested is that the pricing of portable games alone should dictate sales.
no doubt apple is making a killing with these simple apps, but to call the ipod touch a “more capable device” (particularly in reference to gaming) is quite naive. there are a handful of ipod games that can hold one’s attention for the length of a train ride the way “snake” did back in the 90’s on a nokia 3XXX, but as a true gaming platform, the ipod touch can’t hold a candle to either the nintendo ds or the psp.
even with the decent graphics (recall a recent super mario 64 emulation), there is still much to be desired in the way of controlling games with the ipod. physical keys can’t be replaced on a gaming system the way they were with cellphones.
as well, ipod games are more “pick up and play”, suited to casual gamers, than truly immersive games (i can’t think of a single decent rpg on the ipod). ipod doesn’t have the hardware to deal with “serious” games. my ipod also freezes and drops games much too frequently for me to consider it a true alternative to a dedicated portable device. super monkey ball for 5 minutes: good. grand theft auto: ain’t gonna happen.
the low cost games suit apple more than they suit the developers, who see a smaller piece of sales pie than with traditional game distribution. why would they invest time in making quality gaming experiences on an incapable device?
best selling games (think nintendo’s pokemon) will never be licensed to apple. guaranteed.
there will always be a niche for dedicated portable gaming devices. they will simply co-exist with the 5-minute pick up and play ipod games, and gamers will continue to pay 5 times the price for well-developed quality games. if in some alternate reality where this scenario is realized, it’s the gamers who will ultimately suffer when the quality of games diminishes.
but if recent gaming sales indicate (think modern warfare 2), gamers will always pay for quality.
i just re-read the article and laughed out loud when i saw “skee ball”, “doodle jump” and “bejeweled” on the list of top paid apps.
terry, i’m a huge fan, but i think you’re way off the mark with this one.
jrl2k,
I don’t disagree that hardcore gamers will continue to want and pay for the best most intensive titles. The question is is that enough of a market for the traditional handheld gaming market of Sony/Nintendo to survive on? Time will tell!
As far as my “more capable” comment goes, I’m not speaking of more capable in terms of gaming hardware, I’m saying more capable as an over all device with many more functions/possibilities than just gaming.
Lastly don’t take my word for it:
http://www.macworld.co.uk/ipod-itunes/news/index.cfm?newsid=26774
http://theappleblog.com/2009/08/12/ipod-touch-cutting-into-handheld-game-market-top-analyst-says/
Great interesting perspective on game pricing Terry, certainly food for thought. Thanks!
As someone who works in a major retail store I noticed that the PSP didnt seem to sell that well. The dsi’s are gone as of the last time I noticed but they lasted a little while but it was the itouch that was the most interesting. The store would get some in every truck but the touch would sell quick. After playing with mine for a week I can see why they sell fast.
@jrl2k
I think Terry has it right. I just got done with a 900 mile car trip with my two teenage sons. With a ton of free time to waste. We travel with the Wii connected to the car video system both boys have a DS and we have a gen 1 iphone. In previous years the Wii got the most use with a number of hours on the DS. This year the Iphone took over the lead. The controls on the touch/iphone definitely limit some genres, but other ones shine. Your example of Call of Duty is ironic since the top grossing app is Call of Duty World at War Zombies a FPS which obviously suffers from lack of buttons and number 2 is also an FPS N.O.V.A. So obviously some folks can get past the controls. As far as RPG you might try Inotia
http://toucharcade.com/2009/12/07/inotia-a-wanderer-of-luone-a-pretty-fun-action-rpg/
Terry is right on. The hard core gamers just aren’t in the abundance they once were. The new generation doesn’t have time for that kind of commitment. Casual gaming is fun, inexpensive and easy to move on to the next one. And it can be done anywhere and easily shared with your friends especially with so many people owning touches or iphones.
Plus us oldtimers aren’t intimidated by these casual games. No big deal for me to grab a quick download and have a little fun in a spare moment.
I personally find it hard to believe that the iPod and iPhone are becoming known as a gaming device. I have an iPod Touch and have some games on it but they are for killing 5 minutes here and there. Basically a time waster. I have a Wii and a PC that I use for my “real” gaming. That being said, I cannot ignore the numbers that are being published and I also know that the younger generations are not like me… a iPod Touch or iPhone is perfect for them in regards to gaming. It is a strange world Dr. Jones!!
Think “handheld gaming platform” not console gaming.
I’m not expecting any handheld device to replace my PS3 in HD. Just like watching video on my iPhone hasn’t replaced my HDTV.
Hey Terry:
My son has the Nintendo DS1, and it used to go everywhere with him. Since he has his iPhone, I can’t remember the last time he took it out. I just asked me wife when the last time she remembered him playing his DS1, and she said; “I can’t remember—he’s always playing games on his iPhone.” Now, my son is a gamer, and he and I play together XBox live most every night, and he has a Wii. He still plays both of those daily, but if he’s going outside the house, his DS1 stays home thanks to his iPhone.
He loves the iPhone games (and the Madden NFL game for iPhone is great), and he got iTunes Gift Certificates for Christmas, and instead of buying maybe one game, he can buy about a dozen. If I made a handheld game unit, I’d be looking for a “Plan B.”
I have several games that I play frequently in the $4.99 to $9.99 range… I’ve put in many hours (weeks worth by this point) into Civilization Revolution for the iPhone which I managed to snag for $5.99 on a sale (I believe their standard price now is around this price)
In some ways it is better than Civ 4 for Mac OS X/Windows, the controls are fairly well suited to the touch interface, and would likely be harder to do some things as quickly with a control pad.
Now if we could just get the printer companies (Hp, Epson, Cannon…) to use this business model!!!!
As a parent who “chose not” to replace my son’s lost Nintendo DS and my girlfriend who also made the choice not to replace her daughters broken DS I think Terry’s article is spot on. He never stated that the iPod Touch would become the defacto standard for gaming. What I read was that Sony and Nintendo should be worried about the Touch/iPhone eating up marketshare for people that don’t necessarily need the upper echelon mobile gaming. In that context I think he’s spot on because I’m reading about a lot of people that are replacing their kids Nintendos and PSP with Touch. As a parent you have more control over the games that go in the unit and your child never loses or trades a game you paid 25 bucks for.
“Dave
4 hrs, 26 mins ago
Now if we could just get the printer companies (Hp, Epson, Cannon…) to use this business model!!!! ”
I have to agree with you on that Dave.
Actually this exists for consoles as well. Our kids received a bright shiny PS2 LAST year for Christmas. We could afford a better console, but the price of games for higher end consoles means our kids would only get 1-2 games a year. Some seem bewildered why the platform has (until very recently) performed so well against much more capable competition.
Consumers are getting smarter.
@Dave, I have not owned an inkjet in years. The only way to fight crazy pricing schemes is to choose not to play their games. While we were looking for a nice laser, we discovered free printing to PDF’s, and paying pennies to get images printed at real labs made home printing almost obsolete.
Terry, great observation. Your description of the iPhone marketplace parallels the cameraphone marketplace. Know one expects a cameraphone to replace a DSLR, but the cameraphone did replace the entire low-end digital camera market, and continues to eat away at the bottom end of digital point & shoot cameras. This low end (aka entry level) segment represents a significant part of a camera maker’s mix of product offering and losing it to cameraphones is a challenge. In this context, I agree the iPhone is a serious threat to the portable gaming makers. As Scott Kelby mentions above, convenience is a dominant force in consumer behavior, and the iPhone (like a camerphone) is always with you.
You’re right! I hadn’t even considered Camera Phones taking away the low end point & shoot market.
I hardly every pull out my Canon P&S camera anymore. I either have my DSLR or I shoot it with my iPhone for something quick and easy and instantly sharable. Sounds like another post in the making 🙂
Thanks!