How Apple Won the Handheld Wars

Posted on: 09-15-2011 by: Guest Author

By now, I’m fairly certain that you must have heard of Nintendo slashing prices off the Nintendo 3DS to adapt to a less-than-ideal market for their latest handheld device. With the system’s original MSRP of $250.00, a rather lackluster software library and no must-own AAA original title in sight, many pundits believe that the world just isn’t ready for an expensive hi-def handheld. However, this couldn’t be further from the truth. Instead, what people really should be looking at is the rise of the iPhone and the impact that it’s had on the handheld video game industry.

Handheld Market Woes

A cell phone you ask, competing against the big boys like Nintendo and Sony for a share of the video game market? Surely you jest. After all, both companies have stated before that they don’t view Apple’s iPhone as direct competition. Dismissing the iPhone as such though is simply hiding the truth. With ever-improving technology and a marketplace that allows independent game makers and larger-scale developers to sell games on an equal-level playing field, the device has revolutionized the way that customers have begun to purchase both casual and traditional handheld games for portable gaming.

Taking a look at the top selling games from 2009 and 2010, the Finnish-developed indie title Angry Birds debuted to the resounding success of over 50 million units sold since its debut with over 12 million of those being purchased directly from Apple’s App Store. Although selling a game for 99 cents is a far cry from being able to sell a retail game for fifty plus USD (or forty if you’re looking at handheld titles), the low overhead combined minimal production budgets and the massive install base of the iPhone makes it just as profitable or perhaps even more so than your typical AAA hi-def shooter such as Gears of War or Halo on the Xbox 360 and PlayStation 3. Not to mention, it’s certainly more convenient for a consumer to download a title digitally from the App Store.

So why then would a developer limit themselves to shovelware on GameStop and Best Buy store shelves, sitting there for ages, when there’s money to be made with a potential install base of over 85 million units to date? Simple answer. They don’t. Instead, a lot of companies such as CAVE, Activision and Capcom have begun to expand their offerings onto the iPhone to help offset the rising cost of developing larger big-budget titles. Sure it increases the competition and makes it that much harder for smaller developers to try to get noticed, against the likes of Call of Duty: Zombies, Street Fighter IV and more, but a well-thought-out game such as Angry Birds proves that you can compete on a smaller budget and still succeed.

Additionally, these smaller fun-size console ports are a great way to introduce long-running video game franchises to people who may have never previously played games. Typically costing well under the price of a regular retail title, usually under ten dollars USD, nearly seventy percent of the profit earned from selling apps goes directly back to the developer, with the other thirty percent going to Apple. This only leads to good things for gamers, as this means your favorite company will have more money to pour into research and development costs for bigger titles. Even Nintendo shareholders have started to try to push the company to release games for the iPhone despite Shigeru Miyamoto’s stance that they will not release anything. After all, not everyone has a 3DS, but a lot of people needs a phone.

Which brings this conversation to its ultimate conclusion. One of the reasons why the iPhone has been so successful is that it’s not just a dedicated gaming machine. It’s a way to communicate with the outside world, a way to check your email and a lifestyle. Its functionality beyond the scope of just games means that more and more people will purchase one just because it’s a trendy gadget and not just a handheld gaming device like the Nintendo 3DS or the upcoming PlayStation Vita. And with each of these new customers that signs up through Verizon or AT&T, a new potential customer for these games is born. Combined with that, the potential to make a profit with low production costs and the ability to attract new customers to previously established franchises through casual titles, it’s easy to see how Apple won the handheld wars.

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