OK, Apple, But How Many *GOOD* Games Do You Have?!?

After all of the dust settled from the Apple Event the other day, there was one segment that left me with a particularly bad taste in my mouth – the part where Phil Schiller put down the Nintendo DS and Sony PSP and supported his claims of gaming greatness with the slide above. That segment left me with three words to describe Apple – arrogance, hubris, and cluelessness.

First, what did Phil Schiller get absolutely right in the comparison of the iPod Touch to the DS & PSP? The game purchase process. Getting games for the DS usually involves a retail store, which is a pain. Of course there is the DSi Store, but there has yet to be anything worthwhile released there. The PSP is somewhat better, with the PSN Store gradually offering more and more full PSP and PSx games and improving the user experience. However, neither compares with the iTunes App Store experience on either the iPod Touch or the computer.

Other than that, he spouted nothing but arrogance, hubris, and cluelessness when it came to serious portable gaming. And to clarify, I am specifically addressing the broad range of gaming on the PSP and DS, because if Schiller’s remarks were taken in context of the mobile PHONE gaming market they would be spot on – it is clear that Apple has changed the game completely around the content and pricing expectations for mobile phone games.

Don’t get me wrong, I love my iPod Touch and have over 100 games in my App catalog on my Macbook Pro. Some of my favorites include ported puzzle games like Peggle, Luxor, Puzzle Quest, and Othello; classic RPG’s like Vay, Arvale, Dragon Bane II, and The Quest; classic shooters like Wolf 3D and updated shooter-RPG Wolf RPG; great ports of true classics like Tradewinds 2, Myst and Secrets of Monkey Island; new and recent games like iDracula, Civilization Revolution, and more.

I am also not debating that the iPod Touch is a great gaming platform. No less than id Software’s John Carmack stated that in terms of “portable gaming systems, the iPhone is ‘more powerful than a Nintendo DS and PSP combined,’”, and EA co-founder Trip Hawkins speculated that “The iPhone is by far our most effective platform. We make as much money with these games on one device as we do putting a game on 100 different cell phone platforms. Between the iPod touch and the iPhone, I think the platform is freaking out Sony and Nintendo”.

What I am saying is two things: first, I am always skeptical because Apple has been at the absolute bottom of the gaming food chain for a very long time and has shown through their actions that their only support for gaming is in their statements. Second, Apple has failed to demonstrate that they understand the mobile gaming market in their statements to date, which basically come down to ‘anything they can do, we can do better’.

Returning to the bar chart at the top, Apple is claiming that the PSP has just over 600 games in its library, the DS has about 3,700, and the iPod Touch has more than 21,000 ‘games & entertainment’ entries. That chart immediately popped a couple of thoughts into my head: first, wow I have played and reviewed a significant percentage of the PSP library; second, I bet the percentage of DS games easily labeled ‘shovelware’ is over 50%; and finally, can you imagine a Pareto of the sorts of games and ‘entertainment’ filling out those 21,000 App Store entries?

There has been a lot said about game pricing. One article a while back looked at the impact of changing the price of Peggle from $2.99 to $0.99 and back – the game went from low ranked to #1 seller and back again. This is a game that has sold for $20 on Mac & PC, and also for $20 on the DS in the ‘Dual Shot’ version. How does this suddenly become a $1 – or even $3 – game? Quite frankly – it doesn’t. Someone is clearly playing the ‘profit through massive volume’ game.

I believe there is a constant battle between price and value in games. Anyone who has been around for a while will remember paying the same $50 – 60 for PC and console games that we pay today back in the Sega Genesis and N64 days of the 80′s and 90′s. Yet during that time, the cost of living has risen dramatically and so has the cost of art assets and the complexity of games. There are sound reasons why game makers are trying to add on DLC (downloadable content) to games wherever possible – it is quick to make and has a huge inherent profit margin.

Jeff Vogel, the man behind Spiderweb games, wrote an interesting series about what he called “Creating the Expectation of Insulting Cheapness”. What it comes down to is this – selling the same game that has slim profits on a DS or PSP at $25 – 40 for $5 or less on the iPod Touch means looking elsewhere for money. Why? Assuming a game at $30 has a break-even point of 250,000 units, it would need to sell 1.5 MILLION at $5 to hit the same revenue threshold!

The result of those economics is pretty clear – use the iPod Touch as a loss-leader to pull in console game sales, release retooled ports of games for cheap money, or produce small cut-down games with limited development time and functionality. Of the 21,000+ games in the App Store, I’d bet at least 20,000 fall into the latter two categories.

But there is more than just money involved. Phil Schiller stated pretty boldly that “when [the DS and PSP] came out, they seemed so cool. But once you play a game on the iPod touch, you think ‘hey, these things aren’t so cool any more’.” To anyone who has been playing on the DS or PSP for the past four or so years, especially many of us who are also big fans of gaming on the iPod Touch, that statements makes as much sense as saying ‘I used to love the GameBoy, but once the PS2 came out and I realized I could play games on my TV, the GameBoy didn’t seem cool anymore’!

Last night I was playing Dissidia: Final Fantasy and Fate/Unlimited Codes on my PSP and the mediocre shooter C.O.R.E. on my DS, and thinking – there is absolutely no physically possible way I could do this no the iPod Touch. Dissidia uses all of the controls available – four face buttons, four directional buttons, analog stick, and the two shoulder buttons as well as Start and Select. Not only that, but the multitude of combos and special moves requires the use of ‘overloaded’ controls – press a shoulder button and a face button simultaneously. While that functionality is available on the iPod Touch, add the ability to also move using the analog stick and you are again outside the realm of what is possible on the Touch.

Most gamers see the reality that we don’t live in a ‘one size fits all’ world. Otherwise the shelves at the local game store would look like something out of Repo Man and we would have two boxes – ‘Home Game System’ and ‘Portable Game System’ – and one shelf with boxes labeled ‘Shooter’ and ‘RPG’ and ‘Hockey’, perhaps updated every year. They know that the innovative controls of the Wii, stunning technology of the PS3 and awesome online community experience of the XBOX360 can all coexist, as can the innovative dual screens and touch controls of the DS, the great hardware of the PSP, and the simple yet powerful elegance of the iPod Touch.

Since we all know that – and also have seen countless times where Sony has ‘trash-talked’ others, Nintendo has been dismissive, and Microsoft has touted dominance – why bother addressing this? Because Apple has thrown down the gauntlet, come to the vanguard, taken up the call, insert other cliche here, and really become a champion of delivering ultra-cheap games.

As noted, when a game like Civilization Revolution comes out for the Nintendo DS for $30, and when released on the iTunes App Store for $5 the DS version was STILL $20. Why is this, and how does it make sense? While I certainly understand that digital software lacks the base per-unit production costs of boxed games, there is already plenty of precedent for similar pricing between digital and retail versions for every other platform (PC, Mac & PSP). So is it unfair to suggest that for larger releases, the goal is to use the other platforms to pay for the iPod Touch release? Or, as in the case of Myst, to use a property whose costs were covered nearly twenty years ago and whose frequent re-releases have been a nice stream of revenue ever since?

The danger is that people will begin to believe what Apple is selling, to put the iPod Touch on the same level as the DS and PSP, and begin to expect the prices to converge to some much lower level. Because let’s face it – no one is scrambling to pay $30-40 for something if you can get it for $5. I see that simple math as potentially destructive for gaming. Let me be even more clear (and controversial) – if consumers really buy into Apple’s vision of the value of top-line games as <$10, I foresee an absolute firestorm sweeping through the gaming world and leaving a path of destruction in its wake.

It is very clear as I stated that the costs involved in creating games is increasing. Not only that, every successful game helps to finance the unsuccessful games – and those represent the majority of games produced. I have yet to see any evidence that the success-to-failure rate is any better for the iTunes App Store than for other platforms.

Let’s look at a recent release – Madden NFL 2010, just out on the App Store. Assuming it cost ~$50 million to make, at the basic console price of $60 Madden would have to sell ~850,000 copies to cover costs (forgetting about console licenses and so on). That represents about 5% of the US XBOX360 market, let alone other consoles and the marginal non-US sales. (for reference, it has already sold ~2.5 million copies) For the iPod Touch, however, the picture looks different. In terms of pricing, the $10 App Store price means that EA would need 5 million sales to cover the production cost (again ignoring the 30% costs paid to Apple and so on). In terms of what that means for sales, assuming that the market share data released this summer holds, we can assume that ~60% of iPod Touch sales are in the US, meaning ~12 of the 20 million sales are in the US. That would mean that nearly 42% of US owners would have to buy a copy. And I’m pretty sure there has NEVER been a game with that type of attach rate.

To conclude my rant, I am hopeful that the iPod Touch continues to progress as a gaming platform and that the App Store continues attracting talented developers. I also hope that no one grabs too tight on to what Phil Schiller said last week, because I believe that we really could end up in a place of the expectation of insulting cheapness. And that would have a devastating impact on the gaming world I know and love today.

Image Courtesy of Engadget

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Tags: Apple iPhone and Touch Apps, Games & Gaming, Nintendo, Sony