In the latest IDC/AppAnnie report, sales from iOS and Android games now eclipse Sony and Nintendo games by a 4:1 margin. Since 2009, we have seen a meteoric rise in the revenues and market share of games for iOS and Android devices and a decline in sales for dedicated handheld gaming consoles. What does this mean for the future of gaming-on-the-go?
Here are five thoughts on what this means:
- Not an Anomaly: I have seen some dismiss this as a passing phase like netbooks, but that misses a larger trend. Since the launch of the initial iPhone people have been moving to taking care of more and more of their business on their smartphones. This is true for email, web browsing, social media … and gaming. If anything, the success of the Nintendo DS reflected a unique period where people sought mobile gaming but there was nothing satisfactory on phones.
- Sales Volume Difference is Higher: Think about this – the average price of an iOS/Android game is < $1, and for a Sony/Nintendo game is ~$30. That means that for every Nintendo DS/3DS or Sony PSP/Vita game sold there are 120 iOS/Android games sold!
- Not scaled with hardware volume, nor should it be: Another explanation is that because there are >1.5 BILLION iOS/Android smartphones and ~200 million DS/PSP/3DS/Vita systems in the world, there should be more 7.5x higher revenues on smartphones. But that ignores the fact that EVERYONE buys a handheld gaming system for games, whereas there are loads of smartphone owners with no interest in games. In spite of this, game sales are ~120x higher on smartphones.
- The Rise of Freemium: Several years ago I gladly paid $20 for games like Puzzle Quest and Plants vs. Zombies when they came out. Now it is hard to find a game you can just BUY – pretty much everything is free to play with in-app purchases. And for most games, freemium is earning more for companies than normal ‘pay-to-play’ games. In fact, 82% of the ‘top earning’ apps on the iTunes App Store are ‘free’, with another 13 costing something up front with in-app purchases as well – meaning only 5 of the top 100 are paid apps. My point? To what extent are we seeing the impact of massive smartphone volumes compared to freemium games with huge revenues?
- ‘Try and Toss’: If you pay $30 for a game compared to $1, which one would you feel more invested in extracting value from? Exactly – most smartphone owners have at least a few $0.99 games they have never actually played. Maybe it was bought on a great sale, or because you heard about it, or for whatever other reason it just hasn’t been touched. While many games on DS/PSP are never finished, most end up with a greater degree of engagement.
Smartphones and dedicated handheld gaming consoles both offer the potential for gaming-on-the-go; but ultimately it is like comparing smartphones and point-and-shoot cameras. Certainly you can get better pictures from most $200 cameras than from the $12 sensor on your smartphone, and likewise the Playstation Vita or Nintendo 3DS offer more versatile gaming experiences than a smartphone. But similar to your camera – most people use their phone because it is ‘good enough’ and always with them.
Similarly, when you are waiting in an office or wherever, it is easy to pull out your smartphone and read a book or a play a game to pass the time. And the games just keep getting better – we have fun originals, classic ports and amazing variants that will allow you to pass away the hours.
So while there will continue to be an audience for dedicated handhelds for gaming, for most people their smartphone is good enough, and rapidly advancing technology allows for graphics and gameplay to improve at an astounding pace!