A CNN report claims that tablet computers are the future of the video games industry, and given Apple’s stronghold over the tablet industry that means the iPad (for the foreseeable future) is going to be the future of gaming. Not just handheld gaming, mind – all gaming.
If this comes to pass – and it’s requiring something of a mental leap from ourselves – this is going to put Apple in the rather curious position of being the lead player, and indeed possibly the overall steward of the video games market. A market it is traditionally thought to have little interest in – Apple typically prefers to build creative software (GarageBand, iMovie, iPhoto, and so on) rather than entertainment software.
In this article from 2008 John Carmack, Technical Director of id software said to Eurogamer, bluntly: “The truth is Steve Jobs doesn’t care about games. This is going to be one of those things that I say something in an interview and it gets fed back to him and I’m on his s***head list for a while on that, until he needs me to do something else there. But I think that that’s my general opinion. He’s not a gamer,”
“It’s difficult to ask somebody to get behind something they don’t really believe in. I mean obviously he believes in the music and the iTunes and that whole side of things, and the media side of things, and he gets it and he pushes it and they do wonderful things with that, but he’s not a gamer. That’s just the bottom line about it.”
This isn’t just Steve Jobs’, or now Tim Cook’s personal interests guiding Apple. This Macworld article from just Feb 2011 explains why Apple, specifically with regards to the Mac, has such a poor track record amongst gamers and game developers. From locked-down hardware, to ignoring graphics card advances, to ignoring utilitarian function (the first thing any Mac gamer will do is replace the Mighty Mouse with something that works for games), through to ignoring Mac-friendly developers like Bungie, who created Halo (referred to as this generation’s Star Wars), and allowing Microsoft to snap them up this article shows just how much Apple cares overall about gaming: it’s hard not to come up with the answer, “not very much”.
But that matters little in this post-PC world where Apple has, by dent of its incredible product design and a fair bit of luck with the App Store, managed to steal the mobile games market from traditional companies like Nintendo. The CNN report comes on the heels of the release of the Nintendo Wii U video games console, which merges traditional gaming console technology with a touch-screen iPad-like controller. Both Sony and Microsoft are also expected to release new consoles next year, but nobody inside or outside of the games industry has that much faith in them.
CNN’s Kevin Chou claims that “These new consoles, despite their high-profile launches, represent a rapidly decaying ecosystem… This is the first wave of video game consoles that is expected to sell in fewer quantities than the generation preceding. Chou claims: “The best guess, both from inside our company and from industry analysts, is the fall-off will be more than 30%. Much of the decline will be in the out years of sales, after the most loyal fans have snapped up early units.”
Of course, predictions are a precarious thing. But with Nintendo posting its first ever loss last year, and Sony’s Fitch rating recently downgraded to Junk; even Microsoft’s Xbox division went from making US$210 million in 2011 to a US$229 million operating loss in 2012.
Apple made an astonishing US$41.7billion profit in 2012, the tide does seem to be turning away from Japanese console manufacturers. It’s easy to see how devices such as the iPad, iPod touch, and iPhone (as well as the myriad of Android-powered mobile phones) are affecting the video games industry.
Apple may not care that much for gaming, but with the App Store Apple introduced an agency system of publishing to developers, whereby it took 30 percent of the payment in return for handling the transaction. Apple’s primary interest was not games, but programs in general. The games just sort of wandered along with the social media and creative apps, and turned out to be phenomenally popular.
The first big change this introduced was lowering the barrier to entry for developers. It is far cheaper and easier to become a developer for Apple devices than for traditional consoles. Xbox and PS3 development kits, for example, are not publicly available and cost in the region of US$2,000 each. Getting your game onto the Xbox and PSN stores requires developers to work closely with both Nintendo and Sony and drop thousands, if not hundreds of thousands.
Microsoft’s Xbox Live Arcade Team Manager Greg Canessa told IGN in an interview in 2006: “Developing a game for Xbox Live Arcade can cost a few hundred thousand dollars and take a small group of passionate game makers anywhere between 4-6 months to develop and test the title,” says Canessa’s overview. “Upon approval of the game concept and successful evaluation of the developer, the game creators work closely with the Arcade team on everything from game design and testing to ratings, localisation and certification.
Notice the casual air that Canessa says “a few hundred thousand dollars”, which to be fair is quite casual compared to the US$20-$30 million that the average AAA game costs to develop.
To launch an App for iPad and iPhone you just have to own any Intel Mac (it doesn’t even have to be a particularly good one). The Xcode environment is a free download from the Mac App Store and submission to the iTunes App store costs you to have a developer license with Apple (US$99 per year).
The second big introduction was a levelling of the playing field of distribution. The process that a young programmer working from a bedroom goes through when submitting a game to the App Store is the same that EA goes through. And the presence both games get on the store are the same, and either developer can charge whatever it wants.
That’s the sort of environment that led to 650,000 apps being developed for iOS since its launch just four years ago. And sure, there’s a lot of guff, but there’s also classics like Angry Birds and Cut The Rope. And that’s the environment that Apple will push further forward.
The thing is that a developer coding from a bedroom is happy to charge $0.99; whereas EA has staff to pay and offices to run. So devices that pander to companies like EA first and foremost, perhaps feel like they can, and should, charge more.
The PlayStation Vita emphasises the price disparity between the average iOS game and game being sold by traditional games developers. iOS games typically cost between $0.99 and $7.49. PlayStation Vita games are typically being sold for $30 plus. Sometimes for the same game. FIFA on PlayStation Vita costs almost $70, FIFA on iOS costs $7.49. Just over a tenth of the amount.
Then there’s the iPad mini, which our testing noted that it’s pretty much ideal as a gaming device. It costs around the same as a PlayStation Vita (but does all the cool stuff that an iPad does, that the Vita doesn’t); it’s light enough to be comfortable as a gaming device, the screen is high quality, and it’s portable, and the battery life lasts all day long.
The problem for the games industry is how to create games with movie-like production values (Grand Theft Auto 5) and make a profitable return selling games at prices that are just a tenth of what they used to be to the burgeoning iPad mini tablet market.
The truth is, they just might not be able to. People won’t buy games for $60 when games costing just $0.99 are the norm; and most people simply aren’t going to buy systems that charge $60 for games. And as tablets increasingly replace computers as the standard device for doing most computing tasks (email, web browsing, document creation and so on) they also replace gaming devices. The money flows towards tablets, and the developers go where the money takes them.
The development costs for iOS compared to Xbox or PlayStation are tremendously different when you’re a small developer starting out; but they aren’t that different to a tier-one developer like Rockstar. A few thousand dollars to buy development kit and sign up to a service can be a make-or-break deal when you’re starting and have a budget of nothing; it means very little when you’re dealing with the estimated US$100 million budget that the average Grand Theft Auto is reputed to cost to make.
But if the games market increasingly is locked into paying $7 for games, it becomes increasingly hard to charge the $60 required to get a return on that US$100 million; even if the game is markedly better. And with fewer and fewer games carrying the cachet required to charge high amounts; it becomes harder to sell hardware dedicated to those games; and even harder to sell the games. Everything spins down to the indie developers working from their bedrooms.
We all heralded the revival of the cottage developer scene that iOS re-introduced into the video games market; but it’s now looking to be the only viable games market. To gamers reared on big-budget classics from Gran Turismo, through to Grand Theft Auto, Metal Gear Solid, and Halo; the thought of playing Cut The Rope ad-infinitum isn’t that joyous.
Without games developers you don’t get games; and without games you don’t sell systems. Unless people are buying them for wider reasons, such as tablets and smartphones which serve wide ranging purposes, and gaming is something else that they do.
For now, the games industry has something of a respite in that Apple really hasn’t made any moves into taking over the television that their consoles are designed to be attached to. Although you can stream a game from an iPad to an Apple TV via WiFi, it rarely makes sense over just playing it on your iPad screen.
But that’s likely to change at some point, probably next year. Apple is still rumoured to be making a full-scale television, which is likely to bring the App Store to the television screen. And along with it games buyers and games developers. Even if it doesn’t do that, Apple only has to activate the App Store and create an SDK (Software Development Kit) for the Apple TV and there’s no reason to think the App Store won’t be as successful on the TV screen as it has on iOS devices and Mac computers. All it needs is an interface (if you think Microsoft ripped off the iPad with the Surface, just wait to see Apple pay it in kind with Kinnect and the Apple TV).
Even if Apple doesn’t make a television, or update the Apple TV, the disruptive nature of the iPad and App Store is likely to take all the money from the next wave of traditional consoles anyway. Leaving the television to do just that, show television shows. While games are played on portable devices. And not ones made by Nintendo, Sony or Microsoft.
So what can we expect from the future of video games if Apple is the gravitational centre which all developers must spin around. Well Apple is likely to continue to enforce its process of locking down the hardware. And even though the performance of its devices is good, Apple is sure that they don’t come at the expense of battery life, heat dissipation, and other factors. Great for general consumers, but there’ll always be a nagging doubt that they could run twice as fast, or push twice as much power, if only Apple would create a device with half the battery life (which it won’t).
Apple also controls not just its devices, but the ecosystem around them. Insisting on what kind of input and output it has. Notice that there’s no way to attach any kind of traditional controller to an iPad via bluetooth, even though this would make games like N.O.V.A more playable. It is suggested that this is because Apple wishes to push the touchscreen as the more modern and better, indeed only, input mechanism. We’d wager that this ethos extends this to some form of Kinnect-like arm waving and Siri-powered voice input SDK for the television, and it’s possible that there’ll be no kind of traditional controller for an Apple TV either – although the company can be pragmatic at times. But as with all things Apple you’ll find out when it happens.
Games Developers: What will it be like working for Apple?
Apple will continue its approval process, and probably continue to be distant with its communication during development and explanations behind its reasoning. Although it’s approved games like Grand Theft Auto on the app store, that game has legacy and popularity behind it. Many people don’t remember just how groundbreaking and outrageous the Grand Theft Auto 3 game (which was the first to provide a 3D sandpit world of mayhem). It’d be a brave developer to drop hundreds of thousands of dollars into a new franchise that pushed the boundaries of morality, realism, and taste to the same level when facing Apple’s approval process.
Apple’s can be at times surprisingly liberal, and surprisingly prudish: like most high-profile companies it’s particularly touchy about its public image being affected by other companies, and any public backlash (in either direction) is likely to be responded to.
It will continue with the 30 percent agency model, which is a pretty good deal for small indie developers compared to the investment required in more traditional distribution. But the open door policy will result in the expansion of the App Store. Also, as most app developers have noticed: you can’t really depend on having any kind of presence on the app store. With 650,000 other apps (and climbing) you’ll need to have some kind of marketing strategy that doesn’t involve ‘put it on the app store and see what happens’.
There may be some alternatives. The Ouya Kickstarter project aims to create a new kind of open source console, although it’s powered by Android. And services such as OnLive (which will also run on Ouya) have proved that cloud gaming can work, where games are number-crunched remotely and streamed to a low-powered local device. We sincerely doubt whether any of these approaches will really impact on Apple’s (or indeed any other major player) control over the overall games market.
There’s a chance that Android itself will take its relative success in the phone handset world, and push it out towards tablets and further to television. Google and Amazon’s efforts this holiday period show that the tablet race isn’t done yet; and there’s no reason to suggest that a scrap over the television screen won’t be less competitive.
But given Apple’s success in the mobile and tablet space, we’d bet on it taking the television at some point. The television remains the digital hearth, the focal point which the family sits around. Playing games either on the television, or on the second screen; or a mixture of both. And when Apple owns that it’s place at the centre of our entertainment will be complete.