After throwing off the mediocre display of 3-D technologies and e-books at CES, the industry is eagerly awaiting the main event on Wednesday. There truly is no spectacle that compares to the launch of a new Apple product. The formula is well-established. Everyone is hungry for the next iPhone moment and Apple’s bid to squash the Kindle and reinvent the publishing business with the iPad or the iSlate tablet computer. But that is a mere sideshow. The real road kill this time will not be the Kindle. It will be handheld video gaming devices like Sony’s PSP and the Nintendo DS, as Apple establishes a lock on the economics of casual gaming with its newest device.
It is funny how things come full circle. When was the last time a company other than Apple launched a device with this much media frenzy? Clearly it was not Google with the Nexus One (wimper), or Palm with the Pre. It was none other than Sony with the launch of the PlayStation Portable–aka PSP–in Japan in 2004. (It is remarkable to reflect on that moment as Sir Howard Stringer bets the future of that company on people wearing funny glasses while they watch TV at home. Please!) But the PSP launch was truly massive. And it now represents one of the great missed opportunities in the history of Consumer Electronics. The PSP should be everything that the iPod Touch is today. The personal media / gaming platform that saved Sony and dominated the industry for a decade.
Instead, I predict that Apple will now use the launch of its tablet to increase its stranglehold and fundamentally shift the economics of gaming. Sure the tablet will be a great device for traditional media–music, movies, books. But Apple already dominates the music business. The tablet won’t alter those dynamics in a meaningful way. Why do you need a bigger screen for music? And video has become a stopgap for Apple. Apple is in a deadlock with Hollywood that won’t end any time soon. What Apple needs is an industry that is primed for disruption, one with an Old World economic model that Apple can radically redefine–shifting most of the value to its iTunes empire.
Many are predicting that Apple has its sights on e-books this time around, and the rest of print publishing (news and magazines) along with it. This publication did a major profile last year on Jeff Bezos’s “Jobs Complex” and his desire to build an iTunes-like empire around e-books. B&N got nervous and now everyone is jumping in to compete. The publishing industry is falling all over itself to promote tablet computing as a new savior for the dwindling prospects of printed books, newspapers, and magazines. They are rushing to get in bed with Apple, believing that the appeal of a new, shiny device may provide a window to charge for content that they gave away a long time ago. This is the next market that is poised to go digital. So it stands to reason that Apple will swoop in once again.
Are you serious? Forget the fact that Steve Jobs has been completely dismissive of the e-book market, famously commenting that: “nobody reads anymore.” I have a wife in the magazine business, sister in the book business and mother in the newspaper business. I can tell you that there is not enough $$ there to motivate Apple. Can you really imagine The Great Gatsby alongside Great White in the iTunes store? Sure the nascent e-book business may get squashed by Steve’s tablet, but they will just be road kill as Apple reaches for a much bigger prize: Gaming.
Everyone now associates the success of the iPhone with apps. But the real engine is games. I can tell you that first hand after spending a week on a gorgeous beach in Mexico with my wife’s 16-year old godson and his new iPod Touch. He spent the ENTIRE trip lounging under a large beach towel playing games while we went swimming–completely ignoring his Nintendo DS. He’s not alone: Kids between 8 and 18 now spend over 7 hours per day using electronic devices, and spend more time playing games, music and watching TV on cell phones than they do talking on them.
Can anyone explain to me why Nintendo, which has been so innovative with the Wii, completely ignored portable gaming for close to a decade without introducing a worthy successor to the DS. How much time do you need? And why has Microsoft been chasing its tale with the Zune / ZunePhone franchise instead of extending its Xbox juggernaut into mobile devices? Why hasn’t Sony found a way to leverage what seemed like an insurmountable lead in video gaming a five years ago to supercharge its struggling Sony Ericsson phone division?
While video games are generally considered “new media” the economics of the business look decidedly like old media, with companies investing tens of millions of dollars in blockbuster franchises. And then trying to make up all that money selling shrink wrapped media (discs) for hefty prices ($30 to 60) or living off rentals. Sound familiar?
Gaming is also highly fragmented. There is no online clearinghouse for discovering and purchasing games. Ask your friends (with dozens of games on their phones) where they would look online to find ‘cool’ games and they haven’t a clue. The few large sites out there are clearly targeting teenage boys with twitchy fingers. Pretty soon the game publishers will be caught between the daunting economics of a James Cameron-esque console blockbuster for Microsoft and the razor thin margins that Apple will offer through iTunes. Mobile devices are uniquely suited to introduce casual gaming to the masses (can you say Tetris). And Apple will be the market-maker. Even if they don’t choose to get in bed with Apple, video game publishers will be stuck with the 99-cent economics that Apple has established for casual gaming. Economics that will give Apple the lion’s share of the profits, much the way it has in the music industry. Have you checked EA’s stock price lately? They can’t even win with Scrabble these days.
The iPhone is already leveling the gaming business. Apple has redefined the price structure for the masses, lowering the price point for most casual games to 99-cents (or free). Sure there are still blockbusters and consoles. But unless you are a hardcore gamer, the economics of these purchases look really steep–especially when there is a platform that allows you to load games on the fly for a buck that can be manipulated through multi-touch and motion sensing. Wicked!
But, you say, these can only be played on a small iPhone screen. Exactly! To truly leverage their stranglehold over casual gaming, Apple needs a bigger screen that is not attached to our living room wall. And on Wednesday they will have one.
Read more of Robert Fabricant’s Design4Impact blog
Robert is a leader of frog’s health-care expert group, a
cross-disciplinary global team that works collectively to share best
practices and build frog’s health-care capabilities. An expert in
design for social innovation, Robert recently led Project Masiluleke,
an initiative that harnesses the power of mobile technology to combat
the world’s worst HIV and AIDS epidemic in KwaZulu Natal, South Africa.
Robert is an adjunct professor at NYU’s Tisch School of the Arts where he teaches a foundation course in Interaction Design. In 2009, he
joined the faculty of the School of Visual Arts in New York and is a
faculty member of the Pop!Tech Social Innovation Fellowship Program. A
regular speaker at conferences and events, Robert recently gave a
keynote speech at the 2009 IxDA Interaction Conference. He is a
frequent contributor to a wide variety of publications, including I.D. Magazine, The Wall Street Journal, and Wired.