Apple Embraces Casual Gaming

The consumer electronics maker is rolling out games for the iPod and is in talks with EA about games for the forthcoming iPhone

As iconic as Apple may be in consumer electronics—from personal computing to digital music and, now, mobile phones—it hasn't exactly set the gaming world on fire. The Mac lags behind competing brands in gaming software.

But in recent months, Apple (AAPL) has shown a new openness to gaming by introducing a spate of titles for its iPod digital music players. The company tapped several game publishers, including Electronic Arts (ERTS) and Namco, to deliver a selection of casual games. Titles include classics such as Tetris and Pac-Man, updates of old staples like the Arkanoid-inspired Vortex, and diversions with current pop-culture cachet like Sudoku and Texas Hold'em.

Most of the titles have lush graphics and multiple game-play options and work intuitively with the iPod's scroll wheel. And just like song files, the games can be downloaded from Apple's iTunes store for $4.99 each. "Since the iPod goes with you in your pocket wherever you are, we saw a great opportunity to provide some fun casual entertainment," says Stan Ng, senior director of iPod Product Marketing. "We picked games people can pick up and play while they're waiting in line at the grocery store or sitting on the bus."

An Expanding Market

The target, in other words, is aficionados of casual games, often played in short duration on mobile phones and other handheld devices. "I can't imagine (Apple) is shooting for hardcore gamers," says Sidney Shuman, news editor for GamePro magazine. "These games are more for your mom or your little sister. These are play-it-for-15-minutes-and-forget-about-it games." Whatever the demographic—many are women—the casual gamer is an attractive market. Last year, the U.S. mobile gaming market was worth $722 million, a 44% increase from 2005, according to researcher IDC. The market is expected to grow to $952 million this year and to $1.3 billion in 2010.

Apple hasn't said how many games it has sold, a sign the numbers probably aren't high, according to IDC analyst Bill Pidgeon. "This is not a number they want to publicize independently," he says. "It was more like they added a feature." Yet Apple's casual gaming foray is unlikely to end with the last version of the iPod. Apple is discussing games for the iPhone, due to be released in June, with the casual gaming arm of EA, has learned. Apple could also release games for Apple TV, a wireless device that will transmit video downloaded from iTunes onto a TV (see, 1/10/07, "The Future of Apple").

iGaming Mania

Since Apple unveiled the iPhone in January, speculation has abounded about whether the device will feature games. On one hand, the design is a step closer to an all-in-one portable media device and it includes a robust OSX operating system capable of running elaborate games. The touch-screen interface would pose challenges, say game developers, but would also open some new doors.

Apple is mum on gaming plans for the iPhone or Apple TV, but Mitch Lasky, senior vice-president of EA Mobile, says his company is discussing plans for games on the phone. "We have been talking to Apple about games on (the iPhone)," Lasky says. "We see a lot of the technology that we've utilized on the iPod side being incorporated into the iPhone."

For five iPod titles, Apple tapped EA, which expanded its mobile gaming business through last year's purchase of independent mobile publisher JAMDAT Mobile, later rebranded as EA Mobile. In 2006, EA Mobile sales totaled $118 million and accounted for 4% of the company's total revenue.

Lasky had been chief executive of JAMDAT Mobile before the takeover. He says EA saw the iPod as an attractive gaming device for a number of reasons. "The requirement for music to cache so you hear a streaming uninterrupted song, that means there's a lot of RAM," he says. "It also has remarkably good graphics."

Access to iTunes' commercial distribution platform was also a big advantage, Lasky says.

Playing with the Big Boys

Apple also thought to tap two lesser-known developers of Web-based casual games, PopCap Games and FreshGames. The iPod creator handpicked the titles with the most popularity among Web surfers. "The casual game market is really booming," says David Roberts, CEO of PopCap Games. Roberts says his site hosted 170 million downloads in 2006. "Apple came to us and said, 'we want to put your games on the iPod.' They were launch titles, so nobody had experience developing games for the device."

One of the most popular games for the iPod so far has been PopCap's Zuma, in which you use the scroll wheel to rotate a frog character and then press the center button to fire and line up colored marbles. The circular nature of the game environment and the scroll wheel made the game a natural fit for the iPod, Roberts says.

And what of Apple TV? That device too is a shoo-in for games, says Greg Canessa, vice-president for video-game platforms at PopCap. "Apple TV is a natural," he says. "It's about an extension device for the content you have on your Mac or your PC. It's a living extension of iTunes—your music and movies—but games are contained in iTunes as well. Once you start looking at a low-cost box that extends those experiences to the television set, that's an interesting consumer scenario."

Apple may still have to overcome reluctance by some gamers to give up consoles dedicated specifically to gaming, according to GamePro's Shuman. Even as the consumer electronics industry flocks to all-in-one devices "games will be the last to the party," he says. "To really do gaming in a multimedia device is tricky. You have to compromise one direction or the other." And Apple isn't big on compromise.

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