Ahead of Apple’s September 9 pencil pushing event, there were rumors that the company might dip its toes into the video game business. Although dwarfed by Sony, Nintendo and Microsoft in the gaming industry, Apple seeks to re-position itself as a gaming console heavy-hitter through the new Apple TV—a device previously used to stream videos and music.
Apple’s previous foray into the gaming industry—the Apple Pippin—was seen as a huge commercial failure. Launched in 1995 using the then-new CD-ROM format and promises of Internet connectivity, the console cost $599 and came bundled with unlimited Internet at $24.95 a month. However, Apple’s failure to market the device (which was left to publisher Bandai), a high price point, an over-saturated market at launch and a lack of developers willing to create games for the system led to its demise two short years later in 1997 (coincidentally, the year Steve Jobs returned to Apple).
Although Apple’s main competitors in the space, such as Microsoft’s Xbox One, Nintendo’s Wii U and Sony’s PlayStation 4 cater to those who play AAA titles such as Call of Duty, Apple does have plenty of games that are already available on iOS and played on the iPhone and iPad that will be compatible with the Apple TV. Mobile games are generally seen as appealing to the “casual” audience, or those who don’t play big budget games.
Some analysts reported that the repositioning of the Apple TV as a gaming console would open up a new market. “I think Apple’s going to create a big new category in gaming, one that others have tried and failed to create before,” said Jan Dawson, chief analyst at the technology research firm Jackdaw Research. “What the Apple TV has the potential to do is to bring casual gaming to the living room and make it a much more social activity.”
Analysts and gaming executives acknowledged that they wouldn’t be able to wrestle market share away from the established players in the industry, but instead would appeal to those who aren’t hardcore gamers. The new product was announced at a price point of only $150, which is about half of today’s generation of consoles (which range from $300 to $500). This price point could reverse one of the fatal mistakes made by Apple when they released the Pippin almost two decades ago.
Today, many developers both big and small make games for the App Store, which are usually free or much cheaper than games available for console systems, where games are expected to rake in $27 billion this year alone. The iPhone largely shaped mobile gaming during its release, and the iPad allowed more complex games to be played on mobile devices, such as Clash of Clans and Hearthstone.
Some claim that Apple has one advantage over its competitors: their ability to scale. “These are very big, clunky devices,” said Steve Perlman in reference to the Xbox One and PlayStation 4. Perlman worked at Apple in the 1980s and later founded WebTV, an early set-top box startup that was acquired by Microsoft. “They’ve got fans, big power supplies. Apple TV is really a modern computing device,” Perlman added.
Others were a bit skeptical about Apple’s entry into the video game market, stating that Apple should stick to what they’re good at: the mobile segment. “It’s a totally different experience,” said James Gwertzman, chief executive at PlayFab, a company that helps developers run online operations of their games. “Xbox and PlayStation have been very successful at building those living room experiences, and Apple and Android have been very good at ‘play a game on the bus’ experiences,” he said.
Some offerings that are similar to what Apple is planning, such as NVIDIA Shield and Amazon Fire TV, haven’t made a dent in the market yet. Matt Wuebbling, general manager of Shield at NVIDIA, said it was unclear whether or not Apple’s re-entry into the gaming console market was going to succeed. “Time will tell what the impact is,” he said. “I think it’s going after a different, more mainstream market.”
Apple’s re-entry into the gaming market has a high-profile endorsement from Trip Hawkins, who founded mammoth game developer and publisher Electronic Arts (EA). Hawkins claimed that no tech company has really conquered the living room, but Apple has a chance to. “No company has done more for the digital man-machine interface than Apple,” Hawkins said. “They’ve warmed up to games and are a worthy candidate to win the family room in the next decade, though the competition and inertia are epic.”
Can Apple stake its place in the gaming industry? Given the large amount of games available for the iOS and the uncertainty of who is truly in control of the living room, they could make an impact for a market segment that is largely ignored by the incumbents.