Entry into $34B console gaming market seen as largest opportunity for new Apple TV

Posted:
in iPod + iTunes + AppleTV edited September 2015
Though the new Apple TV isn't expected to have a streaming subscription service available at launch, that's not a problem for investment firm J.P. Morgan, who believes the device's real selling point will be an App Store with traditional console-style videogames.




To analyst Rod Hall, the massive $34 billion console gaming market is where the "real opportunity" for a new Apple TV lies. He estimates that an anticipated set-top box with a dedicated App Store would give Apple a foothold in that market and contribute a meaningful amount to its bottom line.

Hall's self-described conservative estimates suggest that every 5 percent of the gaming market Apple can capture will add about 2 percent to the company's annual earnings per share.

Compare that to a streaming TV service, which he believes will not be greatly profitable due to terms with content owners. His estimates suggest that a $40-per-month subscription plan would add just 1.4 percent to Apple's calendar year 2016 earnings per share.

The projections were detailed in a note to investors issued on Monday, a copy of which was provided to AppleInsider.




The real key for Apple's anticipated entrance into the console gaming market is the A8 chip, which features PowerVR graphics that are estimated to be about on par with a Sony PlayStation 3. The power could be even greater if Apple decides to go with an anticipated "A9" processor, Hall noted.

The analyst also said that Bluetooth input should allow a new Apple TV to connect with gaming controllers that are already available for iOS. With titles available for download on the App Store, users would be able to game comfortably from their couch on their HDTV, competing with the likes of Microsoft's Xbox One.

J.P. Morgan has maintained its "overweight" rating for shares of AAPL with a price target of $145.
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Comments

  • Reply 1 of 93

    From a revenue and profit standpoint, I truly wish Apple would make a more aggressive move into gaming hardware (And POS terminal hardware), instead of such barely-moving-the-needle initiatives like like Apple Music.

  • Reply 2 of 93
    crowleycrowley Posts: 5,567member

    Bit of a weird graph as I never played a game that looked better on the X360 than the PS3.

     

    Also, I'm not convinced that casual gaming in the living room is that much of an opportunity.  Maybe the odd party game, but the existing consoles are so far ahead of where the Ax processors are, as well as being entrenched and with the mature development community.  Just don't see Apple's angle there.

     

    Not slamming the ?tv, as I like the ?tv a lot.

  • Reply 3 of 93
    ingelaingela Posts: 217member
    Streaming devices are blowing up. I don't know of anyone under 35 that doesn't stream all of their "TV" media content to a chromecast or amazon fire device. There is a breaking of the dam moment in the wings. Add gaming and iOS apps an this thing may just e the device that busts the dams of old fashioned television content forever.
  • Reply 4 of 93
    eightzeroeightzero Posts: 2,195member
    Quote:

    Originally Posted by sog35 View Post

     

    This is a know brainer.


    I see what you did there. Well played.

    Quote:

    Originally Posted by Ingela View Post



    Streaming devices are blowing up. I don't know of anyone under 35 that doesn't stream all of their "TV" media content to a chromecast or amazon fire device. There is a breaking of the dam moment in the wings. Add gaming and iOS apps an this thing may just e the device that busts the dams of old fashioned television content forever.

    Concur. Considering how long it is taking for this AppleTV update to make its appearance, I'm anxious to see how Insanely Great it is. It might be the "I've cracked it" device Steve suggested.

     

    Just hope it doesn't turn out to be the long wait like the Apple Watch was, although the lack of leaked photos of production or prototype hardware makes me thing is will be. :-(

  • Reply 5 of 93
    calicali Posts: 3,495member
    Nintendo has the best(only) ideas is gaming(Everything else is a knockoff with ZERO originality). Nintendo just sucks at marketing and implementation. They created this social TV platform that was genius, but never promoted it or updated it. Apple could really use them but I heard they don't sell their company to anyone.
    sog35 wrote: »
    People said the same thing about gaming on an iPhone.  No way it could compete with gameboy.  guess they were wrong.

    Only the hardcore gamers care about cutting edge graphics.

    iPhone's closest competitor was the Nintendo DS which had a touchscreen and app store before Apple. Nintendo just never evolved from there and DS owners moved to iPhone. Outside of their game developers and engineers, Nintendo is beyond stupid.
  • Reply 6 of 93
    crowleycrowley Posts: 5,567member
    Quote:

    Originally Posted by sog35 View Post

     

     

    People said the same thing about gaming on an iPhone.  No way it could compete with gameboy.  guess they were wrong.

     

    Only the hardcore gamers care about cutting edge graphics.




    That's true, but few people bought the iPhone for the gaming, and I think only hardcore gamers care about gaming in the lounge, irrespective of the graphics.  My mum plays games on her iPhone because they're free and easy to find and she plays with her phone when she's got nothing else to do.  Would she play games on her sofa instead of watching Downton Abbey?  I very much doubt it.  

     

    Sony and Microsoft have the hardcore gamers tied up in the lounge, and an Apple puck isn't going to compete on the same level as that.  Gaming would be a minor addition to a product that sells on media content, not a major opportunity in itself.

  • Reply 7 of 93
    mike1mike1 Posts: 1,749member
    Quote:

    Originally Posted by Ingela View Post



    Streaming devices are blowing up. I don't know of anyone under 35 that doesn't stream all of their "TV" media content to a chromecast or amazon fire device. There is a breaking of the dam moment in the wings. Add gaming and iOS apps an this thing may just e the device that busts the dams of old fashioned television content forever.

    You should meet more people. On the flipside, I know several under-35s who all have cable or satellite service including my children and their friends. Once they got out of college and into an apartment or house, they all signed up for cable. While it works for the viewing habits of some, streaming TV is not ready for prime time. For example...

     

    1. How many times do you have to re-login to an account? It seems that one app or another is always asking me to sign back in.

    2. Who doesn't have more than one TV? Each Apple TV or similar device is its own entity and needs to be configured for each TV. No way to set up one and copy your preferences and account info to another.

    3. Nobody has shown how this is cheaper than a moderate cable package. I pay about $115 for broadband internet and a fairly inclusive TV package plus HBO. This does not include boxes and DVRs for multiple TVs. Subtract $35 for the upgraded broadband part and that's about $80. And I can watch things I forget to record from the On Demand service.

    To get what I would want over the top, I would need to subscribe to HBO, Amazon Prime, Netflix and Hulu plus the MLB, NHL and NFL packages of some type. Even if it was a bit cheaper, which I doubt, I would have to worry about managing at least 7 or 8 different subscriptions. That's not even including secondary cable networks like USA or the History Channel etc.

     

    If Apple could pull all this together under a single monthy charge to an iTunes account and have it be more cost effective, they may have something. This does not exist yet.

  • Reply 8 of 93
    ingelaingela Posts: 217member

    After people get a taste of an on-demand experience, they never go back. Older people are always weary of trying anything new, but this is one thing that is going to blow up taking everyone of every demographic with them. Even you.

  • Reply 9 of 93
    crowleycrowley Posts: 5,567member
    Quote:
    Originally Posted by sog35 View Post

     

     

    I disagree 100%

     

    Just look at the success of the Nintendo Wii.  There are huge opportunities to make profits on casual gamers.

     

    The Wii had horrible graphics compared to the PS3/X360.  But casual gamers loved it.  I can see the same thing happening with an AppleTV gaming system.  I can also see MUCH CHEAPER games similiar to iOS game prices.




    The Wii sold off the back of Wii Sports.  If Apple have something innovative that captures the imagination like that then they may have a shot.  But I doubt it, there's no reason to think that'll happen, especially since they have no in-house game development or expertise in how to do that kind of thing.

     

    Look at the game in the article picture.  That's the best they got?  Who is going to care about ugly racing games on their big TV?

  • Reply 10 of 93
    jasenj1jasenj1 Posts: 904member

    Price point will be a big factor, too. An Xbox One will run you from $350 to $500 depending on how complete a bundle you get, and the games are $40+ish. An ?TV for less than $100 with a bunch of freemium games could satisfy a lot of casual gamers. (Read parents too poor/cheap to buy one of the big systems.) I bet the ?TV will have a lot of casual & kids games, too. That will appeal to the parents who don't want to shell out for a Wii U and its expensive games or buy the shooter heavy XBox & PS4.

     

    I'm looking forward to it.

  • Reply 11 of 93
    dasanman69dasanman69 Posts: 12,963member
    sog35 wrote: »
    crowley wrote: »
     


    Also, I'm not convinced that casual gaming in the living room is that much of an opportunity.  Maybe the odd party game, but the existing consoles are so far ahead of where the Ax processors are, as well as being entrenched and with the mature development community.  Just don't see Apple's angle there.


    People said the same thing about gaming on an iPhone.  No way it could compete with gameboy.  guess they were wrong.

    Only the hardcore gamers care about cutting edge graphics.

    You really can't see the difference?
  • Reply 12 of 93

    The key to success will not be the graphics performance, but the input devices.

  • Reply 13 of 93
    Acquiring Nintendo's IP would be brilliant for Apple's platforms. But for $24 billion plus? Not so sure about that.
  • Reply 14 of 93
    slurpyslurpy Posts: 5,061member
    Quote:

    Originally Posted by cali View Post



    Nintendo has the best(only) ideas is gaming(Everything else is a knockoff with ZERO originality). Nintendo just sucks at marketing and implementation. They created this social TV platform that was genius, but never promoted it or updated it. Apple could really use them but I heard they don't sell their company to anyone.

    iPhone's closest competitor was the Nintendo DS which had a touchscreen and app store before Apple. Nintendo just never evolved from there and DS owners moved to iPhone. Outside of their game developers and engineers, Nintendo is beyond stupid.

     

    Yep. Nintendo is genius at actual game development (I buy Nintendo consoles only for Nintendo games), but they're absolutely horrendous at marketing and everything else. Just seems like they market everything in the worst way possible, and TRY to shoot themselves in the foot. Nintendo+Apple would be a pretty brilliant partnership. 

  • Reply 15 of 93
    An Apple TV more power than ps4 along with cable pass through would basically eliminate the need for anyone to have anything else.
  • Reply 16 of 93
    maestro64maestro64 Posts: 4,312member

    As it has been said, the issue with Streaming is content discovery. finding something to watch on current TV is pretty easy, it is call channel surfing. Nothing like this exist on streaming service. Today you have to some sort of search or have the streaming service guess at what you might want to watch, then you have to click on it and wait while it buffers, watch a few minutes and then decide if you want to keep watching or not then proceed to do it all over again. Over the years I have gotten really good at watching to shows at once can not do that too well with streaming services.

     

    When this problem is solved then we will have a real streaming product. Also keep in mind Apple does not need to first. why because all the other streaming solution today do not have barrior to exit their solutioin, Yeah a few have unique content you can not get elsewhere, but the question is how important is that in the end. If Apple comes out with a product that offers what Netflix/Hulu/Amaizon offers then addes in linear tv(Live) people will jump from those service. It will take time for those on Cable since most people are tied into a contract. I know I am not going to Renew my Directv plan this year since I believe Apple have have a replacement for what I am doing today.

     

    Also this analysis claiming that A processors can not keep up for gaming, think again, Apple has demonstrated with Metal and Swift together the performance they get is very high especially for gaming. The other game systems have too much overhead to deal with thus the reason they need a massive processor. Also, most users are not hard core gamers, we all know the people who hide in the bedroom or basement and never come out while they're playing games. This is such a small % of the gaming market and too many times everyone focuses on this group, they are not the money makers for Apple to go after. If Apple can catch everyone else that is all that matter and let those games living in their rooms.

  • Reply 17 of 93
    sog35 wrote: »

    AppleMusic main objective is to be another sticky service in the ecosystem.

    Strengthen the ecosystem and you sell more phones/tablets.

    Same was said about the AppStore.  At first it was about just breaking even.  Now Apple makes multiple billions in profits every year from the App store.

    And its not like Apple can't do both.

    Yes, of course, Apple can do both. (Although, I increasingly believe that some change in organizational structure may be long overdue).

    The real question is, what should Apple prioritize?
  • Reply 18 of 93
    crowleycrowley Posts: 5,567member
    Quote:

    Originally Posted by sog35 View Post

     

    What will be the killer feature?

     

    All your iOS games will work on the AppleTV.  You know the ones you bought already.


    All the ones that work by touching the screen?  they'll work on my TV that doesn't have touch sensitivity?

     

    Good luck with that.

  • Reply 19 of 93
    slurpyslurpy Posts: 5,061member
    Quote:

    Originally Posted by 9secondko View Post



    An Apple TV more power than ps4 along with cable pass through would basically eliminate the need for anyone to have anything else.

     

    Not gonna happen. Console makers LOSE money on hardware (as its ridiculously over powered at launch) so that they can make it up on software. Apple is not going to sell something it loses money on. 

  • Reply 20 of 93
    jfanningjfanning Posts: 3,382member
    sog35 wrote: »
    Just look at the success of the Nintendo Wii.  There are huge opportunities to make profits on casual gamers.

    And Nintendo capitalised off that success and produced the Wii U, and how is that going for them?
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