Apple rumored to be eyeing video game market
A recent series of checks by Prudential analyst Jesse Tortora indicate that Apple Computer has hired video game designers and may have aspirations of entering the video game market in long-term.
"We think the video game market represents a distinct possibility for Apple, especially considering that it recently announced the availability of video games for its iPod through its iTunes store," the analyst told clients in a research note on Monday.
Tortora said Apple's design superiority, along with its well-recognized brand name, is sure to provide the company an advantage should it decide to enter the market. He said the company could approach the video game sector in one of two ways -- via a home game console or a handheld device.
"The game console device could be morphed out of some combination of the MacMini and iTV, while the handheld player could be developed as an enhancement to a future version of the widescreen iPod," the analyst explained.
Still, Tortora said such a move "would introduce a complex set of market conditions" for Apple, which has traditionally made its real money through hardware sales. "The video game console market is notorious for subsidizing hardware to sell profitable games," he wrote. "Apple would then have to either rely on the sales of its games and downloadable movies to make enough profit to cover losses on hardware or figure out a strategy to make profits on hardware itself."
Given the challenges presented by the video game market, Tortora believes the company's decision to enter the video game market could depend on its need to defend its position against the competition in the battle over the digital home. He noted that Microsoft recently introduced a video download feature to its Xbox 360 gaming system and said he expects Sony will follow.
"There are no technical limitations to this capability, and Microsoft is already aggressively wooing the movie studios," he wrote. "This could adversely impact Apple’s iTunes Movie download business longer-term, along with its iTV and video iPod sales."
The analysts believes Apple will ultimately have to decide "whether to accept this challenge head-on" by entering the gaming market, or conclude that Microsoft and Sony pose little risk to its business and continue on with its current strategy.
In his note to clients, Tortora said Apple has recently hired game developers at both the software and hardware levels.
"We think the video game market represents a distinct possibility for Apple, especially considering that it recently announced the availability of video games for its iPod through its iTunes store," the analyst told clients in a research note on Monday.
Tortora said Apple's design superiority, along with its well-recognized brand name, is sure to provide the company an advantage should it decide to enter the market. He said the company could approach the video game sector in one of two ways -- via a home game console or a handheld device.
"The game console device could be morphed out of some combination of the MacMini and iTV, while the handheld player could be developed as an enhancement to a future version of the widescreen iPod," the analyst explained.
Still, Tortora said such a move "would introduce a complex set of market conditions" for Apple, which has traditionally made its real money through hardware sales. "The video game console market is notorious for subsidizing hardware to sell profitable games," he wrote. "Apple would then have to either rely on the sales of its games and downloadable movies to make enough profit to cover losses on hardware or figure out a strategy to make profits on hardware itself."
Given the challenges presented by the video game market, Tortora believes the company's decision to enter the video game market could depend on its need to defend its position against the competition in the battle over the digital home. He noted that Microsoft recently introduced a video download feature to its Xbox 360 gaming system and said he expects Sony will follow.
"There are no technical limitations to this capability, and Microsoft is already aggressively wooing the movie studios," he wrote. "This could adversely impact Apple’s iTunes Movie download business longer-term, along with its iTV and video iPod sales."
The analysts believes Apple will ultimately have to decide "whether to accept this challenge head-on" by entering the gaming market, or conclude that Microsoft and Sony pose little risk to its business and continue on with its current strategy.
In his note to clients, Tortora said Apple has recently hired game developers at both the software and hardware levels.
Comments
Seems unlikely to me - it'd be hard for them to enter the sector at this stage, unless they make a really unique product.
Nintendo has already go that covered with both the Wii and DS.
Any hiring of game developers is almost certainly about more small, casual games for the iPod / iPhone.
Which is a good thing, for sure, but it has almost nothing to do with the upcoming clash between Sony, MS, and Nintendo.
I could see the iTv being compatible with iPod games and imporvements to iPod gaming (such as previously rumored gyroscopes, etc.), but I don't even think mac-faithful would be interested in an Apple PlayStation/XBox.
Nintendo has already go that covered with both the Wii and DS.
Buying Nintendo and integrating the features of iTV into it wouldn't be a bad idea, but I can't see Apple entering th market with it's own, original game console.
Apple has little to no understanding of the non-casual game market, and very little interest.
Do you guys pull those statements out of your asses?
Buying Nintendo and integrating the features of iTV into it wouldn't be a bad idea.
Never going to happen, however an Apple/Nintendo partnership could be profitable for both companies.
The first step was games on iTunes for the iPod.
It is not far fetched that they would build on that at their leisure. Why not?
Never going to happen, however an Apple/Nintendo partnership could be profitable for both companies.
They would be wise to partner with as many of the top companies as possible to create an iPod games division (if it's deemed critical to future growth) and not risk their own capital and waste time on game development of loser titles.
1. Develop a powerful gaming API for OSX
2. Aquire a large gaming company with great upcoming game.
3. Develop a console that plays games, downloads movies, streams video/photos
4. License the hell out of the platform.
Microsoft has created a winner in just 3 generations of Xbox consoles. Apple can cut that down to 2 generations if they just follow the pattern of success and avoid the pitfalls.
Bring on the iGame Console!
So, it wouldn't be a completely new stand-alone box to compete or even just another version of Tetris for the iPod, but fine-tuning the graphics and other capabilities of their current hardware to outshine Windows in the PC gaming market.
I'm sure they are simply working on bigger and better games for the bigger, better iPods that will be coming out next month. Remember, most mobile phones play games too! -Mike from myallo.com, the site that finds without searching
I think I read about you, spammer boy. You're one of those posters who now sticks a link into their comments and gets paid for it. Screw Myallo.
Microsoft has created a winner in just 3 generations of Xbox consoles. Apple can cut that down to 2 generations if they just follow the pattern of success and avoid the pitfalls.
Bring on the iGame Console!
xbox and xbox360... just 2 generations of xbox consoles.
Microsoft has created a winner in just 3 generations of Xbox consoles.
Microsoft has only been in the video game console race for 2 generations.
2001 - XBox
2005 - XBox 360
*Edit - monkeyastronaut beat me to it*
For instance, once their "Mini OX X" is out on a few products, they can create a market where 3'd party developers can make games for their devices, such as iPod 5G, iPod touch, iPhone, iTV etc, and let the games be purchased easily through the iTunes store. The games will be developed with Apple's API. Plus with all Apple's patents we've seen the last year they could offer interesting platforms for developers, and a huge install base.
I don't think Apple will join the game industry as we know it today, but rather make it an extension of the iTunes games model we see today.
Smoke grass write reports get paid for being an analyst?
(sure, sign me up!)