Nintendo and Sony Still Don't Get It: Apple's Already Crushing Them in Gaming

At this week's Game Developers Conference, both Nintendo (NTYDO) and Sony (SNE) pushed their respective Nintendo 3DS and Xperia Play mobile gaming devices while insisting that the Apple iPod and iPhone aren't "real" game machines. Uh, guys? You're wrong. Dead wrong. Both of you need to snap out of denial if you're really going to take on the current mobile-gaming champ.

Nintendo boss slams digital games
Delivering the Game Developers Conference keynote, Nintendo CEO Satoru Iwata didn't mention the Wii 2, but he did spend some time sniping at downloadable digital games. As VentureBeat's Dean Takahashi put it:

In a feisty attack on the fastest-growing sectors of the video-game industry, Nintendo CEO Satoru Iwata said that smartphone games and social-media games focus on quantity instead of quality.

"They are not like gaming consoles, there's no motivation [for] high-value video games," Iwata said... social networks and mobile-software platforms like Apple's iOS and Google's Android operating system focus on getting as many apps as possible. Smartphone manufacturers naturally want to sell devices, while social media sites seek to have as many active users as possible.

This argument is about as delusional at it gets.

First, less than a year ago, Nintendo declared Apple its number one adversary -- above the XBox 360's Microsoft (MSFT), above two-decade-long enemy Sony (SNE). If the games are so poor, why is Apple a threat?

Second, the iPod Touch and iPhone have managed to capture the casual gaming audience the Nintendo DS line once owned. Angry Birds alone has passed 100 million downloads, putting the unit sales in a league with The Legend of Zelda, Mario, and Nintendo's biggest franchises.

Third, the "smartphone manufacturers naturally want to sell devices" argument regarding game quality holds no water. Third-party game companies have no interest in selling iPhones or iPods -- only in selling their apps. Furthermore, with more than 350,000 Apple apps available, developers have to create high-value software simply to survive.

Unlike Nintendo, Apple is a device manufacturer that doesn't develop video games. Ironically, Nintendo itself could be accused of having a bigger interest in selling as many devices as possible, since it profits from both the system and the games.

It's obvious why Iwata wants us to believe this nonsense. Nintendo's profits were down nearly 50 percent in Q3 2010. Absent a new Wii, the company is now totally dependent on its cartridge-based Nintendo 3DS for a decent 2011. So of course Iwata hates downloadable cell phone games.

Sony thinks adding buttons will bring market share
Sony presented the long-awaited Xperia Play PlayStation phone to America at this week's Game Developers Conference. I had some hands-on time with the device and, overall, it felt good to play games on a phone with a traditional controller. Is that enough to make up for the iPhone's two year head start in cell phone gaming? Definitely not.

When I asked Peter Farmer, Sony Ericsson Head of Marketing, North America, how the Xperia Play would steal mobile game market share from Apple's devices, he said:

We have to give the iPhone credit for opening up the market, but there are two big differences. First, Xperia Play is much more powerful than the iPhone.... Second, the Xperia Play actually has controls, which is what gamers need.

The touchscreen-only iPhone and iPod touch definitely limits the gameplay options -- users can only touch or tilt. However, adding a bunch of controls won't magically open up the mobile gaming market for Sony Ericsson. More important, those limited iPhone controls have pushed game developers to innovate -- and innovate they have. Enough, obviously, to entertain the gamers who have snapped up many of those 10 billion apps Apple has sold.

Like the Sony NGP mobile console, the Xperia Play is on the Google (GOOG) Android platform and uses the Android Market. By using Android 2.3 for both systems, Sony has essentially validated Google's system for games. The Xperia Play can now potentially satisfy both gamers who want traditional controllers and those happy with the simpler controls found in cell phone games.

In that sense, surprisingly, Sony may better understand the modern mobile market than Nintendo. While Sony is at least supporting games that tens of millions of Apple and Google gamers are playing right now, Nintendo is too proud to admit that the audience for them actually exists.

Photo courtesy of fallwithme // CC 2.0
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