Is AppleTV the Next Video Game Console?

Something happened recently in the world of video games.  Something sneaky.  Maybe something that was not even planned.

Over the last few years, this new product, called the iPhone and its calling-plan barren cousin the iPod Touch, have come onto the market with little or no thought to being a platform for video games and yet still, without any apparent effort, appear to have supplanted the Sony PSP as the second string handheld video game platform and, from where I sit, seem to be poised to rapidly overtake Nintendo’s DS platform in short order.  What is amazing is that no one seems to really discuss the iPhone as a video game platform.  The whole idea of playing video games on the iPhone seems to have just sort of snuck up on everyone.

Now, with little warning, the hand held video game landscape has dramatically changed.  The iPhone, because of its volume, screen quality, multi-functionality and rapid update schedule (when compared to traditional video game consoles) represents a serious threat to the way that video games have traditionally been handled for the hand held market.

Perhaps the paradigm shift has occurred simply because, unlike traditional hand held consoles, the iPhone earns its revenues via other channels and not through video game licensing.  So instead of working hard to make games expensive and distributing them through traditional sales channels, video games are cheap and downloaded through the same mechanisms that provide music, movies and other applications.  Internet distribution is a fraction of the cost of shipping cartridges around via UPS and warehousing them, securing them and paying an employee to check you out at the counter.  The infrastructure around gaming has been vastly improved.  And now, someone wanting a new game gets it instantly – not only during hours when the store is open and when you have time to get there.

Video game console makers can’t really compete with Apple from a hardware perspective.  Apple owns their stack, top to bottom, and spreads its resources amongst many products reducing the cost to produce any single one.  They make their own processors, their own operating system and all the other major components giving them a pricing advantage.  Apple is able to charge more for their products because they are not judged by the merit of being a video game platform but of being a mobile computing platform.  By being multi-purpose, the iPhone is able to deliver a better video game experience.

There is a hidden feature of the iPhone and its kin as well: public impression.  Let’s face it.  If you are riding the train heading into the office in midtown, playing your DS or PSP can be a little embarrassing.  Not that there is anything wrong with it but if you are a corporate executive trying to look the part it may not fit the image for which you are looking.  It also means carrying an extra device with you all day.  But using an iPhone as a multipurpose device means that people on the train can’t tell when you are playing Fruit Ninja or sending an email firing the COO for spending the day playing Fruit Ninja on his iPhone instead of working.  This video game ambiguity is a big win for the platform.  This platform is more lifestyle-oriented.

For years, it was predicted that the general purpose PC platform, always more powerful than the video game console counterparts of similar era, would overtake the video game console with the “next generation”, whatever generation that would be, and that people would hook PCs to their television monitors and stop using consoles.  That has not yet happened.  But surprisingly, the logic always used for why that shift was inevitable applied more thoroughly to the iPhone market than it did to the PC market.  The iPhone being closer to general purpose computing while still being a vertically integrated, tightly coupled device like a video game console.  Perhaps this blending of models was just what video gaming needed.

Given the surprising rise of the iPhone as the hand held video game platform of choice, should we then consider the AppleTV, iPhone’s television-attached cousin, to be a prime candidate for the future of traditional video game consoles?  The latest iteration of the AppleTV, version two, is based not on the Mac Mini like the original but on the iPod Touch sans screen and retails for just $99.  That means that, in theory, we are just a controller away from the AppleTV being able to play all of the iPhone games right on your computer!  This does not take into account the massive differences between touch screen control and whatever the AppleTV would use, but that seems relatively trivial in the grand scheme of things.

Today this may seem silly.  Clearly the AppleTV with its A4 processor is not nearly powerful enough to rival the major game consoles.  But as the Nintendo Wii has demonstrated, that is not always a significant factor in the the video game console market.  Market penetration, cost and multi-use functionality could outweigh processing power.  Realistically we are not talking about the current generation of AppleTV either.  No worries there, the AppleTV can iterate to version three before the current crop of video game consoles sees a replacement cycle themselves putting the AppleTV much, much closer in terms of capabilities.  The shared platform with the iPhone and low cost of acquisition and distribution makes it a perfect platform for casual gamers.

Perhaps the idea of the AppleTV as the next video game console seems silly.  In reality, I tend to agree.  It is, however, a very interesting supposition.  Perhaps, though, we should consider things one stage further.  At this time, Google’s Android operating system is reported to have taken over Apple’s iPhone both in market share as well as in consumer demand.  Android’s broader market appeal and greater choice of platform might make it a better candidate for gamers and multi-function use.  Rapid Android adoption could prove to be a “game changer” for the gaming market in a way that no one is truly expecting.

Maybe the biggest factors that will impact AppleTV or “set top Android” adoption over traditional video game consoles will be in appearance, power consumption and ancillary use.  Already my PS3 spends 95% of its time or more steaming DLNA or Netflix content.  But to run Netflix, its primary job, it requires a DVD be inserted.  A bit of a pain to always switch the disc for daily use.  The AppleTV does this natively – and does so while being small, unobtrusive and very attractive unlike the ridiculously large and silly looking PS3 and XBOX 360 products.  Ask the average home owner which device they would like their guests to see sitting by their television and I guarantee that the AppleTV’s aesthetic is a bigger factor than people tend to imagine.

The AppleTV might not be the future of console video games, but I expect that the iPhone / AppleTV platform and the Android will be playing a significant role in how the future of video gaming shapes up.

Leave a comment