Round Table: The Poison Apple

For decades, Nintendo’s other Blue Ocean– handheld gaming– remained as clear as could be. Sure, WonderSwans, Lynxes and other portable gaming monsters tried to tread water but ultimately foundered or drowned. Then PSP came out, and while it’s still laughed off by many a Nintendo fan, it manages to remain on the market years later and has sold millions of hardware worldwide (62 million as of September 2010)– still less than half of DS’s 130+ million, but also greater than any other prior competitor who ran against Nintendo. And then, unexpectedly, an Apple was thrown into the water.

At its annual fall press event on September 1, 2010, Apple CEO Steve Jobs proclaimed handheld gaming dominance, elaborating that iPod Touch had outsold Nintendo’s DS and Sony’s PSP combined. There was a bit of grousing over this statement since the hardware numbers don’t necessarily add up to support Jobs’ authoritative claim, but he may have been referring to his 1.5 billion “games and entertainment” app downloads. Or maybe he was referring to some unspecified window of time in which iPod Touch outsold DS and PSP.

Regardless, there’s no ambiguity in Apple’s once hesitant-steps-turned-headlong-rush into handheld gaming. Amusingly, Jobs apparently wasn’t planning on how things have turned out. Last year, he told The New York Times…

“Originally, we weren’t exactly sure how to market the Touch. Was it an iPhone without the phone? Was it a pocket computer? What happened was, what customers told us was, they started to see it as a game machine. We started to market it that way, and it just took off.”

Meanwhile, DS hardware and software sales have faltered this year, and right on schedule, Nintendo’s 3DS is ready to take its place. (We’ll find out exactly when and for how much at Nintendo’s 3DS price-and-launch-date press event Wednesday.) If you were to ask an Apple spokesperson, you might hear that iPhone, iPod Touch and iPad are the reason Nintendo’s losing a grip on handheld gaming. (A Kevin Butler-styled Sony rep might try to say the same about its PSP.) Yet do we really believe it? A number of us on staff have iPod Touches and have played games on them, and there’s no overlooking iPhones that support the same games, and a growing number of Droid apps drawing attention on non-Apple smartphones.

Will 3DS be enough to keep Nintendo competitive and relevant in handheld gaming, or will our phones and music players– items we’re much more likely to take everywhere– push Nintendo out of the handheld gaming scene? Is Apple truly the enemy of the future, or is it Apple and Sony combined? We’ll address that in this second Blue Ocean round table.

Adam Sorice

While you could probably argue that Nintendo are currently leading the pack in the home console war– if only just– thanks to the Blue Ocean strategy, it’s definitely in the handheld market that the Big N are streets ahead of the competition. The handheld gaming industry is so synonymous with Nintendo and its legacy of portable gaming consoles that the two often become interchangable in the minds of non-gamers. Completely anecdotal proof of this is my Mum: she still refers to any DS, PSP, iPod Touch or any other game device as a “Game Boy”. And when the Immersion 9000 Super Gamer comes out in 2035, my Mum will still be calling it a Game Boy. That’s being culturally entrenched for ya.

So do I really think that Apple and Sony are true rivals to Nintendo’s gaming crown? Hardly. Sure, PSP has proven to be Nintendo’s greatest rival in a long while and is a worthy challenger, while Apple’s supreme push on gaming may seem a bit out of place with their diverse market, but neither of them are a serious threat to DS’s supremacy. After all, it would take a massive surge in popularity for either of these devices to even begin to border on the popularity of Nintendo’s handhelds, let alone overtake and dominate it.

And as we’ve seen already, 3DS has a far greater potential in the hardcore market than any of its predecessors, looking set to finally meet PSP, or its successor, toe-to-toe in the battle for huge gaming experiences. With developers already moving resources away from PSP, just at a time when Nintendo is offering the chance to release a game on a new, powerful, likely affordable and highly anticipated device, Sony is going to have wildly rethink what PSP now means in 2010 if they hope to continue the brand successfully beyond Monster Hunter sequels.

And Apple? While the device may offer many exciting things for hardcore gamers, what about the 80%-odd or more that are merely casual gamers, or not even gamers at all? The super casual crowd is not likely to buy games for Apple devices that they can play online for free. I will give full credit to Apple for bigging themselves up though; it all looks so promising.

James Stank

In my opinion, Apple is not a competitor of Nintendo’s. You could argue that by having tons of games on iPhone, iPad, and iPod Touch, Apple is competing for consumers’ time, and I would have to agree. Nintendo has said in the past that its competition is anything that takes up a person’s time. Thus, reading, playing sports and anything you could possibly think of is competing with Nintendo. Even thinking. But no, in a much more realistic sense, Apple is not competing with Nintendo. The types of games that Apple and Nintendo offer are totally different. Games on iPhone aren’t meant to last as long as a Zelda or Mario title. These games are meant to take up minutes, not hours, of a user’s time in one sitting. For now, Nintendo has nothing to worry about as far as Apple is concerned. But Sony, that could be a whole different story.

While Nintendo is dominating with the DS worldwide, and always has, in Japan things are a little different. DS, with its many SKUs combined, still manages to outsell PSP on a weekly basis, but now not by much. PSP is the most successful competition Nintendo has ever had in the handheld realm, and it looks as though it is here to stay. Potentially, Japan alone is keeping PSP alive. Had PSP been outsold by DS in Japan as it is here in America, Sony’s system may have met a quick death. But Sony, being a Japanese company, has every reason to make a true successor to PSP, seeing as how the original is so popular in its home country.

PSP2 is going to be a threat, 3D or not. It is going to be more powerful and have better graphics than 3DS, and it will have many improvements over the current PSP. Sony knows it made some mistakes with the original PSP (and PSP Go, natch– Ed.), and it will set out to fix them with PSP2. Upon its release, many third parties may jump ship simply because of its specs. This is what Nintendo needs to watch out for. With 3DS, Nintendo is going for both the PSP and DS crowd. If PSP2 saps 3DS’s third party support, Nintendo can kiss those potential 3DS owners goodbye.

However, Nintendo can also determine its own fate. While Sony is improving PSP, Nintendo has to improve its online and friend systems. We still don’t know too much about 3DS from that perspective, but when we do, we will have a much better idea of how it will compete with PSP2.

Carter Fagan

Apple is as much of a threat to Nintendo as it is to Microsoft: that is, not at all.

Apple recently revealed that iPod Touch is the most successful iPod line to little surprise. It is a very slim, nice-looking mp3 player with a great touch screen, and I’d be lying if I said iOS wasn’t a decent mobile operating system. That being said, iPod Touch is still an mp3 player first and foremost, and iPhone a cell phone, and that’s primarily why I cannot possibly consider iOS devices a serious competitor to Nintendo’s DS.

You’ll see it boasted at Apple’s keynotes all the time: its app store is filled with hundreds of thousands of applications, games being many among that number. How many of those games do I want to play, though? Many of the App Store’s standouts (Angry Birds, Diner Dash, Peggle, Bejeweled, Plants vs. Zombies, Canabalt) are ports of popular flash games that can be played on PC. Yes, you could argue that portability is the very foundation of mobile gaming, and I would agree, but when are we going to see original experiences on iPhone or iPod Touch?

Until Apple can say it has a Mario or Sonic the Hedgehog, I don’t see it as a serious threat to Nintendo. A competitor, maybe, but not a threat.

Andrew Hoover

Apple is a competitor in that it produces a handheld device that plays games, yet the experience it offers is drastically different from that of DS or PSP. For a very casual gamer looking to enjoy classic puzzle games and other simple fare to kill a few minutes, an iPhone is a great device, but it absolutely fails at the kind of games people who read this site are interested in.

As a gaming device, iPhone has horrible battery life, limited controls, and its software is generally much buggier than the competition’s. Among these factors, the controls really are the rub. The simple truth of the matter is that virtual buttons absolutely pale in comparison to the real thing, and even the most acclaimed iPhone games that rely on their implementation don’t even come close to cream of the crop on DS.

This is the primary reason why serious gamers are more likely to stick with dedicated gaming devices. Granted, the growing casual market will remain a major money maker for whatever company courts them best, and the cheap games and ease of access offered by Apple and other smart phone companies is doing a great job of getting their attention. But the cornerstone of the industry is going to be the serious gamer. Casual gamers are more capricious; they move from one big thing to the next, always looking for the next popular, easily-accessed means of getting their fix. The core gamers are the ones who appreciate the brands that have built the industry and pay attention to the big experiences and innovative ideas that phones simply can’t offer. The casual gamers will come and go and can potentially be a major cash cow, as Nintendo is well aware, but keeping the core gamers engaged is a profitable enough venture to make any company happy.

As for PSP, it has definitely carved out a niche for itself, but the likelihood of it surpassing the DS brand is next to nil. The primary reason why PSP has been gaining ground, especially in Japan, is probably due to the fact that pretty much everybody there already has a DS. When 3DS finally hits the streets, it will make a major splash. First and foremost, it will reinvigorate millions of DS owners, and as the the first glasses-free 3D device on the market, it will generate a great deal of interest outside of traditional gaming circles. Factors like price and launch titles remain unknown and could potentially change everything, but assuming Nintendo asks for a fair price and a few worthwhile games make the launch window, 3DS should be a must-have product for gamers of all types.

A PSP successor is definitely in development, but it won’t reach market until well after 3DS and will have to play catch up. PSP2 could of course possess some huge, world-shaking innovation that will make it hugely popular, but given Sony’s history of innovation, I highly doubt that. Where Sony could pick up ground is with”hardcore” gamers, a subset of the aforementioned core gamers, which is a place where Sony is already making strides. However, even with those gamers toeing the PSP line, Nintendo and the DS brand have significantly more clout with the casual crowd, newer gamers, girls, and of course the army of Nintendo loyalists. In other words, Nintendo will remain strong in the handheld market, even in the worst case scenario.

Evan Campbell

I strongly disagree with my fellow staffers. Adam believes that Apple’s iPhone, iPad, and iPod need a massive surge to border on the popularity of the DS. I’m sorry, but I would argue that Apple’s lineup is more popular by the general population. Yes, Nintendo may win the sales battle, for now, but Apple’s handheld products grow in popularity year after year. And that’s even when the company basically re-releases the same product with small upgrades. I have not seen the same sales, or love, for Nintendo’s attempt with the enhanced DSi line.

And I feel as James has drank a bit too much of the Nintendo PR Kool-Aid. Nintendo directly competes with Apple for the handheld market. The whole “We compete with everything under the sun, but at the same time don’t” stance is a way to avoid addressing the competition head-on. Apple is not only a threat to Nintendo, but even Sony. I expect both companies sweated a bit when Apple and Epic showcased the Unreal Engine 3 running on the new iPod Touch. When was the last time Epic partnered with Nintendo? Oh, and I think the tech demo points to games that contain a lot more content than other bite-sized titles. (Let’s also not forget the Rage Engine running on the platform.)

There is also a failure to discuss the moderates of gaming (which Aaron did a great job of dissecting in his Hot Air column). Gamers are not split up by casual and hardcore. There is a huge population of moderate gamers that blow hardcore — and even casual — crowds out of the water. They do not necessarily care about buttons, and appreciate more the ability to have games, Internet, and a phone in one device. They do not want to carry a DS and PSP around with them when going out.

With all that said, I think Nintendo will market 3DS as a machine that does more than just play games (which is a change-up from past strategies). I believe there will be a huge campaign to promote the device’s ability to play 3D movies, which is not available on the competitors’ handhelds at this time. I would even not be surprised to see a movie packed in with 3DS to really demonstrate the extra functionality of the system. I am also curious to see how the new Tag Mode works on 3DS, since it may also be a huge feature for Nintendo’s new handheld, and once again, showcase how the system is more than just a gaming machine.

Nintendo 3DS will be a widely popular and financially successful handheld system. But Nintendo needs to realize more sharks are in the water than ever before, and if the company fails to see that and compete accordingly, its handheld dominance could be over.

James Labalokie

Lol… oh, Apple.  Didn’t this company go nearly bankrupt not too long ago?

Well, whatever.

My opinion doesn’t differ much from Sir Stank’s; entertainment is entertainment; all entertainment competes with one another.

But I think Jobs’ statement about iPod Touch not only being a handheld gaming system but also being the dominant one is beyond ridiculous. That’s PR fluff, really, intended to do something relating to stocks which I am completely uneducated on (seriously?  I’m terrible at economics and business).  Although I agree with the “entertainment is entertainment” bits, Apple’s product does not compare to either Nintendo’s or Sony’s.  They simple are not the same and therefore they should not be judged by the same criteria.  As an aside, that sentence was the only I originally intended to post, but then I thought I’d like to be more professional about this; however, there just isn’t anything else to discuss.

Matthew Tidman

When I first started hearing Apple making claims about what a superior game system iPhone and iPod Touch are, I scoffed, just like the rest of the gamers I knew. There was no way that my beloved computer company could compete head-to-head with my favorite gaming company, especially since iPhone/iPod Touch was not conceived as a portable gaming system. Then I got an iPhone.

Now I’m not as sure as I once was. My iPhone has become my mobile gaming platform. I know this sounds crazy considering the fact that, as other staffers have said, it doesn’t have the same level of quality games as DS, but there is one simple fact that keeps me playing my iPhone: it’s with me all the time.

iPhone, iPad, and iPod Touch are not the new, big, mobile gaming platforms that Apple would like you to believe they are, but they are a threat to Nintendo’s bottom line. To completely ignore them as a gaming platform and competitor to Nintendo is foolhardy at best. If you don’t believe me, ask yourself this question, “Why does Sony not have the most dominant MP3 player on the market?”

M. Noah Ward

I agree with Evan and Tidman on this one, and it’s not just because they cohost the podcast with me. Sony and Apple are both threats. Further, as a Nintendo fanboy, I want Nintendo to dominate them, but just like any sane businessman at Nintendo HQ would, I have apprehension about Nintendo’s ability to continue dominating mindshare in the portable gaming space. For me, the threats come down to the simplest of economics: time and money.

There’s no doubt that DS has superior gaming experiences. 3DS will likely also have superior experiences (provided Nintendo and third parties actually make new games, not endless retreads, for the system). But for every minute a customer spends on PSP, and every dollar spent on an “entertainment” app with Apple, is one less minute and dollar that a gamer will spend on Nintendo. And none of us have infinite amounts of discretionary time and income. If we slip down a rabbit hole of comparable game quality (PSP) or brainless time wasters (Apple), after that time and money is spent, we may need to go to sleep, or to work, or to that doctor appointment. We won’t be starting up the 3DS. And when leisure time comes again, will the everyday Joe consumer want to expend more of his limited resources on Nintendo’s software? Even if the experience may genuinely be worth every cent and potentially even more fun, exhaustion of interest, time and funds is a major point in the consumer’s decision matrix.

“Yeah, that new 3DS system/game would be cool… buuuut… I’ve already spent a lot of time on this other game, or I spent too much money buying an avalanche of lame apps… so I’m going to take a pass.”

And once that tipping point is reached, we could see a comparative tipping point in the loss of market- and mind-share for Nintendo. 3DS may sell well, but maybe it will only sell as well as PSP2 and iPods combined. The next generation, even less in Nintendo’s favor, and we see once-exclusives like Professor Layton and Phoenix Wright show up elsewhere.

Glasses-free 3D’s a neat effect– mind-blowing at first– but just like Wii’s remote, the novelty will fade. And if Nintendo doesn’t have more gang-buster, generational-defining games like Nintendogs and Brain Age up its sleeve (versus endless remakes and re-releases), things not be guaranteed in Nintendo’s favor.

What’s your take? We’re all definitely excited about 3DS, but is it certain to have success and a long lifespan, or will it be replaced with something else in short order when competitive threats grow greater? Tell us in the comments below. You can also read our first Blue Ocean round table about Wii’s competitive threats.