Pluggedin: Apple's iPhone emerges as gaming platform

SAN FRANCISCO, April 1 Wed Apr 1, 2009 2:35pm EDT

SAN FRANCISCO, April 1 (Reuters) - Apple Inc's (AAPL.O) iPhone has emerged as a serious video game platform, fulfilling the long-held promise of mobile phone gaming and positioning itself as a legitimate competitor to handheld consoles.

The Game Developers Conference in San Francisco last week was abuzz with plans about games for the iPhone and its WiFi-only cousin, the iPod touch.

With around 30 million devices on the market -- 17 million iPhones and 13 million iPod Touches -- and access to thousands of games at their slightest whim, consumers are buying and playing games by the tens of millions.

Meanwhile, game designers are diving headlong into the market, churning out offerings at a furious pace.

Some say the iPhone's unique features -- GPS capability, connectivity, a touch screen -- and sheer variety of content gives it an edge over its more established handheld console competition, Nintendo's DS and Sony's PSP.

The DS franchise has shipped more than 100 million units and the PSP more than 50 million since both came to market in late 2004.

"The iPhone is a threat to other portable game platforms," said Mitch Lasky, a partner with venture capital firm Benchmark Capital, and the former CEO of Jamdat Mobile, which was sold to Electronic Arts in 2005 for $680 million. "It could be just massive."

Apple's App Store went live only last July, but an entire network of developers has sprung up to create thousands of games, ranging from puzzles and arcade games to action and shooter games. Developers take 70 percent of the revenue, while Apple keeps 30 percent.

Game publishers include big names such as Electronic Arts ERTS.O, Gameloft (GLFT.PA) and Glu Mobile (GLUU.O), up-and-coming outfits like ngmoco and small developers working out of a cubicle.

Sanette Chao, director of public relations for Gameloft, said the company has made more money selling iPhone and iPod touch games in the past eight months than it has made overall from some other carriers.

"The mobile industry has been waiting for some sort of tipping point...when the App Store was launched, that was the tipping point," Chao said.

Gameloft offers 27 games in the App Store and has sold 2 million copies so far.

According to the latest data from analytics company Mobclix, more than 7,300 of the iPhone's 31,000 applications are games, or roughly 23 percent. Around 5,500 of those games charge a fee.

Users play simpler games for an average of 6 to 8 minutes, but play more complex games for an average of 22 minutes, said Mobclix co-founder Krishna Subramanian.

"That shows it's a serious gaming platform," he said.

The prices on many games can shift quickly with demand. Ngmoco introduced its popular game "Rolando" last year for $9.99 before cutting it to $5.99 and then $4.99. Subatomic Studios introduced its "Fieldrunners" games for $4.99 and cut the price to $2.99 on a "spring break special" earlier this month.

Because of the volume of offerings on the App Store, developers say the key to success is maneuvering a game onto a top 10 or top 25 list, where consumers can easily find them.

John Casasanta, founder of iPhone application development company tap tap tap, said the App Store has been "hugely lucrative" for the company, generating more than $500,000 in sales.

The company scored a hit with a non-game offering, "Classics," after Apple featured it in an ad, and is currently trying to get traction with a 99-cent game called "Parablox" via word of mouth and mailing lists.

"One of the biggest problems with the App Store now is it's just hard to cut through it for independent developers, there's just so many applications."

Apple will release its new iPhone 3.0 software this summer, including new features sure to please game makers, such as peer-to-peer capability allowing gamers to square off against one another. It will also enable developers to offer subscriptions and sell content within their applications.

Many analysts expect Apple to launch an updated iPhone device this summer, although the company has been mum on that point. The second-generation 3G iPhone was released last summer. (Reporting by Gabriel Madway; Editing by Derek Caney)

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