Apple, Studios Giddy Over iPhone Gaming (AAPL)


The WSJ checks in on the state of Apple (AAPL) iPhone/iPod touch gaming and finds a thriving industry. Key points:

  • iPhone and iPod touch owners have downloaded about 50 million games, according to Steve Jobs. That’s about 25% of the 200 million apps downloaded from the iPhone app store. Most downloads are free.
  • More than 2,000 iPhone games are available.
  • Sega has sold 500,000 copies of its underwhelming, $10 “Super Monkey Ball” — a game that Apple has heavily promoted, for up to $3.5 million in net revenue. (That means sales have slowed substantially. Sega sold 300,000 copies during the app store’s first month, and 200,000 copies over the last three months.)
  • But “games sold via the App Store are the most profitable in terms of any of the formats we work on,” said Simon Jeffery, the U.S. president of Sega.
  • “It feels to me like there’s a real threat to their [Sony’s and Nintendo’s] business from the iPhone,” said Neil Young, who used to work for Electronic Arts (ERTS) and now runs an iPhone gaming startup called Ngmoco.

We agree that the iPhone is a serious gaming threat to the Sony (SNE) PSP and Nintendo (NTDOY) DS, especially for non-hardcore gamers. Why? Because before we owned an iPhone, we were considering buying both of those game-focused gadgets. And now we aren’t.

iPhone gaming graphics are good enough for pretty much any genre — even quick-moving sports games, like Gameloft’s “Real Soccer.” And what the phone lacks in game control — a thumbpad accessory might be nice — it gains in size, game cost, and non-gaming utility.

Also important: Gaming could boost iPod touch sales — the gadget Apple’s calling its “funnest” iPod ever — and help Apple’s iPod line from declining this year. iPod unit sales grew just 8% year-over-year in the September quarter and iPod revenue grew just 3% year-over-year.

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