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Why the rise of Apple’s iPad spells trouble for Nintendo

Can it take a bite out of the $20-billion video game industry?


 

Paul Sakuma / AP

When Apple CEO Steve Jobs stepped on stage in San Francisco last January to introduce the iPad, much was made of the potential threat to the ballooning e-reader market—particularly Amazon’s hot-selling Kindle device. But it wasn’t just the digital book world that was paying close attention. So were the head honchos at video game giant Nintendo, the makers of the popular Wii console and hand-held DS device.

Downloadable video games have been part of the iPhone universe for a while—a game called Angry Birds is currently listed as the App Store’s top download—but the experience of playing a free or 99 cent game on your iPhone has so far paled in comparison to what Nintendo’s DS or Sony’s PlayStation Portable offers. The iPad, on the other hand, threatens to raise the stakes with its bigger screen and more capable hardware, taking a bite out of what has become a US$20-billion industry for consoles and games.

Nintendo’s president, Satoru Iwata, reportedly told his senior executives that Apple—not Sony—is the “enemy of the future.” Analysts, meanwhile, say it’s a safe bet that Nintendo, Sony and others are monitoring Apple’s progress closely. “Nintendo would be dumb not to have this on their radar,” says Lewis Ward, an analyst at market research firm IDC.

There is already evidence that devices such as the iPhone and iPad are having an impact. In April, sales of video games and hardware suffered their fourth-biggest drop ever, down 26 per cent year-over-year, led by a decline in sales of portable gaming systems, according to data compiled by NPD Group. Sales of Nintendo’s DS, in particular, fell by half to 440,800 from more than one million in April 2009. The drop was blamed mainly on a dearth of new game titles and consumers holding off on purchases until the launch of Nintendo’s upcoming 3-D hand-held gaming device, the 3DS. But observers note that Apple’s iPhone and iPad are now also competing for consumers’ discretionary income.

The competitive threat could become even more explicit if Apple decides to position the iPad as more of a gaming device. IDC’s research shows more people are now playing games on their smartphones than on portable, dedicated gaming systems, creating a potentially huge market. But the revenue associated with those games remains a drop in the bucket since most cost less than $5, whereas a Nintendo DS game is often closer to $35 or $50. That trend is expected to continue for at least the next few years.

Given the DS’s position as the top-selling portable system and Nintendo’s reputation for building family-friendly games, Nintendo would appear particularly vulnerable to competitive threats from Apple if consumers decide there’s only room in their life for one hand-held device. But Ward says Nintendo could prove more resilient than most people think. That’s because a big part of its customer base is teens and tweens, who are less likely to own pricey smartphones, let alone a $500 to $700 iPad, and because Nintendo owns the rights to some of the world’s most popular game franchises, including the Mario series and Pokémon. “You can’t get that stuff on Apple,” he says. “So if you want to play Donkey Kong, there’s really only one place to go.”


 

Why the rise of Apple’s iPad spells trouble for Nintendo

  1. Your subhead "Can it take a bite out of the $20-billion video game industry?" has already been answered.

    A couple of months ago, a report was published stating that Apple's iPhone and iPod Touch had already reached 25% of all mobile game app revenues. With the iPad selling like crazy, that number is undoubtedly going to increase. And when you consider that iPhone apps are so inexpensive (or free), Apple's share of mobile gaming by number of apps downloaded is even higher.

    Will it replace full-blown consoles? Probably not for a while, at least. But Apple has already taken a bite out of mobile gaming. A BIG bite.

  2. It's very possible that people will take a pass on Mario or Pokémon if they only want to carry, or buy one device.

    While an iPad is one thing, an iPhone is something different. Most parents today do buy their children phones. With the lowest priced iPhone just $99, it's substantially LESS than a DS, which costs as much as a mid priced iPhone. Considering that getting the phone on a family plan will bring the monthly charges down, and also considering that each program for the DS costs so much, it's cheaper in the long run to buy the kid an iPhone, pay for the monthly bill, and save the high game costs.

    It has to be understood that Nintendo is in trouble here because most parents would rather buy their kids one item rather than two. Buying a phone and plan plus as DS is more that just buying the iPhone and plan. Nintendo is going to have to contend with that. An iPhone is also much more than a phone and a game machine.

  3. iPad is an over priced piece of junk. What a rip off for what you get! Have you actually tried one of these….crappppp! Get an archos they are far better and far cheaper than the militant APPLE corp.

    FYI: Apple has yet to take any sizable chunk out of the gaming industry. Yes they have taken a 25% share of MOBILE games, but that is just a tiny piece of the overall VIDEO GAME industry. No one is going to play hard core video games on an IPad…there is just no way. For one, its graphics processor is crap compared to Sony or XBOX or the PSP. Secondly, gamers want more advances systems and large screens. Most people today are playing their games on 40 INCH plus LCD screens. Thirdly, APPLE Ipad is CRAPPPPP! It is almost impossible (Without cracking it) to copy files, games,etc on to it without using iTUNES.

  4. just recieved my iPad from http://www.epicdraw.com and I cant describe how great it is, i take it everywhere with me, i highly reccomend it :)

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