Apple iOS App Store blamed for too many apps as Sony NGP is called "dead on arrival"

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Speaking at the Game Developers Conference held in San Francisco this week, Trip Hawkins railed at Apple's App Store for having too many titles, while blaming Nintendo for inventing the concept of licensed games as Ngmoco proclaimed Sony's Next Generation Playstation "dead on arrival" due to the App Store's success.

My failures, your fault

Hawkins, once Apple's director of strategy and marketing, left the company in 1982 to found Electronic Arts. In 1991 he left EA to launch the failed 3DO gaming platform, which after attempting to transition itself into a games developer, went bankrupt and sold off its assets to French game publisher Ubisoft.

He's now running Digital Chocolate, which creates scores of games for mobile platforms, including Apple's iOS. However, he's not happy about the App Store, complaining that the company has "over-encouraged supply."

Hawkins told CNN that on average, the App Store earns publishers "$4,000 per application. Do you see a problem with that? That doesn't even pay for a really good foosball table," he told the audience from his conference panel post.

Apple now has over 400,000 iOS apps in its library, and recently said it has paid out $2 billion to developers. About a third of those are free, so even on average apps make far more than the $4,000 Hawkins said, even before advertising revenues are included. But more importantly, the App Store is a meritocracy, where good apps make a lot while thousands of junk apps make little or nothing.

"If we can't figure out how to make it a healthy ecosystem, it's not going to be a great business for developers to be able to remain employed in," Hawkins complained, before turning his attention to Nintendo, which originated the concept of a hardware platform creator licensing third party development and charging a cut of software developers' revenues.

"We used to have a free and open game business, and then Nintendo came along and introduced a thing called a licensing agreement," Hawkins said.

In 2008, Hawkins praised Apple's new App Store after his Digital Chocolate successfully launched several apps to "spectacularly pleasant surprise," but today he's changed his tune to say that the "overcrowding" of the App Store makes it hard for many games to get noticed.

He has set his sights on web-based games, saying "there is a place that we can all gravitate to over the years. Think more about the browser. The browser will set you free." Hawkins didn't elaborate on how the number of web pages compare with App Store titles, how gamers will discover web-based games any easier than in Apple's App Store, or how developers will make money from web games.

Nintendo fears change

Nintendo of America president Reggie Fils-Aime panned the market for mobile games (which competes with dedicated handheld devices like the Nintendo DS), saying "the only thing that concerns us is that it becomes a distraction for developers, and it ends up driving development effort down a path that potentially has very little return."

Nintendo global president Satoru Iwata stated earlier in the conference keynote that "the objectives of smartphones and social-network platforms are not at all like ours. Their goal is just to gather as much software as possible, because quantity is what makes the money flow. Quantity is how they profit. The value of video-game software does not matter to them."

"When I look at retailers, and I see the $1 and free software, I have to determine that the owner doesn't care about the high value of software at all," Iwata later added. "I fear our business is dividing in a way that threatens the continued employment of those of us who make games."

Nintendo has refused to make games for iOS or other platforms after shifting its business from software development on early 80s consoles from Atari, Coleco and the Mattell Intellivision into an integrated platform business that sells console hardware, creates first party games, and earns licensing revenue from third party game developers, a model very similar to Apple's iOS.

A market for mobile apps and games

Apple entered the mobile software market and revolutionized how smartphone software was sold, creating the first viable market for mobile software. Speaking at the company's shareholder meeting last month, the company's leader of iOS development Scott Forstall pointed out that Apple has, in the iOS App Store, "created the best economy in software in the history of the planet."

Apple also brought its smartphone market to the iPod touch, which focused on games, and later expanded to the iPad, which supports a wide range of games, productivity apps and creative media titles, including Apple's own Pages, Keynote and Numbers, and the soon to be released iMovie and GarageBand titles.

Like Nintendo and every other game console developer, Apple licenses third party development and imposes a platform cut that helps support the App Store market. The difference is that Apple runs its App Store near break even, while other game platform makers rely upon licensing for the bulk of their profits, often selling hardware at a loss, as Microsoft and Sony have historically done.

The console makers' business model, which imposes a much steeper cut and fees upon developers, also makes it far harder for small indie developers to launch titles. Apple's App Store turned the tables, allowing individual programmers to launch iOS apps on a level playing field with big game development companies.

Consoles head toward online gaming, indie developers

Nintendo, Sony and Microsoft have more recently attempted to address the needs of indie developers via new download-based online stores, ranging from Nintendo's WiiWare to Sony's PlayStation Network and Microsoft's Xbox Live Arcade.

Last month, the developer of World of Goo noted that it launched its popular title for iPad to find much higher sales and revenues compared to the console online stores and even the Steam store for desktop Mac and PC games.

"In the short term, we still think that if an independent developer can get their game on a console it’s a safer bet than playing the App Store lottery," the company said, "but one might wonder whether, in the long run, it even matters who wins the PSN / WiiWare / XBLA race."

App Store predicted to kill PSP and leave NGP 'dead on arrival'

Other game developers are even more supportive of Apple's App Store model, with Ngmoco's chief executive Neil Young saying "I think [Sony's] PSP is done and the new [NGP successor] is dead on arrival.

"It’s really difficult to compete with an App Store that has hundreds of thousands of applications and a wide range of options where the average price paid is around $1.20 and there are tens, if not hundreds of thousands of free applications that are really high quality. So I just don’t think Sony’s going to be able to compete with that."

Nintendo has seen enthusiastic sales for its new 3DS handheld gaming device, but has been clearly pinched by the growth of Apple's iPhone, iPod touch and now the iPad in taking over territory in a space it has almost exclusively dominated for decades.


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