A Focus on Video Games

By Nick Wingfield, The New York Times | Updated: 7 September 2015 13:02 IST

Apple stumbled into the games business almost by accident not long after it released the iPhone in 2007, igniting a new multibillion-dollar mobile games industry in the process.

Could a new Apple device - one linked to the television - shake up the market for game consoles?

The idea no longer seems ridiculous to many people in the games business.

Apple is expected to make games a primary selling point of its new Apple TV product, which is scheduled to be announced on Wednesday in San Francisco, according to people briefed on Apple's plans who spoke on the condition of anonymity.

This is a big change from Apple's previous versions of Apple TV, a device shaped like a hockey puck that for the first eight years of its existence has mainly been used to stream videos and music.

It is tough to know how compelling the games on Apple TV will be until the company reveals the system this week. Yet many of the components necessary for a satisfying game experience will come with the device, the people say - including more power for better graphics, a new remote that could double as a controller and, perhaps most important, an app store to buy and download games.

"I think Apple's going to create a big new category in gaming, one that others have tried and failed to create before," said Jan Dawson, chief analyst at the technology research firm Jackdaw Research. "What the Apple TV has the potential to do is to bring casual gaming to the living room and make it a much more social activity."

Most game executives and analysts see little chance that Apple will be able to woo hard-core fans of the leading high-end game consoles, the Xbox One from Microsoft and the PlayStation 4 from Sony - both of which will most likely still have better graphics than the new Apple TV. Gamers who fancy big-budget games like Call of Duty and Destiny will probably not be easily persuaded to switch systems.

(Also see: Upgraded Apple TV Aims to Make Itself at Home in the Living Room)

That still leaves a large market of casual gamers whom Apple could target with the new Apple TV: people who find traditional game controllers complicated and who enjoy lighter, less epic forms of content.

The new product is expected to have a starting price around $150 (roughly Rs. 9,900), according to the people briefed on the product. While that is more than double the price of the least expensive Apple TV on sale today, it is significantly less than the latest traditional game consoles, which range in price from $300 to $500 (roughly Rs. 19,800 to Rs. 33,000), depending on the maker and configuration.

The business opportunity for Apple could be huge. The company now takes nearly a third of the revenue from sales of any games and other software purchased in its app stores. Total revenue from console games is expected to be more than $27 billion (roughly Rs. 1,80,144 crores) this year, which is more than a third of the $75 billion (roughly Rs. 5,00,400 crores) global games business, according to estimates by PricewaterhouseCoopers.

Nintendo most successfully tapped into the casual gamer market in the mid-2000s with its Wii console, which has an intuitive, motion-sensing game controller. The Wii attracted an older audience, stay-at-home parents and others who had never before played game consoles.

Nintendo struggled to hold on to casual gamers after Apple came out with the iPhone, which enabled mobile games that far exceeded anything available on phones before. Games also became the top category of apps for the iPad, which came out in 2010, helping to create huge hits like Clash of Clans and Hearthstone: Heroes of Warcraft.

Booming sales of smartphones and tablets running Android, Google's mobile operating system, further increased the numbers of people who regularly played games.

Apple's success in games was unexpected for a company that always showed far more interest in creating products for other forms of creativity, including music, photos and films. The Mac was ignored by hard-core gamers for years in favor of Windows PCs. Initially, Apple did not even plan to allow games and other apps written for the iPhone after it released the device.

The makers of game consoles like the Xbox and PlayStation have sought broader audiences by adding video streaming services and other entertainment features. But those game consoles are overkill for many casual gamers.

(Also see: Apple TV to Support Bluetooth Game Controllers: Report)

"These are very big, clunky devices," said Steve Perlman, an entrepreneur who worked at Apple in the 1980s and later founded WebTV, an early set-top box startup that was acquired by Microsoft. "They've got fans, big power supplies."

"Apple TV is really a modern computing device," Perlman said.

Representatives from Microsoft, Nintendo, Sony's U.S. video game division and Apple all declined to comment.

James Gwertzman, chief executive of PlayFab - a company that helps developers run the online operations behind their games - is skeptical that Apple will be able to persuade developers of the latest console games to move their titles to Apple TV, which will probably not be powerful enough to play them. At the same time, the mobile game developers that Apple has already won over create very different kinds of games.

"It's a totally different experience," said Gwertzman. "Xbox and PlayStation have been very successful at building those living room experiences, and Apple and Android have been very good at 'play a game on the bus' experiences."

The number of companies that make game-capable video streaming devices and are vying for a spot in living rooms is multiplying. Amazon Fire TV and Shield from Nvidia, for example, allow users to play games, but these systems do not appear to have taken sales away from traditional consoles. Another inexpensive game console, Ouya, suffered from disappointing sales.

"Time will tell what the impact is," said Matt Wuebbling, the general manager of Shield at Nvidia, referring to streaming devices like those from Nvidia and Apple. "I think it's going after a different, more mainstream market."

Trip Hawkins, the founder of Electronic Arts and 3DO, said the living room remained a confusing battleground that no technology company had yet conquered.

"No company has done more for the digital man-machine interface than Apple," Hawkins said. "They've warmed up to games and are a worthy candidate to win the family room in the next decade, though the competition and inertia are epic."

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