iPhone: The next-gen gaming system?

Apple and developers already cashing in big on games, future looks more promising

Sitting on a train commute to work, one finds that an iPhone helps pass the time quite easily. Users can read the news, text a few people, check emails, and listen to music. And, based on numbers from the App Store, it seems that more and more users are taking advantage of the iPhone's ability to game.

Of the 665-760 million games downloaded from the App Store over the last year, 12% have been paid games, according to a new report from Toni Sacconaghi, a top-rated analyst at Bernstein Research. That means 80-90 million apps, priced at an average of $2.50, have made it through the App Store's gates onto users' phones.

Thanks to the ease with which users can find these games and download them, Apple and gaming developers are already making boatloads of money off of games. Bernstein says that Apple, which takes 30% of App Store revenue, collected $60-70 million from games alone, while developers have raked in a total of $140-160 million.

Clearly, there is a demand for mobile games. And Apple recognizes that.

At their latest event, Apple hailed the iPhone and iPod Touch as full-fledged gaming devices, citing figures similar to those above. Also, two major gaming companies, EA and Ubisoft, introduced new games at the event.

So where does this new partnership go from here?

Bernstein predicts that, by 2012, Apple's iPhone and iPod Touch gaming will make up one-third of the total handheld gaming installed base, effectively biting into major pieces of the pie currently controlled by Nintendo and Sony. If correct, Bernstein suggests that Apple may have another massive branch of revenue to maintain control over, as total game sales for handhelds amounted to $14.7 billion in 2008.

In the end, the forecast does not look good for traditional game companies invested in handhelds, as it is almost certain at this point that Apple is in the game. With such high quality and affordable games on the App Store, Sony and Nintendo may no longer be able to justify their higher-priced games.