Apple's gaming intentions

Q: During a recent event in San Francisco, Apple for the first time stressed iPod Touch as a gaming device and called out DS and PSP as inferior products. What signal does this send to the games industry?  How serious is Apple going to get about the games space?

The iPod Touch is a serious problem for everyone in the games industry.  Clearly, Sony and Nintendo will suffer if parents like me buy an iPod Touch for their kids instead of a DS (I intend to buy two this holiday).  Anyone with a Touch can download several games for the price of a single DS game, and many kids under 10 don't really appreciate the difference between a high quality DS game and a low quality iPhone game. At the end of the day, Tetris is Tetris and bowling is bowling, but Nintendo will continue to differentiate with Mario and Zelda games.  The bigger problem I see emerging is that consumers will be "trained" to expect games on portables to cost under $10, with many priced at $2 or lower.  Once parents become accustomed to buying games for less than $10, it's going to be hard to win them back at the $20 - 40 price point commanded by DS and PSP games.  The hardcore will still buy the Monster Hunter, GTA and God of War games, but even GTA is going to the iPod Touch.

I think it will be interesting to see if GTA is (a) good and (b) priced above market when it shows up on the iPhone and iPod Touch.  If it's $40, my guess is that nobody will buy it.  If it's $10, it has the potential to cannibalize the price point for DS and PSP games.

Apple is deadly serious about participating, and I think that they will use the wealth of games in the App store to migrate to the Apple TV platform, a la XBLA, so that they can kick off their console games offering with several thousand games, then upgrade selectively.