Apple iPad Will Have Limited Appeal to Gamers, say Analysts

Apple today unveiled its new tablet device called the iPad. There's been speculation over the last week or so about how the new Apple platform would impact the games space. Prior to the big announcement today, IndustryGamers briefly spoke with Wedbush Morgan analyst Michael Pachter. "The Apple tablet is going to be priced pretty high, certainly more than $300 [indeed, it starts at $500 - Ed.] so it's going to have limited appeal to gamers, although some people will buy it obviously. I think the early offerings on the tablet will be a lot closer to iPod Touch/iPhone style games, and then probably morph into DS kind of games and then ultimately will morph into PSP quality games," Pachter commented.

He added that it could impact both the Nintendo DS and the iPod Touch in different ways: "I do think it'll have a lot of games, but I think penetration will be low at the outset, and I think the core audience is probably more of a casual game audience than a hardcore audience. So the one device I think will suffer from the introduction on the games side is the DS. I think ultimately a tablet at the right price is the kind of thing you buy your kid for school, since they could take it to school, bring it home and do their homework. But I think the bigger issue is the proliferation of games on Apple devices, and you're going to see a lot of cross-fertilization of games between the iPod Touch, iPhone and the tablet, so I actually see the iPod Touch benefiting from that."

We also caught up with EEDAR analyst Jesse Divnich, who gave us his take after the iPad was revealed. "The success of any gaming hardware device comes down to its installed base and quality third-party support. If the iPad wants to succeed as a serious gaming platform they will need support from the major players in our industry (i.e. Electronic Arts, Take-Two, Ubisoft, etc), but to receive quality support these publishers need to be reassured that the gamer installed base can surpass 20 million (worldwide). There is no point in making great games if no one is there to purchase them," he said.

A larger problem for publishers, Divnich believes, is the current App Store pricing structure being used to support the iPhone and the iPad. "Right now the iPhone infrastructure is not conducive to a healthy bottom-line for third-party publishers, games are just too cheap with the most premium of games retailing on the iPhone for $10 (or $7 in publisher revenue). If third-party publishers are going to treat the iPad as a serious gaming device the average selling price per game has to at least double, which is difficult to achieve, especially when you consider that your $19.99 game in the App store is competing against games that sell for $1 to $5," he noted.

Divnich continued, "What makes traditional retail packaged goods work for companies like EA, Activision, and Take-Two is the high barriers of entry -- not just anyone can make a game and slap it on retail shelves. But they can in a digital environment, which drives up competition and lowers prices. A sure win for consumers, right? No. The profits generated from one game are used to evolve technology and gaming standards to new heights. The lower the profit potential, the less resources and desires there are to push gaming standards ahead.  I wish the best of luck to Apple and the iPad, it has a good shot at being a serious gaming platform, but there are still many hurdles Apple will have to overcome before it can be taken seriously."