As we mentioned, it is hard to take a casual gamer and all of the sudden make them a hard-core gamer. However, demographics naturally grow the pyramid over time. DFC's argument was a simple two-fold analysis where we said: 1) there will be growth in the pyramid as the core audience ages and continues to play games when they reach adulthood, and 2) advances in technology will allow for people to have access to games anytime, anyplace, anywhere. In other words, gamers will not be limited to playing in front a TV set. They can also play on a PC or all kinds of future portable devices.
When looking at the concept of anytime, anyplace, anywhere, a key issue is what type of products will be suitable for specific platforms. In other words, is a hard-core gamer looking to play first-person shooters on a portable game system? DFC's theory has been that hard-core gamers tend to play a wide range of products depending on location and availability. Thus, delivering an intense FPS on a cell phone doesn't necessarily make sense. While it is difficult to get a mass-market gamer to play a hard-core game, hard-core gamers also like to play more mass market games. This is especially true when it comes to playing on a portable system that simply doesn't have the horsepower of a PC or Xbox 360.
To test our anytime, anyplace, anywhere thesis, DFC recently conducted a survey of over 6,000 PC gamers in North America and Europe. A major portion of this survey focused on the usage of portable devices and mobile phones.
The results clearly showed that most PC gamers are "multiplatform gamers." In other words, they also play console and portable games. Of course, the dedicated game platforms still dominate with this audience. When it comes to portable systems, the Nintendo DS is the strongest, but it is closely followed by the Sony PSP. However, a surprising number of consumers also own an iPhone or an iPod Touch.
Furthermore, among these users the iPod Touch is very popular. When specifically asked, over 22% of respondents said they either owned or planned to buy an iPod Touch. In the recent DFC report on the iPhone game market we argued that the iPod Touch was an important driver for the overall iPhone market and is why the iPhone is a more compelling platform than other mobile phones.
Figure : Ownership of Portable Devices
DFC Intelligence has long argued that the mobile phone is simply not a compelling game platform. Of course, under our anytime, anyplace, anywhere theory there is no reason why a mobile phone could not become a game platform, considering most people own one. Furthermore, among the PC game audience, smartphone ownership is clearly on the rise. About 43% of respondents indicated they owned a smartphone with e-mail and Internet capabilities.
It is also clear that a large number of users have actually tried to play games on their mobile phones. When we asked about usage of games on a mobile phone, 58% said they had played a game on their mobile phone. However, most of those were using games for free. Only 17% of respondents said they had purchased a mobile phone game. In other words, less than 30% of those that play games on their mobile phone have actually paid for those games. Considering this is an enthusiast game audience, that is a low conversion rate.
In the latest DFC Intelligence forecasts on the portable game market we forecast that much of the growth in portable games over the next few years will come from increased purchase of games for non-dedicated game devices like mobile phones and the iPod Touch. However, it is important to note that this does not mean a decline in the dedicated game system market.
The growth in portable games is really about a growth in the overall pyramid and new technology that allows for play anytime, anyplace, anywhere. The Nintendo DS has set all kinds of records for best-selling game system ever. We think that it will be hard for other dedicated game systems to match the success of the DS in the next few years. However, that does not mean that non-dedicated game devices and mobile phones will replace or overtake the dedicated devices. The dedicated devices should still account for the bulk of revenue, even if total sales remain stagnant. The iPhone/iPod Touch platform is a compelling alternative but it has a long way to come close to replacing a Nintendo DS or Sony PSP. Nevertheless, the game market has grown to the point where multiple devices can co-exist, and even overlap in consumer ownership.
