Earlier today, Verizon and Apple finally confirmed what everyone knew was coming: iPhone will soon launch on the Verizon network. The hugely popular iPhone has been a hit with gamers and game developers on the App Store, and by bringing the phone to the largest carrier in the U.S., the installed base suddenly could get much larger.
The folks at social gaming network OpenFeint believe the Verizon iPhone impact could be immediately felt this year. "The iPhone coming to Verizon is a highly anticipated event by the mobile gaming community," said Peter Relan, chairman of OpenFeint. "Adding 13 million more potential gamers on the iPhone is going to be a watershed moment for mobile gaming. I wouldn't be surprised if the U.S. mobile gaming industry doubles in revenue this year because of this deal."
M2 Research analyst Billy Pidgeon noted, "Obviously, Verizon rolling out the iPhone will increase the devices' U.S. penetration, and this may be by close to a factor of two. That will be great news for publishers supporting iOS devices as the installed base broadens the accessible market. Most of the negative impact will be momentum and market share losses for competitive phone platforms, primarily Android, but also Symbian, Windows Phone and RIM. This should give those platform vendors strong incentive to more aggressively build out support and marketplace (on handset and online) for all apps, games included."
Whether playing on iPhone or an Android phone or the new Windows Phone 7, it's pretty clear that gamers on these devices are cutting back on traditional handheld gaming systems. Nintendo and Sony must both pay close attention to the market trends. While 3DS might initially have enough differentiation to stand out on its own, over time the smartphone wave could barrel over these traditional platform holders. For now, though, most analysts think Nintendo and Sony are in the clear.
"[The impact is] not tremendous, since Apple is going to sell the same number of phones overall, just with different carriers. Overall, they won't make as big of a dent in the market with the iPhone on Verizon as they will with the iPod Touch," Wedbush Securities analyst Michael Pachter told us.
David Cole of DFC Intelligence added, "I think the biggest impact will be on AT&T and Android. The biggest thing that Apple has done is create a strong consumer store for mobile phone games. Others have just not done so well. ... I don't think it will have much measurable impact on Sony or Nintendo. However, one thing it may offer is an opportunity for Sony or Nintendo to take the lead in setting up competing portable gaming/application stores. Other companies have not done a good job competing against Apple and maybe now more people are willing to turn to a company like Sony for leadership."
Pidgeon, however, doesn't agree with Pachter or Cole. He sees the Verizon iPhone as a big negative for both Nintendo and Sony from the get go. "Yes, this is bad news for Nintendo and Sony and any other vendors of dedicated handheld gaming systems," he said. "But there is worse news coming, when Android and other platforms continue to compete with Apple. Making a case for dedicated handhelds will be increasingly difficult as other smartphone and tablet vendors grow installed bases and improve marketplaces to compete more effectively with the App Store. Also, subsidization of smartphones via service contracts and the relatively low price of phone apps will increase price pressure. New dedicated gaming handhelds will have to cut MSRP more quickly to the $99 price point or uptake will be weak, and software prices of $25 to $40 will be unsustainable."
