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Low prices of smartphone apps, such as Angry Birds, may be a competitive risk against video game companies like Nintendo   (Source: mobilecrunch.com)
Nintendo U.S. Chief Reggie Fils-Aime believes most $1 or $2 smartphone games are "candidly disposable" and do not compare to the video game titles that Nintendo offers

Nintendo executive has recently stated that the low prices of smartphone games has become a threat to the video game industry. 

Reggie Fils-Aime, Nintendo’s U.S. chief, was interviewed by GameTrailers last week about the new Nintendo 3DS. During this interview, Fils-Aime was asked about the prices of Nintendo 3DS games versus the low prices of smartphone apps.

"I actually think that one of the biggest risks today in our industry are the inexpensive games that are candidly disposable from a consumer standpoint," said Fils-Aime. 

Nintendo 3DS games will be priced between $35 and $45 while most smartphone apps can be purchased for $1 or $2. While Fils-Aime considers smartphone games to be "disposable" GameTrailers brought up the wildly popular Angry Birds app, asking if the Nintendo chief thought this game was disposable as well. 

"Angry Birds is a great piece of experience, but that is one compared to thousands of other pieces of content that for one or two dollars I think actually create a mentality for the consumer that a piece of gaming content should only be two dollars."

Fils-Aime believes that Angry Birds is one exception to the rule, but also mentioned that video game companies like Nintendo offer "more substantial portable titles."

"I actually think some of those games are overpriced at one or two dollars, but that's a whole different story," said Fils-Aime. 

The Nintendo 3DS, which is a brand-new portable game console that can produce 3D effects without using specialized glasses, will be available to buy on March 27 in the United States for $249.99.



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I'd have to agree
By ElementZero on 2/7/2011 9:24:08 AM , Rating: 5
Sure, there is the occasional good game on the phone - Angry Birds, Infinity Blade, Plants vs. Zombies. But yeah, most of them are complete crap and after you play them 10-15 minutes you are ready to call it quits. I've never quit a Mario game 15 minutes in at least...




RE: I'd have to agree
By RjBass on 2/7/2011 9:34:18 AM , Rating: 3
I had Angry Birds on my Android before I flashed it to 2.2. I never reinstalled it after I flashed it. Now I am mostly just using the games from Kongregate and while most of those are throw away games, there are over 300 of them to try first.


RE: I'd have to agree
By Flunk on 2/7/2011 9:43:33 AM , Rating: 2
This is also a problem for developers who write games and apps for phones. What's the point in spending hours writing decent games if you're only going to be able to sell them for $2? I'm currently marketing a translation dictionary app for Windows Phone. Last-gen (Windows Mobile 6) apps that did the same thing sold for $29.99. My app is $5, has more features and people are telling me it's overpriced.


RE: I'd have to agree
By aegisofrime on 2/7/2011 9:51:27 AM , Rating: 2
On the other hand, you probably get more sales. As a consumer (and not a programmer), obviously I like the low prices that iOS and Android apps ask for. I think you will find a lot more people willing to pay $5 than $29.99.


RE: I'd have to agree
By Flunk on 2/7/2011 10:04:35 AM , Rating: 2
I seriously doubt it, the market for language translation dictionaries isn't the same at the market for $1 fart machine apps. There are only so many people who need one.


RE: I'd have to agree
By theapparition on 2/7/2011 12:07:00 PM , Rating: 2
Especially when Google translate is free.

I'm sure your app has more features, but just like any other niche market, be prepared for niche buyers.


RE: I'd have to agree
By Alexstarfire on 2/7/2011 5:28:50 PM , Rating: 2
To be fair, Google Translate is usually grossly inaccurate for several languages at least. I can't tell you how impossible it is to understand most "translated" Chinese sentences without knowing at least a little bit of Chinese and/or a lot of broken English from Chinese people.


RE: I'd have to agree
By Kiffberet on 2/8/2011 7:47:24 AM , Rating: 2
I play PC games if I want a 'serious' gaming experience. I have to pay more for it, but it's generally worth it.
App games are 99% of the time just for something to do when waiting in the airport/station/bus stop.
The reason Nintendo would be losing out is because most of their games are a pile of cr@p and not much better than an App.

Also, ever notice how Xbox and PS games cost more than PC games? That because the PC is easier to pirate on, so they have to drop the prices...which mean more people buy.
Nintendo don't do PC games, but if they did, they'd have to charge $20 less, at least!


RE: I'd have to agree
By Aloonatic on 2/7/2011 10:41:47 AM , Rating: 2
The other problem that devs have is that the hardware not standard, and not only that, but it is constantly improving/evolving at quite a rate too, in the smart phone arena.

It's perhaps more like the PC environment, but I think that the stability of the console, both home and portable (in the case of the 3DS) gives developers confidence to invest time in producing games for these devices. Safe in the knowledge of what sort of hardware they are targeting, and will be developing on for the foreseeable future.

What's the point in developing tools and engines to run on for smart-phones that exist commonly at the moment, when they are going to be hugely out classed in teh not too distant future?


RE: I'd have to agree
By tastyratz on 2/7/2011 12:04:19 PM , Rating: 3
Au contraire, does it even matter? Developers of games typically do not develop something and expect to have a long term revenue stream in particular. Gaming systems are around for a few years, but game prices typically plummet within months. Soon enough that $60 game is now a $20 "greatest hit"
Who is still buying a new copy of nba 2k7?

Games are designed around a high volatility market and always have been. They rely on burst sales off the bat and figures plummet fast.

I would argue that the phones are just as much a stable limited platform as gaming systems, and probably have a better long term sales opportunity. In 2 years your app is just as useful on a phone and will still net you that $1 or $5 asking price. For phones you have the apple store, droid market, brew, and java (likely in that order). Your target audience will likely be a much more focused group of people.

Games on a smartphone also only have to look good on a tiny screen from a fairly slow phone. Developing for a more powerful commercial gaming system involves a much heavier resource pool to take full advantage of the platform and compete against all of the other games.
Smartphone games take a fun concept and run with it. Any Joe can make them on his own vs the huge team and long hours for platform games.


RE: I'd have to agree
By ravyne on 2/7/2011 2:18:52 PM , Rating: 2
This is more-or-less true of AAA retail titles, as the limited and highly competitive shelf-space of a retail environment means that the old has to make way for the new, save a few titles that continue to sell well (ie "system sellers").

For independent developers, while they also experience a boon in sales early on, they are typically sustained on the "long tail" of their products. Titles targeting niche audiences even more so.

I'm not saying every title on iOS or wherever deserves to be sold in the 5-10 dollar range, but that price category should logically exist and support quality titles -- yet, it is almost non-existent, and many titles in it come from big studios. Just as you say there is a gulf between a small game and a AAA retail title, there is also a gulf between many of those same small games and even the most polished of iFart applications and other "toy" apps. The market, however, doesn't recognize this gulf though, because the glut of crappy apps sold at rock-bottom prices has led them to believe that sub-two-dollar pricepoints are fair for nearly anything that runs on a phone.


RE: I'd have to agree
By omnicronx on 2/7/2011 12:34:23 PM , Rating: 2
You have to put it into perspective. Your potential market is most likely going to be much higher for an app that costs 1$ than an game that costs 30-40.

Add the fact that the $1 content is available online and you don't have to go to the store, and impulse buys also come into play.

Not that it always works like this, but from a pure volume standpoint, you probably have a much larger potential market for these inexpensive games then full fledged portable gaming console games.


RE: I'd have to agree
By Alexstarfire on 2/7/2011 5:44:30 PM , Rating: 2
True, but you'd have to have 30x more people buying it. Depending on your application you may not possibly be able to expand your market even 30x. Games don't fall in that category though, and actually most applications probably don't. Just because you have a much bigger market doesn't mean that you're going to get a 2x-30x increase in sales though.


RE: I'd have to agree
By Solandri on 2/7/2011 1:17:44 PM , Rating: 2
quote:
. What's the point in spending hours writing decent games if you're only going to be able to sell them for $2?

You need to look at total revenue, not price per sale. If you make 1000 sales at $5, your revenue is $5000. If you make 3000 sales at $2, your revenue is $6000. So the $2 price would be better in this example.

And if you value your time at $50/hr and only spent 50 hours writing the game, that's a total investment of just $2500. You'd be making a hefty profit in both these cases.

So you can't just look at price per sale. You also need to consider number of sales, and your initial startup/coding costs.


RE: I'd have to agree
By sprockkets on 2/7/2011 3:11:25 PM , Rating: 2
Indeed. Just as apple fanbois like to point out the bottom of the barrel computers flooding the market, apple themselves is flooding the game market with bottom feeder apps and games, and due to their marketshare is killing the console market.

F*** apple.


RE: I'd have to agree
By torpor on 2/8/2011 10:33:52 AM , Rating: 2
Actually, I think the move to "app store" style of programs is a terrific step forward, something people will note in 20 years as a real turning point.

Think about it this way: MS Word retails for about $140. There is a ton of functionality in there, and most of it is stuff no one ever uses in the life of that program. In fact, most people would be fine with a simple little doc editor.

If this move to minimal apps can get rid of the feature bloat retail software has accrued since the PC platform took off, then we could be in for a real sea change. Why can't the realization start with $2 smartphone games and apps?


Doesn't Nintendo have their trump card?
By quiksilvr on 2/7/2011 9:21:44 AM , Rating: 5
Classic Nintendo Games? NES, SNES and N64 games? Just throw all of that onto Virtual Console, 3DS and DS for cheap and you'll be fine.




By piroroadkill on 2/7/2011 9:36:31 AM , Rating: 4
Exactly. Money for old rope. Nintendo can compete against shovelware by re-releasing stuff they've already milked.


Angry Birds
By Yaos on 2/7/2011 10:03:17 AM , Rating: 2
Best part about Angry Birds, and really most smartphone games, is that they took a free flash game and turned it into a pay game.




RE: Angry Birds
By Solandri on 2/7/2011 1:39:56 PM , Rating: 2
It's still free on Android. They make their revenue by running ads in the game. As usual, it's the Apple crowd which is willing to pay for something which used to be free.


RE: Angry Birds
By myhipsi on 2/8/2011 10:47:09 AM , Rating: 2
There is a free version (with ads) available for the iphone/ipod as well. I know because I have it on my iphone.


Seriously Nintendo?
By chmilz on 2/7/2011 10:52:45 AM , Rating: 2
Nintendo is the King of overpriced mobile shovelware. I love my DS, but for every great game, there's 100 $19.99 pieces of dogshit crapped out for it.

Sorry Nintendo, you're just pissed because competition has shown what the actual market value is for junk.




RE: Seriously Nintendo?
By CZroe on 2/7/2011 1:49:15 PM , Rating: 2
Actually, Nintendo is known for providing 9 of the 10 AAA titles on their own platforms. Their platforms may get tons of shovelware but that's only because they are so popular after Nintendo gets the ball rolling with their own talent and expertise. Sony's PS2, not Sony themselves, was the king of shovelware in the last generation the same as Nintendo's platforms, not Nintendo themselves, are the kings in this one. Controling a platform that attracts all the shovelware is actually an enviable position (ask Apple).


RE: Seriously Nintendo?
By The Raven on 2/7/2011 3:34:44 PM , Rating: 2
I'm with chmilz on this one. He sounds like me. But you have a good point except for one thing...Nintendo keeps putting out the same stuff over and over again. I've just been playing SMB Wii with my son and it is fun and everything but personally I find it disappointing since I could've come up with the "innovation" that they did for this game. A helicopter helmet? What was wrong with the raccoon tail or the tanuki suit? How about the cape? Or the blue shell? Whatever. It is fun and always has been. Why an I paying full price for the same crap again? Talk about being a money suck.

So really, those 9/10 AAA titles for teh DS are really the same 9/10 titles made for the N64, GameBoy, etc.

So it really is shovelware in my opinion. But fun shovelware.


Reggie, you're kidding, right?
By The Raven on 2/7/2011 10:34:14 AM , Rating: 1
quote:
A Nintendo executive has recently stated that the low prices of smartphone games has become a threat to the video game industry. ... "I actually think that one of the biggest risks today in our industry are the inexpensive games that are candidly disposable from a consumer standpoint," said Fils-Aime.

Umm...Bro. You do know that it is games we are talking about, right?

I am a avid gamer (more than anyone I know, aside from people I meet playing games online lol) and I respect the people who make games (many of my friends do), but it is gaming after all.

This whining sounds to me like someone who makes Tickle me Elmos crying about how cheap ZhuZhu pets are. Buddy, people can only spend so much of their income before they say, "Why am I spending money on this game when I can play Chutes and Ladders or throw around a football for free?"
Yes, if we weren't buying "Super Mario Galaxy TWO" then we would be stuck in a hellish world where we could only play (brace yourselves) "Super Mario Galaxy ONE." Someone please think of the children!
(Oh and additional lol at the fact that this company sells its own version of cheap <cough...overpriced> games called "Virtual Console." Lookout! Super Mario Bros 2 might sell the Super Mario Galaxy franchise out of existence!)

The point of gaming is to entertain ourselves. It is not to bolster the industry. I do it as cheaply as possible as the free market dictates and I think everyone else does too. If Fils-Aime doesn't get that, then I fear for the future of Nintendo (and/or the future of Fils-Aime).




RE: Reggie, you're kidding, right?
By Rasterman on 2/7/2011 1:44:28 PM , Rating: 2
What you are forgetting is the market produced by Apple is not a totally free market by any means. The major reason quality apps are so cheap is they are forced to because of the ranking system and the way Apple features apps.

Since the first top 10 list everyone sees as soon as they open the app store is a list of the most downloaded paid apps (not grossing), but how many downloads they get, meaning the cheaper the app the more downloads you get. Since the difference between being #1 and #11 is two orders of magnitude in sales (not revenue), everyone must price to get #1.

Secondly, the biggest sales 99% of apps will get is if they are featured by Apple, for one week, after that you discount the game to 0 to get sales. This is a very familiar pattern with retail games, $60 the first week, and in the 9.99 bin soon after. It is however not a familiar pattern with truly market-free internet only games that aren't controlled through a third party store (app store). Nearly all indie games are sold for the same price for their whole life, and actually increase in sales over time.

The problem that Fils-Aime sees, and is correct, is that this extreme cutthroat pricing, makes creating a game even more risky, when it is already very risky. If you don't have a smash hit you aren't going to even break even at 99c, whereas before with $20-$30 pricing if you had a good game you would at least make some money, and if you have a smash hit a lot of money. At 99c with the best selling game you are going to make a ton, but with everything else your revenue is now 1/20 to 1/30th.

I don't see Apple or Nintendo changing anytime soon, Nintendo will always have a market because playing with real controls and a fully dedicated device is a much better experience for most games, but the mass market may not justify the price premium for it anymore, which is going to possibly kill them.


By The Raven on 2/7/2011 3:21:52 PM , Rating: 2
I think you missed my point (which may have been my fault).
Within the iApp store it may not be a free market. I don't know, I don't care. Because I don't have any Apple devices. I am part of a free market where I can choose not to play that stuff. That is the free market that I was referring to.
quote:
The problem that Fils-Aime sees, and is correct, is that this extreme cutthroat pricing, makes creating a game even more risky, when it is already very risky.
I'm not sure what cutthroat pricing you are referring to. The cheap games that Fils-Aime is referring to are not big budget AAA games. Many of these games are created by 1-2 people and some are even simple enough to be made by high-school students. It takes comparably little to make a game for Android or iPhone because the provide less. If these developers didn't get paid well or they just don't care because they are getting 'airtime' they wouldn't do it.

Look at it this way. Should I cry that Nintendo is stifling innovation because I could make a company where we made games that were 2x as good as DS games but they cost 2x as much if they didn't put out such lame DS games? No. (BTW I am a pretty big DS fan, I just take issue with his complaint.)

I should realize that people don't care how good a game is or how innovative it is. They just want to spend the least possible to occupy their time with entertainment. And Nintendo should know this more than anyone else because they have been putting out variations on a theme for quite some time. Plus their Wii was the cheapest console at the beginning of the current gen console war and their games are the cheapest. So is Fils-Amie stupid, ignorant or a hypocrite? There is nothing wrong with cheap (appropriately) low quality games. If there weren't such thing then there would be less developers making money and making new games.

I personally play many low quality games that I buy cheap. They don't compare directly with the AAA titles that I also buy, but they are still fun and many are testing grounds for new tech and gameplay. If everything was price high then I might only buy a copy of MW2 and GTA4 and pass on the other 20 games that I would buy for $20 or less. His comment is absolute rubbish.


Worthwhile?
By melgross on 2/7/2011 11:06:53 AM , Rating: 2
While this is bad for Nintendo, because it breaks their lock on overpriced games, it's good for the industry.

I disagree that all these games are only worth 15 minutes. It seems as though we have as many snobs playing games as we do everywhere else. Geeze, guys, these are games. They're all junk and time wasters!

How much longer do you have to play a $45 game than a 0.99 or 2.99 version. 15 times as long? Twenty?

This whole thing is a joke. Nintendo is having its lunch eaten by Apple, as they keep telling us in their quarterly reports, and they can't think of a single thing to do about it, so they're whining instead.




RE: Worthwhile?
By Solandri on 2/7/2011 1:37:00 PM , Rating: 2
Back in the 1980s, Tetris proved once and for all that a game doesn't need thousands of hours of programming, a multi-million dollar budget, and a high price to be wildly successful. Deer Hunter (made for about $30k in development costs in a few weeks, and again wildly successful creating an entirely new market niche) proved it again in the 1990s. A good game is good because it has engaging/addictive gameplay, not because of how much time/money was spent in producing it.

The price drop in games is inevitable. Except for multiplayer games, games are inherently a personal experience. You don't have to worry about compatibility like with Office apps, or marketable skills like with content creation (e.g. Adobe) apps. So there's no backwards compatibility or industry standard you can use to lock in your users. Without that artificial constraint keeping prices high, game prices are almost entirely market-driven. Supply vs. demand. As computing devices become more ubiquitous, more and more people are going to try their hand at coding their own games. The increased supply with relatively fixed demand is going to drive prices down. The old days Nintendo is dreaming of, where a few big companies produced most of the marketable games and could charge a hefty price, are becoming a thing of the past.

(BTW, the game publishing industry is a lot like the music, movie, and print publishing industries. Most of the money is skimmed off by the publishers. When the 35-employee company I used to work for made a tank sim game, we only saw about 10% of the final sales revenue. The other 90% was eaten by the publisher/distributor as printing, marketing, and distributing costs. We spent nearly 10,000 man-hours making and play-testing the game and got 10%. They slapped it in a box, ran a few ads, and shook a few hands to put it on store shelves, and kept 90% of the sales revenue. I will not shed any tears as the online market kills off these dinosaurs.)


Best $3 game
By Rage187 on 2/7/2011 10:14:40 AM , Rating: 2
Battleheart is worth $50 but only charges $3. Does that make it trash?

It was made by two people, and is miles ahead of the trash Nintendo puts out. Nintendogs is not even worth a dollar. That's why Reggie is scared. They can't justify the price of their crap against quality games that cost 1/20 of their shovelware.




Targeting the Market
By Suntan on 2/7/2011 10:44:42 AM , Rating: 2
I’d like to agree with him. But I don’t.

I say that I’d like to agree because I’d like to actually play some quality, indepth games on my phone. But the reality is, the control interface, the small windows of time and the large amount of distractions around any time I try and play a game on the phone just make it impossible to enjoy a game with any depth/complexity.

As such, even the more “in depth” phone games I do have (you know the $4.99 ones) tend to get passed over for the simpler/quicker games, or even just pop open a browser and spend 5 minutes checking the interweb instead.

If you have a 45 minute bus/train commute, yeah maybe a 3DS or the new PSP is right for you. If you only get 3 minutes here or 5 minutes there, the cheap/shallow games just fit into your usage better.

-Suntan




The old model has to change.
By fteoath64 on 2/7/2011 11:59:09 AM , Rating: 2
Look at how Nintendo distribute those games, still on cartridges, hence high cost of distribution. Cell-Phone games cost almost nothing to distribute online and have convenient payment schemes as well. That is one big deal in lowering costs.

Two: The $30 to $45 dollar model has to change because it will not reach volume level it is expected to. There is a huge "used game" market which Nintendo has no part in. Not to mention the massive piracy of the games as well.

I think, the price range should be from $10 to $25. This would possibly triple the volume based on existing customer base alone!. Then it makes it less attractive for pirates to cut into parts of the market which might not even buy these games even at the reduced prices. Or occasionally buy one or two titles.
Nintendo can also encourage their developers to do $2 to $5 titles with over limited features and allow users to "upgrade" into more featured products.

Stop complaining and start innovating like you did with hardware and game play modes.




Dungeon Hunter vs Diablo
By adrift02 on 2/7/2011 2:02:38 PM , Rating: 2
Low prices means that expenses must also be kept low. How much content and at what quality can we expect a game to put out within this scenario?

Dungeon Hunter is a great example. Sure, it's fun. But, compare it to Diablo? I'm not even going to try. And, I would bet that even if Blizzard created Dungeon Hunter the result would be the same (for the above reason).

There will always be a demand for the level of quality and content that won't be found in a smartphone market. Both markets can and will co-exist for this reason until the devices and buyers allow for ~$50 games on smartphone markets.




Dungeon Hunter vs Diablo
By adrift02 on 2/7/2011 2:02:48 PM , Rating: 2
Low prices means that expenses must also be kept low. How much content and at what quality can we expect a game to put out within this scenario?

Dungeon Hunter is a great example. Sure, it's fun. But, compare it to Diablo? I'm not even going to try. And, I would bet that even if Blizzard created Dungeon Hunter the result would be the same (for the above reason).

There will always be a demand for the level of quality and content that won't be found in a smartphone market. Both markets can and will co-exist for this reason until the devices and buyers allow for ~$50 games on smartphone markets.




Disagree
By Smilin on 2/7/2011 3:01:08 PM , Rating: 2
You have a higher probability of getting a good game if it's a AAA title with big dev money behind it. True. I'll agree with him on that.

To say that no value can be had from cheaper games is just hubris.

My anecdote:
Over Christmas holiday I snagged a new graphics card and picked up a AAA title (good one, ranked 9/10 all that) that looked gorgeous on it.

I then proceeded to spend the next week playing some $1 Indie game I picked up off XBL instead. A good game is a good game. Price doesn't matter.




Nintendo missed the point
By SixSpeedSamurai on 2/7/2011 4:01:58 PM , Rating: 2
I think Nintendo is missing the point. 90 some percent of those buying $1 games are not gamers. They were not buying $50 Nintendo games every month. Sure most have a WII, but they are not going to buy a lot of games for that anyway.

I think the economy in general is hurting gaming. $50 to $60 for new games. If you have a X-Box you are paying $35 to $55 a year for online service. It's an expensive hobby for real gamers.




......
By Luticus on 2/8/2011 11:09:22 AM , Rating: 2
quote:
Nintendo U.S. Chief Reggie Fils-Aime believes most $1 or $2 smartphone games are "candidly disposable" and do not compare to the video game titles that Nintendo offers


they don't... i should think this would be obvious.

Angry birds and their data mining ways are no match for zelda, mario, etc...




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