No matter how you see it, Apple [AAPL] is growing its slice of today's games market. And no matter how Nintendo management feel about it, they are going to have to put their titles up for sale to iPhones, iPads, iPods and the Apple TV sooner, not later, if they want to avoid a shareholder rebellion. Nintendo's future hangs on strong 3DS sales this Christmas, but with iPhone 5 set to hit market at the same time, is it curtains for Super Mario?
Apple's adventures in gaming are well known at this point. Games are the biggest App Store category. This has led a coterie of games developers to jump into Apple's iOS embrace, and generated some incredibly cool moments, such as Bungie's decision to release insanely groundbreaking game, Marathon, for free via the store.
What this means is that Apple now has a far better relationship with games developers than ever before -- except with Nintendo, where management steadfastly refuse to make their games available through iTunes. They want to use their hit titles as inducements to get gamers onto their platforms, and while the company remains a big business, revenue is falling and shareholders are in dissent. "Nintendo has no intention or plans of publishing its IP on non-Nintendo platforms," the company insisted last month.
Smashing down the castle: What's at stake? This is a platform war. Apple has a four-square strategy at play: the computer; the phone; the tablet and the television set (though the Apple TV hasn't yet lived up to its future console gaming promise). How can Nintendo compete with this?
Look at the console market today, it is changing so much. Sure, consoles still retain their own inherent advantages, but when it comes to a combined mobile/sedentary gaming experience, its multi-function devices such as the iPhone which hold the promise.
Nintendo 3DS sales have not impressed as a result. Super Mario, Zelda, Donkey Kong and Pokemon. These classic titles have trailblazed Nintendo's reputation, but up-and-coming new arrival, Zynga, already has a matching market value.
Nintendo has not been swift to jump to new sectors, such as social networking. Even the Wii could easily be emulated by an imaginative developer using Apple's iOS 5 development tools and an Apple TV. The result? Nintendo lost $328 million in its most recent quarter.
It isn't just about devices. Take the iPhone: the App Store offers a huge selection of games, a far more extensive catalog than that proffered to the 3DS. Also if you look at the kids who constitute most of the company's market, you'll see them just as likely to play with an iPhone as they are with a DS. And they all know what an iPad is -- you can see it in their eyes when you pass it across.
This is war. Nintendo has slashed the price of the 3DS, but angered early adopters when it did. Investors are demanding company management bring more titles to the iPhone, but this isn't happening. Others want the firm to acquire new developers in order to enter new markets, Facebook games, for example.