Of the many industries that Steve Jobs has been credited with upending—music, smartphones, animated features, personal computing, etc.—there's one that doesn't get as much attention: video games. In fact, when he declared that the iPhone/iOS was going to become the world's biggest game platform, I scoffed. Why in the world would gamers want to jab their fingers at diminutive screens just to make cartoony critters jump around? No way. Everybody knows that real gaming entails cutting-edge graphics, multi-million-dollar budgets, or Mario. Those are the pillars of our society and they will never fall. Right?
Well, maybe. The Big Three have sold 227 million consoles this generation worldwide thus far (2005 through September), and Nintendo and Sony have combined for 223 million hand-held sales. Meanwhile, Apple has sold about 275 million iPhones worldwide since 2007 through September, which includes only about a week's worth of iPhone 5 sales. Then there are about 85 million iPads worldwide. iPod Touch numbers are more difficult to find—but in the summer's Apple v. Samsung court case, it was revealed that Apple has sold 46.5 million units in the U.S. from 2007 to the second quarter of 2012.
So, if you combine all iOS devices, it's nearly a tie. With the iPod Touch's global-sales mystery figure added in along with third-quarter sales, we're probably looking at around 450 million total units for each side. (But that doesn't include Android devices—gulp!—which also have lots of touch games.) When you consider that Apple hit those numbers much faster, it's no surprise that the sales trendlines are going in opposite directions. For the 11th straight month, the traditional video game industry's sales have continued to drop—software falling 25 percent and hardware 37 percent in October, year over year. Meanwhile, sales of iOS and Android devices are still growing. Beyond the new gamers that Apple has converted, more and more players are forgoing the $40-$60 investment in a game disc or cartridge in favor of a $3 diversion on their smartphones or tablets.
Some of that decline may be due to the simple fact that this has been one long-lived generation of gaming machines—the Xbox 360 came out in 2005, the Nintendo DS in 2004. Consumers may be holding out for next-generation rigs. But it's difficult to deny that the business of casual games with App Store distribution has a lot more momentum going for it than the old business model of selling consoles at a loss and then eventually recouping the investment with physical-media sales at brick-and-mortar stores. The former has far fewer costs involved in production and distribution, while the latter is clogged with huge up-front expenses that make every failed title a studio-threatening disaster.
Is this good or bad for video games? Both, I think.
While video games are becoming ever more part of mainstream culture via mobile devices, we're going to be seeing fewer big-budget, big-hype, blockbuster titles. The market will no longer support them. That may weed out some of the unnecessary sequels (Far Cry 13, etc.) but it may also diminish the number of big risks taken by publishers on new IPs. We need to see unique, fresh visions that push the medium forward—and those, frankly, cost a lot of money. While you can say that some casual games are innovative, the vast majority of them are variations on well-established themes: tower defenses, 2D platformers, connect-three puzzles, hack 'n' slash dungeon crawls. Fun? Sure. But I want to see entirely new, immersive worlds, damnit.
Of course, Nintendo aims to provide just that with its new Wii U console, released on Sunday. It wants to sell gamers the best of both worlds—a console system and a touch-screen handheld that comes in the form of its controller, the GamePad. This unit allows players to play supplemental game objectives, "asymmetric" games with other Wii-remote-wielding players, or the game itself if the family wants to watch TV. But I wonder if that's really enough to captivate new generations of gamers. While it can be often foolhardy to doubt Nintendo (see: the Wii and its magic wand), it's difficult to foresee how a secondary screen will spur much true innovation or draw casual gamers away from their phones. Adding a touch screen to Sony's handheld, the slow-selling Vita, didn't exactly shift the paradigm, either.
If game developers don't come up with some ingenious ideas for the GamePad (and they're not apparent in the first wave of Wii U titles), it will end up being just a rather bulky controller.
To wow gamers again, I think Sony and Microsoft will have to do it the old-fashioned way: issue new consoles that provide enough computing power to vault gameplay to a higher level. And not just for fancy graphics (though, I admit, those are nice) or for hands-free gimmickry or for becoming an entertainment "hub"—but for creating games with artificial intelligence that truly challenges players in new ways. That's the next-gen goal the industry should be pursuing. If the Big Three can provide gamers with fresh, unique experiences, they'll come back.
Or maybe they're already there, ready and waiting. Call of Duty: Black Ops II recently had first-day sales of more than $500 million, an all-time record. So maybe the old business model still has some life in it, for good or bad.