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The iPhone hasn’t actually changed the game at all

By on April 21, 2009

New analysis shows that the impact of the iPhone on the mobile games business is much smaller than previously thought.

I’ve been trying to get hold of demographic data for the iPhone from a number of sources. Combining it all lead to a surprising conclusion, and suggests that the impact of the iPhone on consumer behaviour may have been over-estimated.

So to start, 84% of Britons own a mobile phone, meaning about 51.8 million of us.* Of those, 77% own normal phones, 19.5% smartphones and 3.5% an iPhone.

  Users Game purchasers**
(#) (%) (#) (%)
iPhone 1,811,402   3.5%   336,921   18.6%
Other smartphones 10,092,095   19.5%   565,157   5.6%
Other mobiles 39,850,836   77.0%   1,075,973   2.7%
Total 51,754,332 100.0% 1,978,051 3.8%
** Game purchasers as a percentage of total number of platform owners
Source: comScore, Gamesbrief analysis.

 So in the UK, almost 2 million mobile phone owners have purchased a game. 337,000 of those were iPhone users. Nearly twice as many other smartphone owners have paid for a downloadable game. More importantly, as John Chasey of Finblade and IOMO has argued, Java-based games are still more than half the market.

Sure, the iPhone is taking off fast, the AppStore is fantastic and Apple has showed operators how mobile should be done. The AppStore has about 6,700 games already (2,000 of them are free) and the number is growing fast.

But it is running into the troubles of being successful. As Dean Takahashi of Venturebeat says: “If your game dips below the top 100 games, it’s almost impossible for users to discover. Apple highlights cool games on its web site, but being selected is like winning the lottery.”

The Java-based mobile games business stalled amidst poor user experience, difficulty of finding good games and technical difficulties. I have argued before that Apple is going to have to grasp the bull by the horns and become a, perhaps the, publisher on the iPhone.

But these numbers show that for all of the excitement over the iPhone, it hasn’t had as much of an impact as commentators (including me) have tried to make out.

– – –

* Based on Wikipedia population figures

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: thecurveonline.com
  • http://www.themobileconsultancy.com Tim Harrison

    A nicely provocative headline from you, Nicholas, to which I must respond. I shall put my faith in the veracity of your crunching, but the numbers aren’t the whole story here, as you well know.

    The iPhone has performed CPR on a flatlining industry that was about to die.

    As I talk about in my piece over at Pocketgamer.biz http://bit.ly/Up8dO while Apple has shaken the fruit from the tree, it hasn’t necessarily improved the harvest. Yet. Because what the iPhone’s ‘success’ has done is a) renewed the faith of the existing mobile game community that people will buy games for their phones b) attracted new developers who will disrupt and reinvigorate the industry c) after a couple of years in the wilderness, made operators and handset manufacturers care about downloadable games and applications (again).

    Yes, in the long game, only numbers are important. But the short-mid term is more exciting than it has been for years and at the very least, the halo effect of this groundbreaking device will leave us with a long-term mean penetration considerably higher than the embarrassing 3.8% (and positively shameful) 2.7% we currently endure.

  • http://www.nicholaslovell.com Nicholas Lovell

    Many thanks Tim, and I certainly see your point that the iPhone has reawoken the mobile apps market. But I guess my point is that developers (particularly British ones) should remember that the iPhone’s raw numbers are not vast, although its impact may be far-reaching.

    I should also clarify one point: The figures on the right of the table are “numbers of iPhone owners who have ever purchased a game”. Some other commentators appear to have interpreted them differently.

  • http://cimota.com/blog mj

    From the DeLoitte survey: “Implied penetration is now approaching 125%, meaning that up to 40% of mobile phone users have multiple SIMs and devices.”

    Your figures also ignore the iPod touch which is growing at 3x the rate of the iPhone and has a similar installed base.

    So, if 3.5% of the market are making 18.6% of the game purchases, you have to admit there’s a market change there. Add in the Touch (for which we don’t have figures) and you see why the AppStore becomes more compelling.

    Yes, if you’re not on the top 100 list, you’re going to find it hard but this is more evident that the time for releasing the game and hoping for the best is over. Now you have to market your game, find PR opportunities, price it right, collaborate with others, get reviews and make sure they’re good by producing a polished product.

    Java games distributed through operators and portals might be selling more – but then their market is nearly ten times the size. So a market ten times as large is buying only slightly more than half the games? That speaks volumes about the death of that market!

    One local developer sells his Java entertainment products through several portals and earns between 30 cents and 1 euro for each sales of his 6 euro app. He produced one iPhone version which works on iPhone and iPod touch and makes 2 pounds every time it sells (for 3 pounds). His attitude: he’s moving all but one of his development team to the iPhone. It’s where the money is.