Roku's Added More Games

Now with even more games...

That didn't take long; Roku has just added 7 new casual games to its little streaming video box, to go along with Angry Birds. The 7 games are from Accedo, and cost a whopping 99 cents apiece. And so the concept of an app store for games appears in the family room, not with Apple TV or Google TV, but with Roku.

Google has just acquired Motorola, which happens to be a major cable-box manufacturer. IS it possible we could see Google TV getting some widespread adoption in the cable industry? Don't hold your breath; those cable boxes are just a way for cable companies to get you to pay for their DRM and give their profits a fat boost. They're unlikely to see any benefit to Google TV... "what's in it for me?" will be the question running through their minds.

I suspect Google may take their time with the Google TV relaunch, as Apple is apparently doing. Apple may pop up with a surprise for the holidays, but it looks like their new iPhone(s) being announced in September will probably be their major product introduction for the rest of the year, aside from some new MacBook Pros.

Roku may have the 99 cent family room game market all to itself this Christmas. I wonder if they'll let other developers in on the fun?

Gaming For Roku

That's a gaming controller...

It looks like the family room is being invaded sooner than I thought by inexpensive gaming. The camel's nose is under the tent, and in this case the camel is named Roku. Their inexpensive little boxes for streaming Netflix and other video have been a hit for people who don't happen to have a console (Xbox/PS3/Wii) or an Internet-connected TV or a Tivo that includes streaming. Now, Roku is introducing three new versions, starting at $59 and going up to $99, and they've built in a copy of Angry Birds. Naturally, you get a six-axis controller that looks an awful lot like a Wiimote to control your game.

Roku notes that other Angry Birds games, like Angry Birds Rio, will be coming soon. They don't mention whether or not any other games might be made available for the Roku. I don't think these devices include any kind of storage, though, so I don't see where you'd put games. Unless, of course, they were streaming games from OnLive... which is certainly a possibility in the future.

The interesting thing here is just how easy it is to add a good-looking game to a very inexpensive box. When you think about how powerful an Apple TV with an A5 in it could be... and think about something like Infinity Blade on your TV... and you'll see why console makers should be nervous. Heck, we need not wait for Apple to pull the trigger on its new Apple TV with App Store (though I think they would have a real winner introducing that for the holidays this year). Perhaps Amazon will step in... we have heard rumors about Amazon Android tablets in the works, and they are working on a social game of their own. Why couldn't Amazon create an Amazon TV box for $99, that streams Amazon programming and has their Android market built in? Hey, if Apple can't get its act together, maybe Amazon can step in and grab the market share.

If you think the traditional console market has been in turmoil the last few years, just wait until this hits... it'll be  a nuclear blast. Oh, that probably means zombies...

New Apple TV Rumored

It doesn't seem like a bad deal when you add it all up... but will Apple actually do this?

We know a new Apple TV is coming... the only question is when, and in what form. The newest rumor making the rounds is that Apple TV is actually going to be... a TV, with the Apple TV functionality built in. Sure, this one's been rumored before, but to me it makes more sense now. Apple has a significant base of retail stores; TVs aren't that difficult to ship any more; there's plenty of room in the market for a new player.

The idea, I think, is to bundle iTunes into the TV and get ready to take on Netflix. That huge data center in North Carolina Apple built could be the necessary component in this push. Of course, the ability to put Apps on your TV is a huge potential money-maker for Apple and for developers. The game market would be right in the crosshairs of such an effort... note in the above picture one of the factors going into the price comparison is a game console.

Still, it would be pretty pricey... I don't see this idea as the real gamechanger. I think Apple TV at $99 is a great buy if you could get a full App Store with it, and access to thousands of games. Such a box would be easy to add to existing setups. While Apple may sell a full TV set someday, I don't think it would ever have a chance to take over the world. Or a significant market share. An Apple TV with an A5 chip could put out some serious game graphics, and at $99 with thousands of games at $2.99 or less would be an instant death threat to the console industry as we know it. Wii U? Wii Who would be more like it... use an iPad for a controller with your Apple TV, or an iPhone, and you've got the Wii U beat before it even comes out.

I think this holiday season would be a perfect time for Apple to bring out the App Store for Apple TV, and a new upgraded Apple TV too with more horsepower. Will it happen? I don't know, but if it does the ensuing hooraw in the game business will be interesting to watch.

AppDroid Apocalypse, Nowish

The face of destruction.

With Google's I/O conference coming up next week, it's a good time to look at what's happening to Google TV and Apple TV. According to this report, Google TV 2.0 will be coming with support for other chips than Intel, Android 3.0, and a full Android Market unleashed. What's that all mean? A lower price tag, since ARM-based chips are much cheaper than Intel's, an easier interface, and better graphics.

Which all means that Google TV may have a chance... if Google has been smart enough to cut some deals allowing content from major broadcasters to be shown through Google TV, unlike the first version. Sorry, Google, but if people can't watch the TV they want to watch through Google TV, don't expect the unit to take off.

Meanwhile, all is quiet on the Apple front... too quiet. Rumors have been bubbling up about the massive data center Apple has constructed in North Carolina, which apparently will be used in some fashion for iTunes. But it's probably connected to Apple's recent purchase of iCloud, and the streaming music service, and the deals Apple's been cutting with major music labels. I suspect even more than that... other rumors have Apple eying Netflix's business.

It all makes sense to me. Apple could certainly turn Apple TV into another huge growth center if they can put the pieces all together. Imagine streaming video deals where you could use the Netflix model, which has proven so popular Netflix now has more subscribers than Comcast. If you focus on streaming content, which you can do if you have a massive data center, then you don't need large local storage... a few GB in an Apple TV unit would suffice, thus keeping the costs of the unit way down. Streaming video, streaming audio, purchases kept in the cloud instead of stored locally... Now you put an A5 chip in the Apple TV, and suddenly the graphics power is now better than a Wii, and closing in on Xbox 360.

Flip the switch and allow the full App Store to be there on Apple TV. Now you're seeing a $99 box that outdoes a Wii for gaming power, easy use of an iPhone or an iPad as a controller (easily outdoing the planned Wii 2 controller-with-a-screen we're hearing about), and thousands... no, hundreds of thousands of apps available. Most of them for free or a few dollars... tens of thousands of games, and thousands of other types of apps, and more created every day.

Yeah, this is all coming soon to your family room, once Apple gets all the pieces in place. The media deals are the hardest part. The data center is ready, the hardware is ready. The gaming industry? Not ready. Nintendo, Microsoft, Sony... this is the next enemy you have to fight. Apple has hurt your handheld business, Nintendo, now they are aiming right for your jugular in the family room. Sure, Nintendo has their new console planned... but it will be hundreds of dollars, not $99. And I see no sign that Nintendo is going to embrace the new app business model that has propelled the smartphone business to amazing growth in the last few years.

Just to make it all worse, Apple is on a one-year hardware cycle, where the hardware gets a significant power boost every year. Think the new Apple TV that will be coming, with an A5 chip, is too wimpy? Wait a year for a newer $99 box. Another year or two after that and it will be more powerful than Nintendo's new console.

I still think Nintendo, Microsoft and Sony have some amazing assets in this fight, and a chance to continue to hold significant market share in the future. But unless they start embracing the future sooner rather than later, they are going to see their market share diminish between the onslaught of Google and Apple. The handheld business is just about a lost cause now, though Sony seems to be fighting an intelligent rearguard action with the NGP. Next up is the console business... and I can see that being upended the same way the phone business was upended in a few short years, by Apple.

Developers, get ready to rumble...

Google TV: Ready For Reboot

Google TV... it really is a black box.

Google TV is one of those products that has huge potential... but so far hasn't come close to achieving it. Logitech has been having a rough time selling it, as evidenced by this report: Logitech only managed to sell $5 million worth of Google TV in their last quarter. Not good, especially when they had expected to sell $18 million worth... and they had sold $22 million in the previous quarter.

The product is over-engineered and under-interfaced, from what I can tell. It's complicated and hard to use, not exactly the kind of features you want in a product for consumers. Plus, the early adopters who are the likely buyers right now no doubt heard all about Google's plan to reboot the device, which helped kill sales.

Supposedly Google TV will be getting its upgrade soon, adding in the long-awaited App Store. No word if they will actually revamp the interface so mere mortals can figure it out, but that would be nice. Look, guys, you have some unknown amount of time here to get it fixed, because sooner or later Apple is going to get tired of the Apple TV "hobby" and turn it into a real moneymaker. If any company knows how to build a slick user experience, it's Apple. If they can put some sizzle into the TV screen, they'll own the market. Google needs to get there before Apple to capture some mind share while they refine the interface.

I still expect Apple to make their move before the end of this year. I don't know if this means a new version of Apple TV, but it may have something to do with the rumored introduction of their cloud computing offerings. Most people figure those are aimed at iPhones, and they are right in the near term. But I think Apple is aiming to own the family room too, and all of these initiatives can help them with that market.

Hmmm... I wonder if Amazon will enter the set-top box market, since Android is open to all...

Smart TV 2011

Not exactly Smart TV the way it's been promoted.

Gaming in 2011 is facing the onslaught of a new segment, courtesy of the Internet-connected TV. We've seen several types of them, including some with Yahoo! Widgets built in; Apple TV to connect to any HDTV; and Google TV (as a separate unit from Logitech and built into some models of Sony TVs). The market is getting even more crowded in 2011, with both Microsoft and Cisco joining the party. Yes, we'll see Windows TV by and by, and Cisco's got a series of cable boxes that connect to the Internet. Even LG is joining the fun with a separate box to upgrade earlier LG TVs. Some observers believe this is just a continuing failure of the tech business trying to enter the TV business, and it will continue to fail.

It's true that so far no smart TV device has really been a hit with customers, and certainly none of this has any relevance to gaming, does it? Well, it does, and here's why. Someday, one of these companies will actually figure out that an App Store for smart TVs could make a boatload of money, and they'll actually fire one up. (Google, at least, has announced their intent to do so... sometime this year, hopefully.) It won't take a whole lot of expensive power inside a Smart TV to make playing thousands of games possible... just look at what smartphones can do. Current app developers will cheerfully port their apps over to this new market, and it won't take them long to do so (weeks, probably). Then we'll see a whole new market emerge, and the console makers will be the first ones affected. Imagine the kind of apps you can get on your smartphone suddenly available on your TV... in high resolution, at a low price or free to play.

I suspect Apple will pull this out of their hat at some point this year, though I can't say when. Perhaps when nothing else major is going on... and with iPad 2 expected as early as a February announcement, and an iPhone 5 probable for this summer, I'd expect something in the fall. Google will likely try to hit earlier than that, probably springtime. Will Microsoft get into the act? If they're smart, they'll hook this into their Xbox Live/Windows Phone 7 plan, and make apps available for all of their platforms... but internal battles will probably keep this from happening.

Still, this will be a major new market for small developers, once it gets going. But it will be a body blow to traditional console gaming...

Tablet Wars 2011

It's gonna get ugly for the hardware manufacturers. It'll be a bonanza for software developers. The tablet boom is coming to 2011.

Some analysts are estimating up to 75 million tablets will be sold in 2011, and Apple may sell half of those. Let's look at each segment of the market.

Apple: Expect a new iPad 2 this year, probably announced by April. Rumors suggest a higher resolution screen, thinner and lighter, and including front and rear cameras. My guess is that Apple will reduce the price of current iPads to make room for this new model, and boost sales even further (while fighting against the massive competition heading their way). I still expect Apple to cut some kind of deal with textbook publishers; the market possibility is huge (student signs up for classes, downloads all textbooks into his iPad... goodbye heavy backpack!). The gaming possibilities will expand as AirPlay allows iPad games to be viewed on an Apple TV-connected TV screen... with iPhones as controllers... we're gonna see some amazing games, especially if the new iPads have even faster processing than the current ones.

Android: The number of Android tablets heading to market is huge; we'll see a slew of them at CES soon. The big deal, though, will be the release of a version of Android crafted with tablets in mind. Google hasn't made any official announcements on this point, but there's plenty of speculation. Some point to the Chrome OS as Google's  reason for holding off on Android for tablets, being afraid that Android make make Chrome OS dead on arrival. I think Google will ultimately go with whatever sells, and right now the demand all seems to be lining up for Android. In any case, Google has to sort out the situation before Android tablets really take off. Even so, there is a wave of Android tablets headed to market soon.

Microsoft: Don't count them out of the tablet race. CES will see the introduction of a new variant of Windows designed for ARM processors as Microsoft aims to grab a slice of this fast-growing market. Still, they've failed miserably in the past to make Windows-based tablets sell; adapting Windows toa finger-based interface has been awkward and slow at best. Can Microsoft reinvent itself sufficiently to succeed? Certainly they've managed to do so with Windows Phone 7, so maybe they can pull it off after all. I think they have a very tough race ahead of them, though.

HP: Here's the real dark horse, with their PalmOS slated to become the basis for a new line of tablets. Certainly HP has the size and manufacturing capability to handle this task; can they be innovative enough? No announcements so far, but the rumors are pointing to a product introduction or several in 2011.

Developers will have multiple targets for tablet products. Gaming will be a major part of all of these platforms, if not the biggest part. It's going to be a wild year.

Apple TV, Windows Phone 7 Sell A Million

Apple's bid for family room domination hasn't exactly set the world on fire, but it's not doing too badly either. This week will see the new Apple TV hit one million units sold, which is not too shabby. At this point the new Apple TV doesn't offer a whole lot besides Netflix viewing and buying iTunes content... but according to Apple, users are renting or purchasing over 400,000 TV episodes per day, and watching over 150,000 movies per day.

Windows 7 has a similar adoption pace; they've shipped over 1.5 million units to retailers. Which may not seem like much compared to recent iPhone or Android sales numbers, which are doing those kind of numbers in a week. But it's not bad for a brand-new phone operating system. Microsoft says they've lined up 18,000 developers so far, which means they'll be seeing a lot of apps at some point.

What I'm waiting for is when both of these devices have a major impact on gaming. Apple TV needs to throw the switch and start selling Apps... maybe start offering a version with more storage for that purpose, or allow the user to plug in more storage. The AirPlay introduction is so new the impact hasn't been felt yet, but it will be... you can play your iPhone or iPad games on your TV through Apple TV, and that can be amazing. Scrabble on the TV? Infinity Blade on your TV? This won't be as significant as actually downloading those apps to your Apple TV, but it's still cool.

Windows Phone 7 has Xbox Live integration, and it remains to be seen how far Microsoft carries that. I'd like to see more than just access to your account; let's see Apps cross over into your Xbox 360 space. Reduce the demands for putting games in the Xbox Live Arcade down to the level of Windows Phone 7, and watch the market explode. Will Microsoft do it? They'll have to deal with angry retailers, perhaps, but the potential is there.

It would be nice to see more than just an iPhone/Android competition in the mobile space; I'm hoping Windows Phone 7 and PalmOS can make it a lot more interesting. (Blackberry? Nokia? Well, I suppose they are still around... but their trajectory is in the opposite direction, and unless they do something dramatic they will cease to be smartphone contenders in the next year or so.)

It seems clear to me that smartphone adoption will continue at a blistering pace in 2011 and beyond. This will expand the market for games of all types, as well as for e-books and other digital content. Tablets will also grow rapidly, and the combination means that more and more people will have a computerlike device with them at all times. We're just seeing the beginning of how these devices will transform gaming and book reading. The marketing of games and books is also changing rapidly, and there's no standard path to success. All I can say for sure is that developers and authors need to pay a lot more attention to marketing, and build it into their plans even before they create their content.

Google TV Not Ready For Prime Time

It looks like Google has figured out that Google TV isn't ready for its debut yet; they've asked TV makers to delay their introductions of Google TV, which were planned for the CES show next month.  Google wants time to refine the software, which has gotten rather poor reviews. This would also give Google more time to land some deals for TV content, which have so far eluded them.

The downside of this is that Google has caught their TV partners by surprise right before a major trade show, which is not the way to build good long-term relationships. It's no fun scrambling to try and redo your CES presentation at the last minute. Google will have some work to do, not only in fixing their software problems.

It's kind of sad, really, that Google isn't able to capitalize on some of these opportunities faster. Apple has shown there's a huge demand for tablets, yet Google hasn't been able to create a tablet-specific version of Android yet. Which gives Apple many months free of effective competition. Looking at Android designed for phones on tablet size screens makes the iPad look very good indeed.

Granted, Apple TV is still pretty limited. But it does have a very easy to use interface, which is a base Apple can build on. Someday apps will be offered through Apple TV, and then the device's true potential will appear. Maybe Google TV will beat them to the punch, but this latest move isn't very promising. We may have t wait another year before these giants get their acts together, which gives Microsoft and Sony and Nintendo a little breathing room.

Google TV Off To A Bad Start

Not an actual Google TV.

I've seen Google TV as a harbinger of the coming AppDroid Apocalypse, as Apple TV and Google TV invade the family room with the app market business model and decimate the existing videogame industry. (Yes, I know "decimate" comes from the Roman practice of killing one legionary in ten to punish the troops... and in this case, a 10% reduction in force sounds about right for the early impact on the game industry. So the term is used with precision in this case.) Well, we may have to wait a bit longer for the carnage to begin. Early reports on the Google TV have been pretty poor; it's expensive, complicated, and most of the important video sites on the Net you'd want to see have blocked it.

Now comes this word: We're seeing discounting of Google TV units, a sure sign of weakness in sales. A 25% reduction in price is not a good sign... it may be an attempt to prime the pump and get things moving with an early holiday sale, but no matter how you look at it, when you drop the price it means you don't have enough demand to keep the price high.

What's the problem with Google TV? Clunky and overpriced springs to mind, and launched before it was fully baked. Google should have had deals in place with various key video sites, not getting blindsided by sites blocking the device and making it nearly useless. Google seems to have problems getting a slick interface together... just check out the Android Market if you want to see what I mean. Sure, I understand their philosophy; just throw something out the door fast to see if anybody likes it, we can always refine it later. Keep it open so developers can jump in and do cool stuff with it that Google doesn't have to pay for up front, then maybe acquire somebody if they do something really smart. Sounds great, but so many times Google has put something out and it just doesn't click because no one gets it or it's so clunky no one wants to take the time to figure it out (hello, Google Wave?).

Maybe this is why Apple hasn't rushed to put an App Market together for the Apple TV... they want to refine the user experience first, not second. And maybe get some content deals in place so it launches well. Sounds clever, doesn't it?

Google TV isn't dead, not by a long shot. But they will have to seriously improve it with the 2.0 version if they expect it to make a serious impact. Perhaps they will figure things out before they start making their app market available... I hope so.

More Games On TV?

If you thought that Apple TV and Google TV were going to make the family room a dangerous place for console games, it looks like there's even more competition. Yahoo! Connected TV is going to be adding paid apps to their lineup. Yahoo! has had their widgets built into TVs from Toshiba, Vizio, Samsung, Sony and LG for a while now (in selected Internet-connected models), and with this new program will be allowing developers to create apps and sell them for your TV.

Nothing is said especially about games, but I can see some Texas Hold'em in some of the screen shots. The materials I burrowed through didn't mention anything about animation, but you can still create many games without animation. Sure, this will no doubt be a pale shadow of what you can eventually get from a fully enabled Apple TV or Google TV, but neither of those platforms are ready for gaming action yet. (Google has said "sometime in 2011" for having an Android Market designed for Google TV; Apple hasn't said anything at all, but it sure seems like an obvious move.) Yahoo! will start allowing paid apps in 2011, so they will steal a march on their competition.

The family room space is heating up for game developers. You'd think the current consoles would be in a good position, since they already have hardware in place (and continue to sell it) and a large installed base. Unfortunately, they are saddled with old business models and are finding it difficult to change (Ooh! Nintendo has started to allow demos of games in their WiiWare store! Wow!). The fight going on now is for the hearts and minds of developers, and the current console makers are in a stupefyingly bad position for that battle. "Hey! Sign up to create games for our console... pay this fee... plan on spending months wading through the bureaucracy and waiting for approval... wonder if your games are going to get stuffed into an obscure corner of our online store..." or "Create whatever you like and put it into our store." I wonder which one is easier to sign up for?

This all represents a big opportunity for old-school game companies... you know, the kind that still produce things on paper. Find yourself a programmer, guys. Grab a bucket, it's about to rain soup in the family room.

The AppDroid Apocalypse

Apple TV and Google TV: Threat or Menace?

The Appdroid Apocalypse is coming, and it poses a threat to the survival of the console business as we know it. Surviving, or better still, thriving, will require understanding the coming changes and changing business models in response. It won't be easy, and for some companies it may prove impossible. For others it's a huge opportunity. Either way, the Appdroid Apocalypse is arriving soon, and we'd all better be ready.

What is the Appdroid Apocalypse? The same App Store/Android Market that's busily eating up market share from the Nintendo DS and the Sony PSP is coming to a family room near you. The Apple TV and the Google TV will eventually offer the same gaming apps that you find on iPhone/iPad/iPod Touch and Android, but they'll be played in your family room. Yeah, the same place your console is plugged in. These apps, numbering in the tens of thousands, cost an average of less than $1.50. Thousands of them are free, or free-to-play. The most expensive ones are still under $10. The Apocalypse part is where this new console business turns the existing console business into a scorched wasteland... or at least, a market where sales are declining from year to year rather than growing.

Whoa, wait a minute, you say. That's not what Apple TV does... Apple hasn't said anything about offering Apps on Apple TV. Sure, and they didn't do that for the first year of the iPhone, either. Everything is there to make it happen; the new Apple TV runs on iOS, after all. You think maybe Apple hasn't noticed they've made a billion dollars selling Apps? Or the potential of selling a few billion more in family rooms? Apple can flip a switch and turn on an App Store for Apple TV at any time. They probably just want to get everything ready for the launch, so they can hit the ground running. It could happen soon, or they could wait a year. But it's going to happen.

Google is in a similar place. They see how much action they've gotten from the Android market, and how Apple has done with the App Store. Does Google want to lose the family room to Apple? No way.

One thing Apple and Google have in common is that neither one particularly cares what happens to the traditional console business. Gee, Microsoft might lose a lot of money? A happy side effect of Apple and Google's plans.

Where's the evidence for this Apocalypse? Let's look at the numbers. Android phones are now being activated at the rate of 200,000 per day, according to Eric Schmidt. Combined, Android (8.5 million through 2009) and Apple smartphones (according to this report) will be in excess of 150 million by 2012, and with iPod Touches and iPads, along with Android tablets, it may be well over 250 million units (Gartner Group projects over 100 million tablets sold in 2012). Compare this to an installed base of 132 million DS units as of June 2010; that's likely to grow by another 15-20 million units by 2012, but that still leaves it about half the size of the iOS/Android installed base.

Nintendo's DS business is faltering; both hardware and software sales are down (43% and 23% over the last six months). The 3DS is coming next year, but it will likely be $250 to $300, and it still won't have a business model akin to Android or Apple's relatively open markets. There are over 300,000 Apps in the App Store, and the Android app market has hit 100,000. By comparison the DS has in the low thousands of titles, and many are no longer available because you just can't find a cartridge. All of the apps are always available, since there is no physical inventory.

At least 25% of those apps for iOS are games, and the average price is around $1.50. Thousands of them are free, and many are free-to-play. Apple and Google are integrating advertising into their platforms, which promises to keep game prices low as publishers can make money from ads. Freemium business models, such as used in social games like Farmville, are wildly successful (to the point where Zynga is looking at $1 billion in annual revenue by 2012); this is not a model planned for consoles. Nintendo has some 241 downloadable titles available for the DSi, but they are mostly $5 or $8 (and the DSi is a small part of the overall DS base). Nintendo is careful to preserve its retail business by keeping retail titles out of its download store. They saw what happened when Sony introduced the PSPGo, which offered no way for retailers to take a cut from software sales since it was all downloads.

The handheld videogame business is rapidly being outsold by Apple and Google, and the trend will accelerate. Sony has done pretty well with the PSP (over 50 million sold) but it has paled in comparison to the DS and the iPod; their attempt to get into the future of the business with the PSPGo (which used digital distribution) failed miserably as a high price and massive retailer pushback doomed the device. They may try again with the PSP2, but they'll have to innovate with their business model to find a way to get retailers to support digital distribution (Sony also needs to get their internal music and movie units onboard, which also promises to be a fight). Nintendo has come out squarely against the idea of digitally distributing core titles. The even more fundamental problem is that Sony and Nintendo offer devices that are only game machines, while Apple and Google offer devices with a wide range of functions. The greater efficiencies of scale mean that Apple and Google can put more and more power into their handheld devices at lower and lower cost, and they release new hardware on a yearly schedule instead of the 3 year or more schedule of Sony and Nintendo.

Now Apple and Google are poised to bring this business model innovation into the family room (here's an overview of their current offerings). You'll see an App store for the Apple TV and the Google TV, offering many different titles. Developers can easily release software without elaborate bureaucracy. There will be thousands of titles available at average prices an order of magnitude below standard console games.

These Google TV and Apple TV boxes will not be close to the power of current consoles; at least, not at first. But they'll be plenty powerful enough to run, say, Farmville. Or any of the thousands of games on iPhone or Android. Advertising will be built in, and free-to-play business models will be welcomed.

And this is how the classic console industry starts to decline. Does anyone think the last two years of declining sales have just been a fluke?

Do these things mean AAA console titles are obsolete? No, there will still be demand for them. But development costs have to be kept in check to make these titles consistently profitable. Mid-range titles are getting squeezed by lower sales and higher budgets, and there's only so many AAA titles the market can absorb.

Surviving the Appdroid Apocalypse means investing in new types of games and new business models. We're already seeing EA buying mobile and social game companies; Activision is talking about a subscription model for Call of Duty. It's a difficult task, though, to take a company mostly based around a 2-3 year development cycle for its games and completely change the way it approaches business. There will be wrenching readjustments along the way. Creating a steady flow of profits on free or 99 cent software is a huge challenge, and it will mean different development models.

It's not all bad news, though. The changes favor smaller developers who can more easily adjust to a new market of smaller budgets and shorter development times. The indie developer has many more possibilities opening up than seemed possible a few years ago.

It's also true that marketing becomes a huge issue when you're trying to stand out among tens of thousands of titles all competing for attention, and that will be a big problem for smaller developers. Developers of all sizes will have to be able to make a profit on a game that may be given away. Big publishers will have many advantages going into this market due to their size, audience awareness, and the amount of dollars they can throw at things. Small developers will have more of a chance to break through into a big market than they've had before, but it won't be easy.

We're all going to have to figure out out how to first survive, and then thrive, after the Appdroid Apocalypse. Because it's coming soon to a family room near you.

Brave New World Coming

Thanks for sticking with me while my blog was on autopilot for the last two weeks. Now I'm back and starting to catch up with the latest news...

The console game market is facing an existential threat, and one of the killers is pictured above... the new Apple TV. Apple hasn't dropped the bomb yet, but this new product launch has everything ready. It's a $99 box that lets you stream movies and TV shows... and content from your iPad and iPod Touch and iPhone. That's interesting enough, if you think about being able to see an iPad game on your TV, with everyone using it as a controller (or their iPhones... think about the Scrabble game).

The real threat is when Apple decides to put the App Store on the new Apple TV. Suddenly, tens of thousands of games averaging $3 apiece will be available... soon, many of those in versions especially for the TV screen. And thousands of them are free, or free-to-play. Compare that, as Dean Takahashi just did, with what's available as downloads currently on consoles... mostly $10 or more titles, very few in number and very few free.

And that's not even talking about Google TV, which is clearly planning the same thing. Oh, and let's not forget Apple's new social network, and Google's sub rosa effort to outdo Facebook, both with amazing gaming potential. It could all happen in a heartbeat, with Apple rolling out the the new App store at any time.

Console makers are caught in a rough spot. They don't want to piss off game retailers by offering full-price games, nor do they want to piss off publishers by offering free games. They surely realize what the future is, but getting there means killing or severely wounding their current business model with much uncertainty about how fast the new business model would take over for it. And this in an environment where their typical development cycle is 2-3 years for a game, and in the new mobile/social game world it's 2-3 months or less.

The next couple of years will be a roller-coaster ride for the game industry. Hang on...