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Console Gaming Ripe for Disruption?

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September 26, 2013 – Comments (0) | RELATED TICKERS: AAPL , MSFT , NTDOY

Board: Apple

Author: 0gre

I keep looking at this year's game console systems and to me, they look largely lackluster. They are expensive and all three major players have made big mis-steps as they get ready for their launch (or in the case of Nintendo, their launch was a bust).

— At $400-500, new consoles are over-priced and over-serve the market.
— It's a time of transition in console gaming and no-one has momentum.
— Console games are expensive and ripe for a disruptive pricing model.
— Apple has a great (for game companies) model for 'low-cost' gaming with in game purchases and the eco-system to do it right.
— Apple just released a new CPU/ GPU which is ideal for gaming. Gaming is exactly the sort of application that benefits immensely from 64 bits; 4GB+ of RAM also makes a ton of sense for a gaming system.
— During WWDC Apple announced a gaming API along with new controller standards but there wasn't a word mentioned about these during the launch of iOS7 & the iPhone.
— This quarter we've seen more new 'channels' launched on Apple TV than in a long time. Additionally there have been lots of rumors of deals with cable and content providers.
— Clearly Apple is taking gaming seriously at this point. They have an exclusive with Infinity Blade on the iPhone 5s and according to EA Apple locked up an exclusive on Plants Versus Zombies 2. Both hugely successful titles, exactly the sort of thing you want for a launch exclusive (though they are both mobile games).

If Apple were to drop a $200-250 console into the mix, it could put a huge monkey wrench in Microsoft and Sony's holiday launches. Figure an AppleTV sized device with an A7 CPU, 4-8 GB of RAM, and a modest sized flash drive in the 64-128GB range for holding larger games. There would be no optical media and likely no moving parts (save perhaps a fan).

This would be an incremental growth product which complements the iPad and iPhone. An add-on if you will. It would also be Apple's way of getting into more living rooms and a way of boosting iTunes revenue.

Pure speculation here, and I'm not putting a huge probability on it. I just see a lot of pieces in play that seem to add up to Apple doing a console launch. 

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