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The App Store: A New Marketplace Paradigm

The App Store: A New Marketplace Paradigm

This entry is part 3 of David’s series on The Future of Gaming. Click to jump back to Part 1 or Part 2.

Initially, I wholeheartedly opposed the idea of the App Store. In fact, in many ways, I still do. I don’t like the closed model, whereby approval has to be met before anything is even listed. I’m not a fan at all of the revenue sharing model, whereby Apple gets a piece of the pie every time you sell a copy of your app. I can’t stand the closed development environment that severely limits the creativity developers could otherwise exercise in developing their apps. Also, Objective C sucks.

But there is a paradigm behind the App Store that is responsible for a heavy portion of the iPhone’s success. Early on in this series, I was asked why I was focusing on the iPhone instead of smartphones in general — an excellent question, considering the Android actually commands a larger portion of the smartphone market than the iPhone. But the App Store is the reason for this. Android has its version, but there are specific affordances within the App Store that are crucial for its success. More importantly for this article series as well, it is the App Store, not its competitors, that will have the most substantial influence over what the market looks like in the future.

What’s interesting about this line of reasoning is that it’s not just the game-buying experience that the App Store is revolutionizing; in fact, that’s secondary to the more significant development revolution facilitated by the App Store paradigm. The App Store is completely changing the way game developers can develop games in the first place, forcing the bigger names to change their business plans in response. Let’s look at some of the ways this is happening…

Low-Budget Game Developers

The App Store’s effectiveness starts with its appeal to developers of various sizes. One of the major problems with the big gaming companies is that making a game — any game — is a monumentally costly endeavor. Even with Xbox’s hyped cheaper development kit, it still only appeals to developers with some size and some clout. An individual or a small team of people working in their spare time cannot put out an Xbox game of any quality, which severely limits the potential market of game-makers. With the iPhone’s relatively cheap development kit, however, there is plenty of room for low-budget game developers to meet substantial success in the market. Tiny Wings, for example, was created by just one individual. And yet, at the same time, this does not come as a handicap to bigger developers. Tiny Wings was developed on a non-existent budget; Angry Birds cost a reported $100,000 to make; and Infinity Blade cost nearly $2 million. This represents an enormous appeal to designers looking for a platform on which to design, given that the App Store paradigm gives them a lot more flexibility with their budgets and designs. In other words, independent developers are going to find consoles and systems that support the App Store paradigm to be far more attractive than their fixed-price predecessors. What all this means is that the App Store paradigm has a strong leg-up on its competition in the form of…

Flexible Pricing

I’ve honestly never understood why every Wii, PlayStation 3, or Xbox 360 game costs the same amount of money. Every new Wii release, $50. Every new Xbox 360 release, $60. It doesn’t seem to matter if you expect to get three days’ play out of it or three months’, they all cost the same. That was my main complaint with New Super Mario Bros. Wii — it was a marvelously fun game, but it only took about 8 hours to play through. Can I really justify $50 for 8 hours of game, when $50 can buy 50 or 100 hours from other games? But the App Store avoids this conundrum by permitting flexible pricing. Many games on the store are free or as low as 99 cents, while they can range up to $20 — and hypothetically, they can range up to hundreds of dollars (though I doubt we’ll ever see an iOS game that’s more expensive than a console game). Naturally, the iPhone also doesn’t offer games of the quality of console games — yet. But remember for a moment, we’re not talking about the iPhone App Store and its inherent benefits, but rather what those benefits will mean for the future of gaming. Even though the App Store’s games range only up to $20 games that are still put to shame by big-name console games, the ability to price your games flexibly will be a crucial feature in the future, largely because they lead to…

Variety of Genre and Scope

I mentioned above that my problem with New Super Mario Bros. Wii was that it’s a rather small game for the $50 price tag. However, at the same time, how can you arrive at a price point that every genre and every game is able to hit? By mandating a $50 price tag, you effectively state that a game must have at least a certain budget, at least a certain quality, at least a certain level of graphical impressiveness to warrant a customer ever giving your game a second glance. But the flexible pricing mentioned above means that the genres and scopes for games are completely up in the air. Rather than more examples from the App Store, let’s look at some examples from the big names’ competition for the App Store. Limbo, for instance, was one of the surprise hits of 2010 on the Xbox Live Arcade, sporting a minimalistic feel and pleasantly short plot. Limbo quite simply could not exist in a market that did not have the App Store paradigm. This is what the paradigm allows: games of various genres, scopes, sizes and lengths to be featured side-by-side in one market, priced in a way that makes each individual game worth the purchase. This paradigm is a necessity of the future of gaming.

Enterprising readers will notice at this point something rather interesting: none of this is actually that new. These three above features are the very same benefits the PC gaming industry has had going for itself for years. PC games can range in price from $0 to $60. They can be made by individuals or by enormous companies. They can cover every genre and every size. Many games, even console exclusives, see dual releases on the PC since it has all these benefits. But the App Store paradigm has a bit more going for it than just these things…

Store Accessibility

Now, this one might seem silly. After all, of course a web-based market is more accessible than your local Wal-Mart or Target. But just because it’s obvious does not mean it does not play a crucial role. The internet has fed our culture’s natural obsession with instant gratification, and instant content delivery is becoming more and more important. NetFlix has spoiled us, but the App Store brings that paradigm to the gaming world, where any game can be purchased and played almost instantly. If you want a game to play now, you can have a game to play now. Coupled with the flexible pricing mentioned above, this opens up gaming to a whole new audience. Formerly, to get into gaming, you had to have a certain level of preparation. You had to go out and buy an expensive console. You had to save the money for a pricey game. You had to go get the game. Then, you had to play it enough to actually make it worth it. But the accessibility of the App Store paradigm improves this substantially. Returning to the Limbo example, would people have raced to their local store to buy a $15 little platformer game? Likely not. But the availability lessens the initial commitment needed to get into playing a game, opening it up to a whole new audience. Online stores with downloadable merchandise, like the App Store and Xbox Live Arcade, will be the standard in the future of gaming.

Store Centrality

However, it’s not just that the App Store is immediately available. As mentioned in the PC gaming note above, downloadable games are not new, either, although the App Store paradigm (along with Steam) has helped the concept explode in popularity. Downloading games has been possible for a long time (both legally and illegally) — but what the App Store does is make it easy. Part of the resurgence of the popularity of gaming for non-“gamers” has been that the barriers to entry have lessened considerably thanks to the App Store paradigm. Before, downloading games was a rather complicated endeavor — granted, it wasn’t actually complicated, but it felt complicated. You had to know where to go, you had to know you were getting the right deal, and with viruses running amok, you had to know you were buying from a site that was trustworthy. Like many things in life, if you knew how to do it, it was easy — but it felt hard to outsiders, and perception is reality. The App Store paradigm, on the other hand, centralizes everything. One place to buy games. Guaranteed trustworthiness. Guaranteed safety. Guaranteed best price. Simple, simple, simple. Now, don’t get me wrong — I actually strongly dislike this feature of the App Store paradigm. I feel it stifles competition and, if Apple isn’t careful (or Google isn’t successful), I would predict an anti-trust lawsuit on Apple’s hands given that they are the only supplier for apps. But all that aside, these are reasons why the paradigm is popular, and the centrality of it plays a major role in coaxing novices into purchasing and playing.

Now, before you jump down my throat about insinuating that the iPhone is somehow the console killer, let me remind you: we’re not done here. Yes, I realize that the iPhone will never be able to match the gaming experience of a PlayStation 3 on its own. It can’t even match the graphics of a PlayStation Vita on its own. My claim here is not that iPhones are themselves the console killer. The point of this article is to highlight the ways in which the iPhone is changing the gaming industry, and how those change will affect the future of gaming. So, stick around and we’ll reach the grand vision within a few weeks.

(Image credit the App Store.)

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