How App TV Disrupts the Console Industry

How App TV Disrupts the Console Industry

Part 1 – App TV: The Everything Box

The living room right now is a no man’s land of standards and cables, universally poor and inconsistent user interfaces, huge numbers of channels, multiple boxes of hardware, hated cable companies, and multiple video game systems, each with its own proprietary hardware and expensive software. TV needs a revolution, exactly the same way that smartphones did — and it’s going to happen beginning this year. But let’s start this off with a trip to the future…

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It’s 2014. After a hard day at work, you stagger over to your couch and plop down for some gaming on your App TV. You flick on the tube using your home tablet remote app and browse through your library of games. Some of them reside on the internal storage of your App TV, some of them reside completely in the cloud, and some have functions that are buried in both. You really don’t care how it all works, so long as you can easily browse, search and discover what you want to experience.

Tonight, you feel like playing a new game, so you check your personal recommendation list and select a game that the App TV thinks you might like (based on a complex algorithm that takes into account your downloading habits, your media and social network). You enable ads so that the game is free — you never buy anything without trying it first. Someday you might spring for the monthly game service subscription fee, but it doesn’t seem worth it yet. You’d rather rent all of your games a la carte. Besides, with over 250,000 games available on the system, you feel very little urgency to “own” anything.

While you’re playing the game, a video call from your best friend comes through and you patch him into the game so he can play with you from his Android tablet. You play for awhile then the system alerts you that the basketball game has started, so you switch apps with a gesture, knowing the game will be waiting for you on your TV, phone or tablet when you want to get back to it.

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App Gaming – Disrupt The Console Industry? Really?

Today app gaming is still well in its infancy and largely relegated to one platform — Apple’s mobile iOS. Even with Apple’s dramatic success with the App store, in 2009 app games made up less than 5% of the total revenue for the US game industry. Most of the products are small-budget productions with shallow gameplay, low production values and are stuffed with lowbrow ads. Even with small budgets and multiple monetization approaches, it is difficult to justify longer development cycles based on the likely ROI. I know this from first-hand experience as CEO of Appy Entertainment, a start-up company that I co-founded with fellow console game developers.

Our team has deep roots in the console industry, having built High Moon Studios (now an Activision-Blizzard studio). We’ve developed on console systems from the Atari 2600 (yes, really) and we’ve built everything from character based-adventure games like Oddworld: Abe’s Oddysee to fighting games like Ready 2 Rumble boxing, multiplayer first-person shooters like Darkwatch and third=person action games such as The Bourne Conspiracy. We “get” console games, and with 4.5 million downloads across our three apps – FaceFighter, Zombie Pizza and Tune Runner, we know a bit about the App Store as well.

So what is App TV and how (and why) will it disrupt the console industry?

What Is “App TV”

Currently, there have been many attempts to consolidate the living room under one platform, from set top boxes to satellite providers to console systems like Xbox 360 and PlayStation 3.

“App TV” is the catch-all term I am using to describe the “bottom up” transfer of touch-based, Internet-savvy mobile operating systems with App Stores to a living room platform. Currently, Apple is by far the market leader in the mobile app space, but the Android platform is catching up fast. In addition to Apple and Google, this space is hotly contested with five major competitors (Nokia, Research In Motion, Microsoft, Palm/HP and Samsung) who all have their own mobile platforms and have or are in the process of launching App Stores.

In terms of a frontal assault on the living room, Google has fired the first shot in moving Android to TV. Announced in May of 2010, Google TV uses a variant of the Android operating system to allow users to browse the Internet, listen to music, search for content and most importantly, to download and play Android games.

Apple is also heavily rumored to be bringing out a new version of Apple TV based on iOS that will have many of the same features as Google TV with the added benefit of the iTunes ecosystem and its 100 million iTunes accounts. According to the Taiwan-based tech news site DigiTimes, Apple is planning a new version of Apple TV with an iPhone-like interface, support for social network sites, network based multimedia and the App Store. Both of these platforms allow for both native game apps and cloud-based content through purpose-built App Stores, with Apple being the current leader in number of apps, number of paying customers, number of downloads and media sales. Apple also has retail relationships with its customers and 100 million credit card accounts on iTunes.

Chart – Total Number of Android and Apple iOS Apps to date. The App ecosystem is enormous and growing fast with thousands of hungry developers.  App TVs from Google and Apple would be able to run a significant portion of these apps right out of the box.

Because of the low development cost, easy access to market and the popularity of the hardware platforms, the number of apps created by thousands of developers for Apple and for Android has exploded, from nothing in 2007 to an estimated 400,000+ by the end of 2010. The number of apps downloaded from Apple alone has passed the 3 billion mark.

There are many advantages to building an App TV platform for both Google and Apple:

– The Android and Apple iOS operating systems, hardware and App Store distribution systems are battle-tested and already in place. (Nokia, Blackberry and Web OS platforms are also potential contenders, but have nowhere near the acceptance with developers or consumers)

– Mobile devices based on Arm chips are quiet and run very cool, making them ideal content display devices in the living room. They are also very reliable.

Source: Industry Gamers

– The volume of smartphone-based architecture already dwarfs the volume of consoles and handhelds combined (see chart above). Many of the same components and chipsets for app-capable phones will be reduced in price, making App TV integrated devices and set top boxes inexpensive for their manufacturer and reducing consumer costs. They can also be sold on a contract basis or folded into the actual TV retail price, further reducing the cost to consumers as effectively zero.

– Google can monetize the TV audience with Ad Sense and Ad Words.

– Apple can sell more iOS hardware and use the halo effect to sell even more of its hardware (iPads for example).

And not one of these companies, not the cable companies, not Apple, not Google, not Microsoft, not Sony, not HP, not Dell, not Nintendo can sit idly by and let one of the others control the software distribution channel for the living room. Apple in particular has shown itself more than capable of coming into a market with complicated products and poor user experiences (MP3 players, phones, tablets, digital downloads, online retail) and remaking them in its own image by putting the user experience first. All of these companies will be competing here because their long-term survival is at stake as the PC, phone and consumer electronics industries continue to merge into one enormous marketplace.

Click here for How App TV Disrupts the Console Industry – Part 2

* Editor’s Note: Article syndicated in partnership with Gaming Business Review.

About Chris Ulm
A serial entrepreneur, Chris Ulm leads production and creative development for independent iPhone publisher Appy Entertainment. Chris was essential in growing the dev teams at High Moon Studios and its acquisition by Vivendi, and the sale of Malibu Comics to Marvel.

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