What Apple Should Do with Apple TV

It’s that special time again, when all the gaming companies are readying a new generation of game consoles as they gear up for a new round of the console wars. This time Nintendo was first out of the gate with their next generation console, having already launched the Wii U. Sony and Microsoft have both taken the wraps off their next generation consoles, the PS4 and XBox One and soon both consoles will join the Wii U on store shelves. Sony and Microsoft are both determined to win this round of the console wars. Nintendo may already be out of the race. The Wii U has been met with incredible apathy by consumers and sales are so poor at this point that game developers have already started abandoning the platform. The question remains, did Nintendo launch a bad product or are consumers no longer willing to pay $500 for a game console where your average game costs $60? Microsoft and Sony are betting it’s the former but the real answer probably involves a little from column and A little from column B.

Which brings me back to Apple TV. Apple has the perfect opportunity to take the wind out of the new console launches by turning Apple TV into a $99 gaming console. The path for Apple to do this is straightforward. Apple TV runs the same operating system as the iPhone and iPad, and it uses the same Apple designed CPU. iOS is already the number one mobile development platform when it comes to number of apps and number of developers supporting the platform, with gaming being the largest app category. Apple has already leveraged this ecosystem to enhance their OSX computer platform by making it easier for iOS developers to also publish their apps for OSX computers. They even created a Mac App store that mirrors the App Store for iOS. More recently, with iOS 7 and OSX Mavericks Apple introduced a SpriteKit game programming SDK along with a reference spec for hardware manufacturers to create gaming controllers for iOS and OSX devices. Given that Apple TV runs iOS, and given that SpriteKit is already designed to work with touch and non-touch interface devices, all Apple needs to do to turn Apple TV into a gaming console is open Apple TV up to developers and to package the small Apple TV box with a couple of game controllers.

You may wonder if developers will actually port their games to Apple TV? You may also wonder if consumers will actually buy them? The answer to both questions is pretty clear. During a recent earnings call EA revealed that they make more money through the Apple App Store than through any other sales channel. Given this fact, and given the relative ease EA would find in porting their existing iOS games it’s obvious that if Apple allowed developers to publish games for Apple TV that EA, Gameloft, Epic Games and all the others would publish Apple TV versions of their iOS games in an instant. Apple could launch an Apple TV game console with a huge library of content and an army of developers, big and small, ready to keep pushing new content to the device. And clearly consumers spend freely when most games cost between five and ten dollars. Even Microsoft and Sony, who normally looked only to large game publishing houses to produce content, found new revenue streams when they opened up their boxes to independent developers and provided online channels to download these games.

The quality of content also shouldn’t be a concern. Some of the games on iOS already begin to rival the current consoles in terms of visual quality. Now consider where developers will be able take their games with Apple’s new 64bit A7 chip. In Apple TV the A7 chip can also be larger and less focused on power consumption which would allow Apple to create a quad core version of the A7 chip for an Apple TV gaming console, giving the tiny box even more gaming power. Also consider that both Sony and Microsoft are launching new consoles that may actually be a step down from the current generation in terms of power.

Microsoft and Sony are both playing a bigger strategy than just gaming. Both the PS4 and XBox One are devices that are meant to act as the hub for a whole media ecosystem. These are more than just gaming consoles, they are seat in the living room where games, movies, TV shows and music can be pushed to consumers. And they complete a media integration with other devices like phones, tablets and computers. The ability to start on a movie on one device and finish it on another. Apple already understands the power of creating a fully integrated experience between hardware, software and content. At some point Apple TV is going to become more than hobby project for Apple. Currently Apple seems to be focused on getting the right content deals to deliver more music, TV shows and movies, but dealing with content owners has continually proven a difficult task for anyone attempting launch this type of set-top box. Which is why Apple should shift their focus to gaming. By shifting Apple TV into a gaming console and opening it up to developers Apple has the potential to start selling Apple TV in real volume. Especially considering Apple can sell an Apple TV game console profitably for a lot less than Microsoft or Sony will sell their next generation game consoles at a loss. Once Apple has the eyeballs they’ll have more clout in negotiating content with the music, TV and movie content owners.

 

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