Should SONY Scrap PSP2?! (If they plan to make one)

[famousringo]

Smashchu2 said:

Squilliam said:

"According to an NPD data analysis, the iPhone is now responsible for 19% of all revenue generated by handheld games (as of 2009), compared to the PSP’s 11%. Obviously, the DS still reigns supreme with 70%."

http://socialmediaseo.net/2010/03/25/iphone-beats-psp/

Given the fact that the iPhone has a superior (read more profitable) distibution model the likely split between iPhone and DS is likely to be closer to >30% publisher revenue compared to <65% for the DS as the distribution fee is a flat 30% vs the obvious packaging, distrubution, retailer and license costs from Nintendo.

That's not even 1/4th of the market. How can we say that Apple is a threat? They obviously do not have anywhere near the strength  to effect Nintendo.

A few other misnomers. The distribution is not really "more profitable." What it really has is higher margins (Difference bewteen the slaes price and it's unit cost). Profitability is the end result. Let me take two products (and we'll say they are both softare titles on two diferent platforms) and show you how one is more profitable)

	Game A	Game B	Game C
Selling Price	$5	$40	$40
Variable Cost	$2	$48	$30
Unit Gross Margin	$3	$2	$10
Sales	500	50,000	50,000
Gross Margin	$1,500	$100,000	$500,000

See how A, despiting having a weaker margin, would generate more revenue. This is because it has a higher potential to sell better. Game C was to show that higher price can mean better margin. The most the margin for A could be was $5 (this is with no cost). The most the Margin of product B and C could be is $40. There is a lot more wiggle room. Because the price is higher, it can meant the margin can be higher as well. Now, look at this.

 

Notice how iPhone has far more games. They have asmaller peice of the pie and it is spread across more games. This means they they are not a real gthreat to Nintendo as making a game on a Nintendo system has a higher chance of yeilding better profits. The 19% is more from shear bulk them from compeling software.

So I still say that Apple is no threat to Nintendo.

All your post really does is highlight the fact that Apple has a very different business model than Nintendo in the handheld space. The fact that this completely new, and still rapidly evolving, business model has gone from 0% to 19% of US handheld software revenue in less than two years — and with no help from loss-leading hardware or 1st party development — would suggest to me that Apple really is a threat to Nintendo.

Look, it's really simple. There are three notable platforms for mobile gaming. Currently, Sony's platform is in decline, Nintendo's is maintaining speed and about to change course, and Apple's is growing rapidly. If Apple isn't a threat to Nintendo, who is?

Personally, I'm glad that Nintendo isn't as dismissive of Apple as you are.