iPhone Gains Gaming Market Revenue Share

Software market research firm Flurry Analytics has posted some interesting information about where Apple’s iPhone stands in regards to the gaming market at large. The report also includes details about how the iPhone is stacking up in the mobile market against its two major rivals, the Nintendo DS and the Sony PSP.

In 2008, Apple’s iPhone OS accounted for only one percent of the overall gaming market, compared to 20 percent for other portable games, and 79 percent for console. 2009 saw a definite swing towards portable gaming overall, with Apple alone reaping about half of the benefit of that shift.

Apple’s overall share of video game software sales climbed to five percent in 2009, which represents an impressive 500 percent growth rate for the year. The general portable market, which seems to include not only the Nintendo DS and PSP, but also other mobile gaming platforms like cellular devices, grew by five percentage points as well, taking 24 percent of the market in 2009. The home console market, by comparison, dropped to just 71 percent. The numbers seem to indicate a growing portable market, of which Apple is currently taking the lion’s share.

According to Flurry Analytics’ estimates, using information from the NPD group, which details gaming revenue, the market overall took in $11 billion in 2008, and had a lightly less lucrative 2009, taking in only $9.9 billion. That means Apple’s take grew from $115 million in 2008 to somewhere around $500 million in 2009. With the introduction of the iPad in 2010, that number stands grow at an even faster rate as a whole new market segment is opened up to App Store gaming.

Zooming in on how the iPhone is doing relative to its two strongest competitors in portable gaming, the Nintendo DS and the PlayStation Portable, we see an even more dramatic picture of tremendous growth. Where the iPhone accounted for only five percent of the revenue share of the three platforms in 2008, in 2009 it took 19 percent. That means that it surpassed the PSP, which fell from 20 percent to 11 percent market share year over year. The DS stayed strong at 70 percent in 2009, but that still represents a fall of 5 percentage points from 2008.

The PSP is in big trouble, but it also looks like Nintendo may only be doing better because it had such a hefty head start to begin with. Recently, Apple announced that its next generation portable console, the Nintendo 3DS, is set for release in the not-too-distant future, so that could help its prospects. The PSP, on the other hand, had a very disappointing year with the release of the PSP Go, which wasn’t very well received, and no plans have been announced about the device’s next iteration as of yet.

Apple’s iPhone platform, on the other hand, is set to make some major leaps forward this year. There’s the very concrete and tangible benefit the iPad will have when it comes out early next month, compared to Nintendo’s vague plans regarding a new device somewhere on the horizon. Then there’s the near-certainty that Apple will be releasing a new iPhone in late Spring/early Summer, which should bring at the very least better processor power and graphics rendering for more impressive and ambitious games.

Therein lies Apple’s main advantage, besides its appeal to casual gamers: new hardware every 12 months, at least. The iPhone, iPod touch, and presumably the iPad, too, all get annual refreshes at the very least. And those refreshes often mean more muscle under the hood, which translates to more for game developers to work with. Significant performance updates to Sony’s and Nintendo’s platforms are few and far between.

The iPhone platform is still struggling to find purchase with core gamers, but I think the iPad, especially with its support for Bluetooth keyboards, might finally make significant inroads with that crowd. Watch for 2010 to be the year Apple dominates portable gaming.