Apple: A Video Game Giant, Missing in Action at E3

Ever heard of the Pippin?

It's on a very short list: an utterly failed Apple product. It was Apple's first and, so far, only attempt at designing a video game console. The Pippin was released in 1996, along with a controller called the AppleJack. It had one-tenth the computing horsepower of a current iPhone and ten thousand times fewer games to play. I didn't buy one, and neither did you.

Fifteen years later, Apple has become a force in video games, and games may be essential to Apple's future. Since the introduction of the iPod touch and iPhone -- then the iPad, and the resurgence of Macs -- more games have been published on Apple's platforms than any other. Games are far and away the most commonly created and downloaded apps (with about 60,000 different games available), and millions of birds are not happy (Rovio's Angry Birds has been the most-downloaded app for 279 days and counting).

Yet, despite Apple's new status as a games superpower, it will be absent from E3 -- the big annual video games conference this week. Apple is the quiet giant in the games industry: it has already disrupted a chunk of it, and it's in a position to do much, much more.

For Apple to grow, it'll have to continue to attack big markets. And video games are ripe for Apple. Games are a multi-billion dollar market and might be the window into an even bigger one: television and movie content on televisions.

Still, Steve Jobs describes Apple TV as "a hobby" because he says he can't figure out how to sell a set-top box. Most consumers get them for free as part of a cable or satellite television service. As he said last year:

"The problem with innovation in the TV industry is the go-to-market strategy. The TV industry has a subsidized model that gives everyone a set top box for free. So no one wants to buy a box. Ask TiVo, ask Roku, ask us... ask Google in a few months."

--Steve Jobs, D8 Conference, June 1, 2010

Only, he's wrong. There absolutely is a strategy for selling a set-top box. Ask Microsoft, Sony or Nintendo: it's to include a general entertainment service with a gaming console. And the Trojans are starting to emerge from their horse. Microsoft just revealed that 40% of time spent on the Xbox isn't on games. With Roku's announcement that it is going to support Angry Birds on its set-top box, others who are in the general entertainment business are catching on.

Apple could play at this. Some have speculated that Apple only needs a few baby steps to make Apple TV a game console: imagine an App Store, a little more graphics processing and computing power, a simple controller (maybe even an iPod Touch, iPhone or iPad) and, presto, you have it: Pippin done right. And if the new cloud service Apple plans to announce next week, the iCloud, supported games...

But there aren't rumors of a major Apple gaming announcement next week. Then again, Apple loves to surprise. We will have to wait and see if Apple decides to get serious about the quintessential mass-market entertainment medium of our time, video games.