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Microsoft Corporation (MSFT) & Sony Corporation (ADR) (SNE): This Week’s Biggest Gaming Announcement Might Have Had Nothing to do With E3

This week, much of gaming’s future was revealed at the Electronic Entertainment Expo (E3). Both Microsoft Corporation (NASDAQ:MSFT) and Sony Corporation (ADR) (NYSE:SNE) announced the prices of their next consoles — set to be released this fall — and demonstrated a number of games.

Microsoft Corporation (MSFT)

And yet, this week’s biggest game-related announcement might have been Apple Inc. (NASDAQ:AAPL)’s upcoming mobile operating system, iOS 7.

Now, for the first time, Apple will openly support third party controllers (and controller add-ons) for its iDevices. This is the next step in advancing Apple as a major player in the video game industry.

The burgeoning mobile gaming market

According to a Business Insider study, about 40% of the time that people are on their mobile phones, they’re playing games.

As smartphones and tablets have grown in popularity, mobile gaming has emerged as a potent force in the industry. Finnish company Rovio saw its revenue double and its profit jump over 50% in 2012, largely on the popularity of its widely successful Angry Birds franchise.

But it isn’t just small upstarts that are cashing in. Electronic Arts Inc. (NASDAQ:EA) purchased mobile-focused PopCap games for over $1 billion in 2011. Its flagship series, Plants vs Zombies, has been one of the most successful mobile games ever, and its forthcoming sequel is widely anticipated.

Meanwhile, Square Enix, a major Japanese studio, has said declining financial results will force it to shift its focus more towards mobile gaming — a platform with lower development costs.

The limits of mobile gaming

But despite the growing popularity of mobile games, and the widespread use of smartphones and tablets, handheld consoles like Nintendo Co., Ltd (PINK:NTDOY)’s 3DS and Sony Corporation (ADR) (NYSE:SNE)’s PlayStation Vita continue to receive consumer support.

In large part, this might be due to the fact that, for many types of games, touch screen controls just don’t cut it. Apple Inc. (NASDAQ:AAPL)’s move to support external controllers should allow for the development of iOS games that require buttons and joysticks.

To be fair, there are already plenty of iOS controllers out there — but because Apple doesn’t directly support them, they are compatible with only a limited number of games. With Apple moving to create a central standard, more games should appear to support the external controllers.

Could Apple crush Microsoft and Sony?

Before Sony Corporation (ADR) (NYSE:SNE) purchased streaming game company Gaikai, its founder David Perry told CVG that he expected Microsoft Corporation (NASDAQ:MSFT) to create a TV. Perry argued that the idea of a console was becoming obsolete, and that in the future, games would be streamed directly to TVs — no $500 box would be necessary.

If a TV is all that’s needed to get into gaming, Apple Inc. (NASDAQ:AAPL) could be in an interesting spot. The company is widely expected to unveil a TV at some point in the near future, and that TV — combined with external controllers — could be a force in the gaming industry.

One of the original Xbox creators, Nat Brown, wrote on his blog that Apple could destroy Microsoft Corporation (NASDAQ:MSFT)’s Xbox business with a TV:

Apple is already a games competitor broadly, even if Apple-TV isn’t yet a game platform or a console. Mobile generally and iPad specifically have grown the total hours of game play and grown the overall game market. Only in the last 18-24mo has that overall growth turned from a segment-expanding rising tide to a tsunami swamping the console game vendor profit boats hitched to the docks. It is accelerating. Apple, if it chooses to do so, will simply kill Playstation, Wii-U and xBox by introducing an open 30%-cut app/game ecosystem for Apple-TV. I already make a lot of money on iOS – I will be the first to write apps for Apple-TV when I can, and I know I’ll make money.

Android as a gaming platform

Like Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG) also has the potential to dominate the video game industry. Although Apple’s iOS app store still has a larger selection of games, there are some unique ways in which Google’s mobile operating system Android is being used to facilitate game development.

Take the Ouya, a new, cheap indie console. For $100, users get a small box that plugs into a TV and runs Android. Natively, the Ouya has an app store separate from Google Inc (NASDAQ:GOOG) Play, but because it runs a version of Android, ports to and from the bigger Android ecosystem should be common.

There’s also NVIDIA Corporation (NASDAQ:NVDA)’s SHIELD. The handheld gaming device runs Android, but unlike the Ouya, has direct access to Google Play. Given its $350 price tag, one might be inclined to doubt the machine’s mass-market appeal.

But that isn’t how NVIDIA Corporation (NASDAQ:NVDA) sees it. The company’s Tom Peterson told TechHive that SHIELD could ultimately compete head-to-head with the major consoles. Nvidia thinks the Android platform has a lot of potential, given its widespread adoption, and in time, game developers could turn to that massive market.

It’s expected that 1 billion Android devices will have been activated by the end of this year, and 2 billion next year. So, while NVIDIA Corporation (NASDAQ:NVDA)’s goals might seem lofty right now, the market is certainly there.

And Google Inc (NASDAQ:GOOG) clearly cares about Android’s gaming capabilities. At its recent developer conference, Google unveiled its new Android games hub. The service allows Android game developers to more easily implement features like cloud saving, online multiplayer and achievements

iOS and Android to become the premiere gaming platforms?

While the gaming community was focused on Sony Corporation (ADR) (NYSE:SNE) and Microsoft Corporation (NASDAQ:MSFT)’s offerings at E3, Apple Inc. (NASDAQ:AAPL)’s decision to enable controllers on iOS might ultimately be far more significant. Just last quarter alone, Apple sold 37.4 million iPhones and 19.5 million iPads. For comparison, Microsoft Corporation (NASDAQ:MSFT) has yet to sell 100 million Xbox 360s, despite the console having been on the market since 2005.

Meanwhile, Google Inc (NASDAQ:GOOG)’s open source Android is increasingly being embraced by the gaming community — projects like the Ouya and Nvidia’s SHIELD could lead to a much broader selection of Android games.

At any rate, the video game market continues to evolve, and both Google and Apple could become much more significant players going forward.

Joe Kurtz has no position in any stocks mentioned. The Motley Fool recommends Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG), and NVIDIA Corporation (NASDAQ:NVDA). The Motley Fool owns shares of Apple and Google.

The article This Week’s Biggest Gaming Announcement Might Have Had Nothing to do With E3 originally appeared on Fool.com.

Salvatore “Sam” is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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