Even 6-Year-Olds Want an iPad

According to a recent Nielsen survey, children ages 6-12 are more interested in having an Apple (Nasdaq: AAPL  ) iPad than anything else in the survey, including TVs, computers, and phones, but especially outpacing all of the major gaming consoles by a wide margin. The iPad ranks further down for children 13 and over, but it still blows every console away. This seems to fit with the recent news that the estimated value of app-based Zynga Game Network has surpassed the real market cap of Electronic Arts (Nasdaq: ERTS  ) , the second-largest game publisher in the world. Is this the beginning of the end for old standards in the gaming industry?

Probably not
Part of the problem is that the major consoles from industry leaders Nintendo (OTC BB: NTDOY.PK), Sony (NYSE: SNE  ) , and Microsoft (Nasdaq: MSFT  ) are all several years old. Any kid who wanted a Wii, PlayStation 3, or Xbox 360, and could get one, likely already has one by now. While PlayStation Move and Kinect for Xbox are new, the long life of the Wii has likely taken some of the novelty out of motion-based games. To a 6-year-old, the most novel device on the list is clearly the iPad. And after watching his parents play with their iPhones constantly for a couple of years, a child would naturally want a toy-sized version of his or her own.

In a similar vein, I wouldn't worry too much about game publishers, either. Certainly they are seeing a kind of paradigm shift, where the once impressive 12 million World of Warcraft subscribers are now eclipsed by Zynga's 57.6 million for Farmville. But this seems like it has more to do with new customers, not stolen ones. While British Prime Minister David Cameron might have time for a couple of minutes of Angry Birds here and there, I doubt it comes out of time he would've spent playing Call of Duty: Black Ops, which recently set a record for the highest five-day sales not just for games, but entertainment history in general.

This isn't to say the innovate-or-die maxim doesn't still hold. Console manufacturers will need to put something new on the market, not just an add-on or upgrade, if they want to recapture the interest of the crucial child demographic. And if game publishers want to avoid becoming boutiques and tap into the growing gamer mainstream, they'll need to focus more on the on-the-go, app-based games instead of just high-budget blockbusters.

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Fool contributor Jacob Roche is hoping someone will get him a Wii with Mario Kart for Christmas, but it probably won't happen. He holds no position in any of the other stocks mentioned. Microsoft is a Motley Fool Inside Value pick. Apple, Electronic Arts, and Nintendo are Motley Fool Stock Advisor recommendations. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On December 01, 2010, at 1:05 PM, bfallingstar wrote:

    Mr. Roche,

    "the once impressive 12 million World of Warcraft subscribers are now eclipsed by Zynga's 57.6 million for Farmville"

    An income stream of $15 per month times 12 million subscribers is 'eclipsed' by a 57.6 million subscribers for $0 per month? Even with the possibility of micro transactions, that doesn't sound like as impressive a business model to me.

    Let's see some balance sheets on that. Sounds like Blizzard/Activision is laughing all the way to the bank.

  • Report this Comment On December 01, 2010, at 1:21 PM, TMFKris wrote:

    I'd be interested to know what the youngest children in the survey would say when asked why they want an iPad or what an iPad is. And is anyone planning to buy their 6-year-old an iPad?

    Kris - TMF copyeditor

  • Report this Comment On December 01, 2010, at 1:28 PM, TMFTheDoctor wrote:

    bfallingstar,

    That's a really good point. I wasn't necessarily making a revenue comparison though, just the size of the potential subscriber base. Hence, ATVI could be a boutique and sell a $15 product to a few hardcore customers, or reach for the other much larger demographic of bored office workers, parents, etc. One isn't necessarily better than the other, but there is a certain opportunity cost in leaving that market to Zynga.

    Thanks for reading,

    Jacob

  • Report this Comment On December 01, 2010, at 4:47 PM, Brent2223 wrote:

    TMFKris - Demand is demand isn't it? Every Christmas brings a hot toy, and sounds like the iPad is it this year. Logical? Probably not. Don't think the toy business ever is. And will parents buy as many iPads as Tickle Me Elmo’s, probably not. But Mr. Jobs must be salivating at the thought of getting 6 year olds hooked on the Apple platform. This could result in a huge shift off of PC's in the coming 10 - 15 years, and that's what I take out of this. Just like the cigarette industry without those silly age restrictions, get em hooked early and they'll never leave.

  • Report this Comment On December 02, 2010, at 8:47 AM, TheBlindCat wrote:

    My 2 year old and my 5 year old started with the gateway drug, the iPod touch. Both are now hooked on YouTube (Crazy Frog, Singing Hippo, etc.) and Angry Birds.

    My daughter was at her Nana's house over the Thanksgiving holiday making Gingerbread houses with 5 or 6 little girls ranging in age from 5-6 years old. When the saw the iPad they all dropped everything and clustered around it, taking turns playing Angry Birds. I was surprised that at least two of them already knew how.

    The younger ones seem to value the additional screen real-estate, maybe as they get older portability will be more important.

    My .02 cents? Game makers will need to take the iPad successors, with the inevitable improvements in processing, graphics and battery life, seriously. The console makers should do likewise.

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