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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?
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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