‘Clash of Clans,’ Apple, and the Battle to Disrupt Console Gaming

Apple's "Metal" for creating iOS games shows potential for boosting the already-growing market for iPad games.

Aug 19, 2014 at 7:00PM

While it's not always easy to get sales data for mobile games, there's no denying their influence. Some extremely popular titles are played on Apple's (NASDAQ:AAPL) iPad. Consider:

  • King Digital (NYSE:KING) is expecting more than $2 billion in bookings from its social games. Candy Crush Saga is the second-highest-grossing iPad app as of this writing. A related game, Farm Heroes Saga, checks in at sixth.

  • Supercell's Clash of Clans ranks as the top-grossing iPad game right now. Hay Day ranks fourth. Combined, these two helped Supercell generate $2.4 million of in-app sales per day last year. The company's newest, Boom Beach, already ranks 10th.

Clash Of Clans Leading Ipad Game Apple

A screenshot of the top-grossing iPad games as of Aug. 15, 2014. Source: Apple iTunes App Store.

Huge successes like these should serve notice that the iPad is a serious alternative for casual gamers. Is Apple doing enough to bring more like them to the platform? I think so.

Guesstimating the opportunity
There's plenty at stake. Last fall, Newzoo and AppLift performed a study that puts the tablet gaming market on track to grow 47.6% annually between 2012 and 2016, at which point total spending will reach $10 billion. (Smartphone gaming is expected to grow 18.9% annually, to $13.9 billion, over the same period.)

What would that sort of growth mean for Apple? My guess is $900 million in App Store fees. That's presuming the iPad still controls at least 30% of the tablet market come 2016, making it the target platform for some $3 billion in spending on mobile gaming. Add in the Mac maker's customary 30% cut and you've a $900 million windfall.

Heavy 'Metal'
To cash in on this, Apple needs more and better tools to help developers create iPad games. Metal is the company's answer. Here's a demo of the technology from EPIC Games founder Tim Sweeney.

Source: YouTube.

For me, the demo illustrates two things:

  1. Apple wants the iPad to be the best mobile screen you can buy. And why not? Signs point to users adopting mobile video in greater numbers. For example, TubeMogul says the total number of video ad auctions jumped 350% sequentially in Q1 as marketers try to tap into users' growing reliance on smartphones and tablets for video news and entertainment.

  1. Seely's comment that Metal helps the iOS 8 environment render 10 times faster suggests that Apple is committing to bigger, better, and more expansive apps and games for future iPads. Given Newzoo's findings, that's likely to be a smart move.

The Bigger Game
Longer term, I see Metal helping grow the iPad ecosystem and aiding tablet sales in the process. How big is that opportunity? Again, figuring its share at 30% of the market, Apple could end up selling about 77 million iPads this year vs. 31.9 million in fiscal 2013. Even if that's optimistic -- and it is, we can't bank on Apple doubling iPad sales -- the point is that a growing number of casual gamers are "Tablet First," as Clash of Clans maker Supercell likes to call it. From the company's website:

When Steve Jobs first introduced the iPad to a very skeptical world, he called it "magical."  We now know what he meant.  Our inspired vision is to create some magic of our own that lives up to the awesome potential of these wondrous devices.

No doubt Tim Cook would agree. With Metal, he and his team are adding to the enchantment.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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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