Game Developer Conference 2018 (better known as GDC) is currently underway, but the biggest story in gaming took place just before the event — the release of Fortnite on iOS.
Fortnite, arguably the hottest game in the world right now, comes to iOS complete with cross-platform play with PCs and game consoles. This move gives strength to the trend of mobile gaming expanding into much more than a market of casual games. Despite Android’s dominant numbers lead, Apple Inc.’s (NASDAQ:AAPL) iPhone is the platform of choice for this mobile gaming revolution.
Apple and AAPL stock stand to be the big winners in this new phase of mobile gaming. And the key advantage is one that Apple has held for the past decade: avoiding the splintered user base that plagues Android.
GDC 2018 Dominated by ‘Fortnite’ on iOS News
Going into GDC 2018, Epic made a move that has ended up dominating the gaming news headlines. The company released Fortnite on iOS. This isn’t a dumbed-down take of the game, just one part of it, or something that’s limited to battles between iPhone users. Fortnite on iOS is the full game, complete with the ability to join battles with players who are on a PC or a game console.
Within 12-hours, it was reportedly the number one app on the App Store in 13 countries, and that’s despite the fact that Fortnite on iOS currently requires an invitation from Epic Games to download. Epic collected $1.5 million worth of in-app purchases in the first four days. Apple gets a 30% cut of that revenue, part of the Services division that increasingly important to Apple stock.
I’ve been writing about Android fragmentation for years, and the problem just doesn’t seem to be going away. The crux of the issue is that Apple iPhone owners update their devices regularly, and there are a limited number of different hardware versions to track — all of them quite capable. In the Android world, there are thousands of different devices (many of them entry-level hardware) running all different versions of the operating system.
Many can’t update, so they’re stuck with older versions of Android. At the moment, iOS 11 is on 90% of Apple mobile devices, where Android Oreo (released around the same time as iOS 11) is on just 1.1% of Android devices. Even 2016’s Android Nougat is on less than a third of Android devices.
In a TechCrunch interview, Apple explained why this gives the company an advantage in mobile gaming:
“We bring a very homogenous customer base to developers where 90% of [devices] are on the current versions of iOS. Apple’s customers embrace those changes and updates quickly, and this allows developers to target new features and the full capabilities of the devices more quickly.”
Fragmentation means game developers don’t actually have access to anywhere near that entire pool of Android smartphones. The majority of them are underpowered and/or running an outdated operating system. That also means much more testing is required to ensure a decent gaming experience for the Android users, and that’s a step that can delay a release. Some developer’s skip the platform altogether.
Either way, the iPhone is in the place where it’s a first-choice for gamers. They get earlier access to most games and exclusive access to some titles.
IOS Is Set to Dominate Next Round of Mobile Gaming
Android fragmentation is why casual mobile gaming hits like Pokemon Go and Super Mario Run landed on the iPhone long before they hit Android.
Fortnite on iOS marks a new stage in mobile gaming. Smartphone hardware has reached the point where games can compare to console versions. And game developers are beginning to exploit that capability with cross-platform titles that give them access to a huge pool of new customers who don’t own a PC or game console, while giving existing gamers a mobile option.
Fortnite mobile will come to Android, but for now it’s only available to iPhone and iPad users, following the pattern established in casual gaming. Expect Apple to leverage this advantage to encourage more game developers and to market the iPhone to gamers.
The next round of mobile gaming may not just sell more iPhones, it’s going to boost that Services revenue –all upside for AAPL stock.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.