Analysis: Apple Stirs Up iPhone Social Gaming

One buzz-phrase that has often been applied to Apple, with no small amount of justification, is “disruptive change.” This is a company that has made a business of turning entire industries upside down with a single big announcement. Whether it’s wiping out feature phones, getting AT&T in a headlock, or backing the recording industry into a corner, Apple is the technology world’s greatest iconoclast.

But the firm’s principles of creative destruction apply internally as well as externally. Sometimes, as was the case today, we suddenly realize that Steve Jobs and Co. have been paying attention to the goings-on in their proprietary ecosystems after all.

Game Center looks good on PowerPoint. Photo courtesy of CNET

During the iPhone OS 4.0 showcase, Jobs announced Apple’s Game Center, which will sport leaderboards, friend lists, recommendations, achievements, and all the other stuff we’ve come to associate with the iPhone’s extant social gaming networks.

The rationale for Game Center seems to be to reverse the fragmentation of the App Store into competing blocs–OpenFeint, Plus+, Scoreloop, Crystal, and so on. Secondarily, it will standardize the iDevice social gaming experience, extend it throughout the platform, and bring those affiliate sales revenues back into iTunes. This is a move straight out of the walled garden playbook. As such, it’s completely consistent with the way Apple has run the App Store since its inception.

At first blush, all of this seems like an unmitigated disaster for the third-party providers whose lunch just got eaten. But there’s more to this story than meets the eye.

The networks we’ve heard from thus far have been almost uniformly upbeat about the announcement. One could chalk some of this up to good PR–never let them see you sweat–and there is no doubt that losing affiliate sales (and all of those dedicated eyeballs) is going to hurt.

But the networks have much to gain here as well. OpenFeint, Scoreloop, and Plus+ quickly offered allegiance to Game Center, stating that their new virtual goods and freemium frameworks would jive perfectly with Apple’s system.

‘OpenFeint X is currently built on top of OpenFeint and in the future it will also sit on Apple’s Game Center social graph, achievements and leaderboards so developers and gamers don’t miss a step,’ said Jason Citron, CEO of Aurora Feint, in a press release. ‘Apple is a key partner and we are delighted that they have validated the first half of the OpenFeint vision and we can now fulfill the second half: OpenFeint X and Virtual Goods based Social Games.”

Scoreloop and Plus+ sounded exactly the same notes in their responses. “Apple positions Game Center around basic social connectivity, which represents the base layer of Scoreloop’s infrastructure,” Scoreloop CEO Marc Gumpinger wrote to us in an email. “But with its virtual goods architecture and in-game monetization fully in effect, Scoreloop’s functionalities go far beyond what was announced today.”

ngmoco’s Simon Jeffery repeated the sentiment on Plus+’s behalf. ‘Plus+ is all about empowering monetization and discoverability mechanisms for the development community, and we have clearly demonstrated with games like We Rule that these mechanisms work,’ said Jeffery in an interview with PocketGamer.

These guys aren’t just making the best of a bad situation. As we reported last week, all three companies have been hard at work on building freemium capabilities into their networks. This is where the real future of App Store revenue lies, not in taking a 5% cut of 99 cent game sales. And Game Center could potentially extend their reach to every single game on the App Store.

Serious questions remain. For instance, won’t the advent of Game Center simply switch the competition between the networks to a new venue? It’s unlikely that a game will make use of multiple virtual currency solutions. Plus, what’s to stop Apple from barging into the freemium solutions market at a later date, if that’s where the real money is headed?

That’s why we expect the competition to spill rapidly into other arenas, too. One way to make sure that a developer uses your particular freemium solution–and uses it “right” (in a way that makes good money)–is to publish their game yourself. Hence, we expect to see those social networks that don’t already publish games to develop publishing arms in a hurry. And there will likely be a race to add other types of functionality surrounding game discovery and player interaction as well.

We don’t know how it’s all going to play out, but one thing is for sure: Apple’s increased attention to the platform is a very good sign for us gamers.