Niche Appeal

The other factor, though, is the attach rate of software. If developers only care about installed base because it creates a larger potential market, then we must consider that "potential market" isn't a function of installed base alone - it's a function of installed base multiplied by attach rate, generating an ARPU-like figure that's actually more relevant to developers and publishers than installed base ever could be.

The data with which to do these calculations is a bit uneven, because platform holders release their installed base and attach rate data in different ways (some of them more accurate than others, but none of them what you might call scrupulously honest), but even with this imperfect information, this approach results in some interesting outcomes. We can see, for example, how the low attach rate of the Wii effectively cuts the system's installed base down to size, while the Xbox 360's great attach rate is a seriously powerful multiplier on the installed base.

So here's the thought experiment - if we accept that the casual audience cultivated so successfully by the DS has now essentially moved its focus to iOS platforms, can we imagine instead a future for dedicated portable consoles which focuses more on attach rate than on installed base? Is there, in other words, a future for portable consoles that abandons the pursuit of enormous installed base in favour of satisfying a core audience that generates a high attach rate?

Were the Vita to be such a massive hardcore hit, the knock-on effect on PlayStation Suite devices such as the Xperia Play could be significant.

What we're talking about, in essence, is a niche console. Niche videogames are broadly understood - if you've got the measure of a niche market, you can tailor the development of a game (both creatively and financially) to fit that market and build a tidy business for yourself. In recent years, the commercial viability of doing so has been greatly enhanced by techniques which have flowed out of the business model experiments of the freemium market - IAP, DLC and various other strategies for tapping into the big-spending "whales" who populate niche markets.

Can this approach also be applied to a game console? It's a bigger niche, of course - really a collection of related niches which together make up the hardcore game market - but the concept remains the same. A carefully designed console and well-curated software selection is designed not to sell a large volume of hardware, but a limited volume of hardware to a core market which will contain a high proportion of "whales" and drive attach rate (or ARPU) extremely high. The potential addressable market for developers is therefore large not because of huge, DS-style installed base, but rather due to the fact that the installed base contains far fewer dead-weight units gathering dust at the bottom of desk drawers.

It's by no means a bulletproof strategy. Curation of the software library would be an extremely important and tricky task, as would communication and engagement with the consumer base. There's a risk of creative stagnation as developers attempt to offer cookie-cutter clones of successful games, something which of course happens already but could be amplified by the limited nature of the audience. Moreover, there's still the risk that the advancing credibility of iOS platforms could slowly present this more exclusive market with the same problems the broader market faces today.

Yet the advantages of success would be immense. Not only would this be a business potentially every bit as profitable as the existing handheld console market, it would also be a business which offered its platform holder a vast degree of creative respect and credibility among consumers - a "halo effect" which could have a knock-on impact on sales of more broadly focused gaming devices. Were the Vita to be such a massive hardcore hit, for example, the knock-on effect on PlayStation Suite devices such as the Xperia Play could be significant.

No company would ever admit, of course, to deliberately limiting the scope of the audience for their devices. In the face of the relentless progress being made by iOS and other App Store game distribution models, however, it would make sense for Nintendo and Sony to focus on their base. The core gaming audience is still hungry for great games and great platforms. Rather than exerting their best efforts in what may be a hopeless battle against the Apple juggernaut, cultivating and nurturing the high-spending consumers who have stuck with core gaming through thick and thin is a strategy that could serve the platform holders well.