Will cheap mobile games kill the gaming industry?

Smart phones are already changing many markets in the IT industry. Mobile gaming represents one of the fastest growing segments of the digital games market, and potential for future growth remains strong as more consumers are using smartphones for games of all types, including the increasingly popular mobile game apps. Is the mobile gaming industry a threat to the console industry?

Traditional PC, PlayStation 3 and Xbox 360 games can take two to three years and $20 million to $30 million to build. By contrast, apps for Apple and Android handsets can be assembled in weeks for less than $20,000, which explains why they’ve captured an entire generation of bedroom entrepreneurs’ imaginations. Given sales of 100 million-plus iOS devices (iPhone, iPad, iPod touch, etc.) though, producing high-quality titles capable of selling in the millions isn’t the issue.

Despite the best efforts of Nintendo and Sony, mobile games are taking a bigger chunk out of the portable gaming market, with one in every three dollars of portable gaming revenue going to smartphone and tablet games, according to new analysis from mobile analytics firm Flurry. Games for mobile devices now account for almost half of all the game downloads.

Even most of the gamers who use a dedicated console to play online are spending the largest chunk of their change on games for mobile devices. The rest of their game funds are going toward titles downloaded for PCs, full consoles, portable consoles, and other systems.

A recent report revealed some startling facts about mobile gaming and the rise of smart phone gamers. iPhone user spends around 15 hours on average every month playing games. Android users weren’t far behind by cloaking 9.3 hours monthly average while other smart phone users were at 7.8 hours. Overall around 64% of people who download applications have installed a game in the past 30 day period making gaming apps the most popular genre of apps.

Although the message is clear many publishers are not very worried considering that the market is still dominated by console games. Since the cost of production for many mobile and social games is extremely low in comparison with console games, when the time comes for jumping ships or expanding over to mobile and social platforms it will not be difficult, especially for a video game development company that already has the assets, technology and manpower necessary to develop games for consoles and the PC market.

While portable gaming market is changing rapidly, Nintendo and Sony aren’t sitting still. Nintendo recently launched the 3DS, which sold almost 400,000 units in its first week, a respectable number that still fell short of some analyst expectations. Sony is working on new portable hardware and moving closer to the mobile market with plans to make its PlayStation software available on Android devices. We’ll have to see how the two gaming giants fare in their efforts to kick-start their businesses, but it’s clear mobile games are posing a huge challenge with their cheap (or free) pricing and easy digital distribution.

The rise of cheap mobile games, even as low as 99 cent apps are compared to that of the iTunes music revolution and that of the takeover of the traditional books market by self-publishers via eBooks. Does this mean that internet is about to change the gaming industry once again? Many companies have already started integrating their games into social and mobile platforms. EA and other major studios and platforms such as Sony, Microsoft, etc., have also started experimenting with social media platforms, as well as the development of games for mobile devices. However, for the near future, gaming companies are quite unlikely to have any serious issues due to the rising popularity of mobile games. There will always be a demand for console and PC games, in addition to mobile games.

And what do you personally think about expanding of mobile games popularity? Do you think mobile games are going to beat console games? And are they more advantageous to invest in?