Apple's New iPad Making Waves in Video Game Market

(Reuters) - Apple Inc's (AAPL.O) faster and sharper-looking new iPad is drawing the notice of the traditional video game industry, as developers are envisioning games for it that have more in common with the visceral 3D shooter Call of Duty than FarmVille.

The company is also setting itself up to take on Microsoft (MSFT.O) and Sony (6758.T) on their home turf of game consoles.

From Electronic Arts to Crysis developers Crytek, industry executives are figuring out ways to migrate graphics-intensive so-called hardcore games to the iPad. Epic Games and Namco Bandai (7832.T) took the stage at Apple's iPad unveiling this week to show off what they can do with an iPad that has a faster quad core processor.

With more than 55 million iPads sold to date, including 15.43 million last quarter, the tablet is quickly catching up to the number of consoles on the market: the PlayStation 3 has sold 62 million units and Xbox 360 has moved more than 65 million units. That growing user base is drawing developers who want to see their games played on as many devices as possible.

Apple is definitely building their devices as if they care a lot about 'triple-A' games, said Mike Capps, president of Epic Games, the studio behind Gears of War for consoles and Infinity Blade for the iPad.

The triple-A moniker is bequeathed to only the highest-quality video games -- those with the best graphics and that cost in the tens of millions of dollars to produce. So far, not many triple-A titles appear on mobile devices.

Capps, who has appeared on stage at all three of Apple's iPad launches, said he is trying to push the console manufacturers, Sony and Microsoft, to come out with more powerful devices so they do not get left behind. On Wednesday, he told the crowd in San Francisco the new iPad has better screen resolution and more memory than Microsoft's Xbox and Sony's PlayStation.

While gamers today might still prefer to play shooter games at home on big screen TVs with a handheld controller, that could soon change, Capps said, especially if a bluetooth controller is developed for the iPad.

It is quite easy to imagine a world where an iPad is more powerful than a home console, where it wirelessly talks to your TV and wirelessly talks to your controller and becomes your new console, Capps said in an interview.

Meanwhile, the industry is bracing for change. Frank Gibeau, president of Electronic Arts' Labels (EA.O), who oversees the company's biggest games such as Battlefield 3 and Star Wars: The Old Republic, said the company is eyeing Apple's moves closely.

When the iPad gets to the processing power that's equal to an Xbox 360 and it connects to a television, that's no big deal to us. We'll put the game through the iPad and have it display through the television. Gibeau said.

BRING ON THE GAMES

EA has already brought some games from its marquee franchises to the iPad: Dead Space and Mass Effect.

For publishers, it used to be, oh hey, it's just the Nintendo, Sony and Microsoft show, but that's not the case anymore, Gibeau said.

Germany's Crytek, which developed Crysis 2 for consoles and PCs, is working on its first game for the iPad, due out in the spring. While that game will be puzzle-based -- minus the free-wheeling pyrotechnics -- the company said it could one day bring that genre of hardcore games to the device.

As more people come to these platforms, we have to follow our fans, said Kristoffer Waardahl, a Crytek studio manager.

While speedier iPads will soon be getting into more gamers hands, Jeremy Parish, editor in chief of gaming blog 1UP.com, said it does not necessarily put pressure on console makers to come out with a new product any faster. The Xbox 360 launched in 2005 and the PlayStation 3 came out in 2006.

For the console makers, it has got be a little bit of an embarrassment to say that this tablet has more power and better screen resolution. But at the same time, this will not be the motivating factor to get them to jump into a new generation of consoles, Parish said.

Yet the industry is counting on a new wave of gaming hardware in the near future. Nintendo will release the Wii U, its first console with high-definition graphics, later this year.

For now, experts are divided as to whether the new iPad will make a dent on consoles but at least one investor said he does expect sales of rival gaming products to be hurt.

While consoles won't cease to exist, it does create pressure on them by hurting their growth and taking away some of their customers, said Michael Yoshikami, CEO of Destination Wealth Management.

Sony spokesman Dan Race said the PlayStation 3 business is having its strongest year ever and the PlayStation $249 price point is resonating with gamers and families alike.

Nintendo's U.S. executive vice president of sales and marketing, Scott Moffitt said Regardless of the device, consumers have repeatedly demonstrated that they care more about the experience than the tech specs.

Microsoft declined to comment.

Apart from the iPad, Apple's fledgling TV product is also being watched closely by video game companies. Hudson Square analyst Dan Ernst said he doubts the iPad will affect console sales, but said an Apple TV with an app store could one day pose a viable threat.