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Apple (Nasdaq: AAPL) may be planning to create a premium games section in its App Store where it could sell high-dollar iPhone games, PocketGamer.biz has reported. The report's sources were not named, and Apple refused to comment on the rumor.
Games could sell for around US$20 in the premium app store, according to the report. As it stands now, the most expensive games on the App Store typically go for about $10, and many more cost less.
Still, might the rumor speak to larger issues? Does the App Store need a premium game section?
The news site reports that the hypothetical premium page would be limited to large game publishers. That tidbit seems at odds with the largely laissez-faire pricing model Apple seems to encourage with its wide-ranging App Store developers.
Little Games, Big Business
A key point is the rising number of games and entertainment titles, which Raven Zachary, founder of iPhoneDevCamp and a contributing analyst for The 451 Group, says make up a sizable fraction of all the apps in the App Store. He estimates that 25 percent of all apps are games -- but they are even more important revenue generators than than 25 percent would suggest.
"In all likelihood, games make disproportionately more revenue in the App Store. While they account for 25 percent of inventory, they likely account for more than 25 percent of the revenue," he told MacNewsWorld.
"Right now, you see a lot of developers focus around $5.99 price points for games. When the App Store launched, people assumed the average price point would be $9.99, but that's gravitated to $5.99 for games -- and $1.99 or $.99 for casual titles," he explained.
Squeaking Out Higher Prices
Some game publishers, which have enjoyed pricing well over $30 for Nintendo DS or Sony (NYSE: SNE) PlayStation Portable titles, are working new angles to eke out net gains.
"'Toy Bot Diaries' -- what the publishers did, and what they were very clever about, is they took on an episodic, sequels approach," Zachary said. Iugo Mobile Entertainment released a "Toy Bot Diaries Free," "Toy Bot Diaries," "Toy Bot Diaries 2," and "Toy Bot Diaries 3."
"If they released it all at $11.99, that could have created problems -- a lower take rate," he explained, noting that if a customer 
gets hooked on an introductory set of levels, they might spend more.
"The humor from all of this is, we're fine going to a bar and buying a beer for $5, but if the game is $5.99, we might hesitate to buy it," Zachary noted.
"The amount of enjoyment from a beer for $5 is a distinct amount of time, and a game is probably going to generate dozens of hours of entertainment vs. perhaps dozens of minutes for the beer -- we have different kinds of price sensitivities for different things," he added.
Something Is Broken - and It Might Not Be Price
Pricing, however, may be a symptom and not the bigger issue. The app store has thousands of games, hundreds of which, to put it concisely, suck. And yet they take up space in the App Store. In fact, the App Store may need an entire games-focused makeover.
"In my opinion, the App Store sucks as a game store. Crap Store is more like it. There's far too much free shovelware and un-entertaining games. Games shouldn't be buried in the marketplace below music, video and applications. Quality games offer great entertainment value for consumers and ought to be featured by category, quality and price," Billy Pidgeon, research manager of IDC's consumer games market practice, told MacNewsWorld.
"This is a missed opportunity for Apple, and if they don't get it right, someone else will. I think operators, vendors and publishers should be prepared for games to take off as a mobile entertainment category when Apple and others come up better online marketplaces linking device, deck and Web and allowing consumers more options than over-the-air," he explained.
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