Is the Apple (NASDAQ:AAPL) iPhone and Google (NASDAQ:GOOG) Android Game Market Drying Up?

Apple (NASDAQ:AAPL) has subtly branded itself as an alternative games company. But has that mission failed?

According to a new report by Chomp (via TechCrunch), Apple’s efforts continue to pay off. Using data compiled from its own site (Chomp.com is a search engine for finding apps), the company found that Angry birds still leads the pack of iOS software. Three versions of the game made it into the top 10 list for the year.

Android, on the other hand, has seen a significant decline in game downloads. In 2011, none of its top 10 apps were games. But snooze-fest software like The Weather Channel ranked high.

What does this trend tell us? First, it reveals that Android users would rather get weather updates than play an game, which doesn’t say much for the quality of Android gaming. Second, it indicates that the average Android user might be a bit more casual than the average iOS user. But be careful when making that argument. Unlike Android, iOS has an enormous market of phone-less kids and teens who buy apps for the iPad and iPod Touch. The data on actual iPhone downloads could be significantly different from that of other iOS devices. But until someone collects and calculates the data separately, iOS reports will continue to lump all of the Apple platforms together.

Third, Chomp’s data could be a sign that the future of gaming is not as mobile as people expect. While this is something I have argued about for months, the media has led the public to believe that game-specific companies like Nintendo might as well retire, while Sony (NYSE:SNE) and Microsoft (NASDAQ:MSFT) should move on to other things because, you know, mobile is here! And mobile is the best thing since toasted bread and sliced cheese!

Zzzz… Oh, sorry. I just nodded off for a second there. Now where were we? That’s right – the reasons why Chomp’s data is significant.

Fourth, Android isn’t the only company to see a drop in game downloads. While games maintained their overall popularity on iOS, three of the 10 games (according to Chomp searches, not Apple’s own listings) were a part of the Angry Birds series. In other words, one series fueled iOS gaming in 2011.

While it is possible that another franchise could take Angry Birds’ place in the near future, on a month-to-month basis, iOS games suffered a big loss in December. During the month, the nine most popular apps (again, according to Chomp searches) were utilities and social networking tools. One game, a freebie called Temple Run, came in at number 10. But Zombie Highway and Doodle Jump, which both cracked the top five in October and November, were nowhere to be found in the top 50 for December.

All games run their course. No one title – or any group of titles – will be successful forever. But while popular games tended to drop off gradually in the console (ex: PlayStation) and handheld (ex: Nintendo DS) markets, iOS games don’t normally have any staying power. They shoot to the top and die off suddenly, as witnessed here. In fact, if it weren’t for Angry Birds, iOS gaming still wouldn’t have birthed a single franchise. But let’s be realistic: if that “franchise” is still thriving in 10 years, it will be a miracle.

As an early supporter of iOS games, I want the platform to be successful. The game industry needs iOS games. Because of iOS, millions of casual gamers are playing games more often. Without iOS, thousands of people who had never played a video game before still wouldn’t have played a single video game. The revenue stream might be a little different (instead of traditional game publishers like Activision (NASDAQ:ATVI), smaller and lower-budget companies are reveling in iOS success). But in the end, the game industry still wins.

That said, it is important to realize that apps and games are two completely different things. They may fall within the category of software, but there is a big difference between Angry Birds and the Hulu app, or Infinity Blade and a cookbook app from Jamie Oliver. You wouldn’t lump World of Warcraft and Call of Duty into a category with Microsoft Word and Google (NASDAQ:GOOG) Chrome. So why should we treat apps any differently?

Finally, the future of video games has never been and never will be set in stone. We saw what happened with Zynga (NASDAQ:ZNGA), the social games company that was caught plagiarizing other hit games. As recent as 2011, Zynga was hailed as the future of gaming. Then we learned that the company was losing $150 on every new paying customer. A third-party developer who has nothing to do with Zynga came to the company’s defense and threw out a few numbers, claiming that Zynga was profitable. But that view was quickly dismissed.

Social gaming, like so many other trends within the industry, is proving to be a fad. Without a few major changes to social gaming, that whole industry is bound to collapse.

iOS games are not likely to suffer the same fate. Unlike Facebook, there have always been worthwhile games on the iPhone – consumers just have to know where to look for them. But if these declines are not exclusive to Chomp users, they could be a sign of a broad change in iPhone usage. If that’s the case, it would be really nice if someone would be there to rise up and take charge of the market.

But someone isn’t paying attention.

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Louis Bedigian
Benzinga