How Apple’s new iPhones could pose a threat to gaming’s major players

Apple has danced along the edge of the video game industry's waters for some time now, never quite jumping in, but staying close enough to keep the likes of Microsoft, Sony and Nintendo wary.

With the introduction of the iPhone 5S and the cheaper iPhone 5C during this week's iPhone reveal event, however, the company took a big step closer -- and both console and dedicated handheld system makers have a very valid reason to worry.

The A7 processor in the 5S features a 64-bit processor, something no other smartphone manufacturer has used before. According to Apple, that makes the 5S 40 times faster than the original iPhone and twice as powerful as the former flagship iPhone 5. It will also result in a significant boost to the graphics potential of the platform.

Apple wasted no time showing off these improved graphics at their big reveal event this week, bringing Chair Entertainment's Donald Mustard on stage to demo Infinity Blade 3, the final chapter in a series that has traditionally represented the visual top tier of iPhone games.

Those who attended the event likened the graphical quality of Infinity Blade 3’s real-time gameplay to what we're used to from cutscenes today. And, they noted, there was no noticeable lag as it was demoed.

"The gameplay is absolutely gorgeous," said Engadget.

[Related: Plants vs. Zombies 2 shambles to iOS devices]

Developers we spoke with after the event said they'd need to see benchmarks on the chip, but the A7 could potentially produce graphics that are on par with the Xbox 360. That could be devastating should Apple introduce a standalone game controller, something the company has been said to be working on for over a year now. And it's not a big leap to assume Apple will move the A7 chip to the newest iPad before the end of the year, a system that's even more gamer-friendly thanks to its larger screen.

Of course, it's not just consoles that need to worry. The smartphone market has already taken a bite out of the dedicated handheld game space. As Sony renews the push for the PlayStation Vita and Nintendo prepares toroll out the Nintendo 2DS, they have a new threat to deal with from Apple in the form of the iPhone 5C.

Priced at $99, packing a retina display and offering much more than just the potential to play games, Apple's low-cost iPhone makes a strong value argument. (The 2DS, by comparison, will carry a $130 price tag, while the current Vita rings in at $200.) As budget-conscious consumers hunt for gadgets this holiday season, that could cut into sales projections from Nintendo and Sony.

Apple, of course, already has the support of the development community -- and big console publishers are starting to shift resources in their direction. While EA and Take-Two certainly make the bulk of their income from traditional console games at present, they're taking steps to protect against a broader shift to smartphone-centric gaming by expanding their mobile divisions and ensuring major franchises have equal exposure on iDevices and consoles. Activision recently joined the parade as well, after resisting the mobile market for years, by launching a mobile version of its Call of Duty franchise.

Epic Games, meanwhile, has been a longtime supporter of Apple's products. Last year, at the unveiling of the new iPad, then-president Mike Capps declared: "This new device has more memory and higher screen resolution than an Xbox 360 or PS3." Them’s fightin’ words.

Of course, this is hardly an all or nothing situation. Apple's entry into the living room gaming space won't sound a death knell for consoles, but it could weaken them.

The good news is that home consoles have some advantages in this fight. They've enjoyed a long history in this business and know the audience better than anyone at Apple. The coming of the Xbox One and PS4 will undoubtedly provide a shot in the arm to the game industry and spark renewed interest in traditional console gaming. So long as massive franchises like Grand Theft Auto, Halo, and Call of Duty stay largely focused on consoles, they’ll help keep core gamers satisfied in a way their smaller smartphone cousins can’t quite manage.

But hopes that Apple would stay on the sidelines seem to be getting smaller and smaller. And it's starting to look like the next console and handheld wars could be a much tougher slog.