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Jul 23, 2008
How Mobile Phone Games Trend will Come True?
The mobile games panel focuses on the question, what’s it going to take for mobile games to go mainstream, exploring differences between the US and international markets, and different business models that are being used to tackle the mobile phenomenon.
Mobile Games: Challenges & Opportunities to Create a Mass Market Phenomenon
Scott Scherer, VP Product Management, Hands-on Mobile
Jill Braff, SVP, Global Publishing, Glu Mobile
Stephen Jackson, CEO, Smashing Ideas
Kay Gruenwoldt, Head of Industry Marketing, Nokia
Erica Chriss, VP of Strategy & Business Development, Greystripe
Moderator: Mark Donovan, CMO & Senior Analyst, M:Metrics
Jill, what have you seen shift in the last year in terms of drivers of your business?
Jill – The increase in people playing mobile games. Back in 2002 with Sprint, we were doing focus groups and couldn’t find anyone playing. Now we can find active players a day after posting an ad in CraigsList. The core audience may be different from the typical mobile user, but that’s what you need to grow a business. Also, we’re trying to see the carriers start to measure RPU (Revenue Per User). As the networks become a commodity, these services become more important.
Scott, HandsOn involves bringing titles like Incredible Hulk to market. How is that doing?
Scott – Guitar Hero 3 has been a tremendous success, the number one title since it’s launch in December. It’s a brand that’s hard to screw up, but also hard to create a long tail and ongoing revenue stream. So we deployed an option where if you buy the game you get three additional songs each month, which drives people maintaining their subscription. People are coming back and trying out the new songs and getting more great experiences each month.
Mark – That underscores the shift to subscription models and evolving content.
Jill – It’s awesome to see this kind of stickiness to content and episodic content. Mobile really should be about this kind of close relationship with consumers.
Steven, you’re a serial entrepreneur with Smashing Ideas, a smaller company. What does this market look like to you?
Steven – The company has been a casual game maker for 12 years, generated 150 million game plays last year. We’re the largest independent Flash developer in the US. Adobe decided they’d spend $900M to address the mobile space with Flash Lite and we jumped on the Adobe bandwagon for the mobile space. We have 30 applications on Verizon and 80 screen savers. We create 60% of our games, and then for the other 40% distribute for other developers. As a small player, we play in the Adobe Flash Lite niche and that’s where we focus.
Kay, tell us what’s happening with Nokia. When nGage was first launched it was laughed at, but you’ve been tenacious and successfully relaunched. How does it fit in?
Kay – We’ve learned a lot over these last 3-4 years. It took quite a while to come up with the new nGage platform, and we’ve accomplished all the points we set out to address: fragmentation, discovery, purchase process. We’re focusing on a premium experience for higher end phones. The average price for games on the platform is from $8-14. People pay for it because they can try the content out first and perceive the value. Now, original IP is leading ahead. The content that our games publishing unit creates is selling very well. That’s great news for smaller game companies and developers, they have a chance to be successful.
Erica, your business model is what Greg just said is way too early, ad supported games. How does that work, and is it cannibalizing the market?
Erica – We see it as a great market, and we know we are not cannibalizing it because our publishers are telling us so. It’s increasing the scale of the entire market, enabling discovery, and providing content for folks who will never pay for content. Instead of having them pirate your content and pay you nothing, why not allow them to create meaningful experiences that you can monetize. We’re seeing 300K downloads per day, and a large percentage surveyed would not pay for games, and are experiencing similar conversion rates as other distribution models.
Are there top tier publishers signing on with Greystripe?
Erica – We do have a number of top tier publishers whom we work with, including Hands On and Vivendi. First, we can be thought of as part of a windowing strategy, like DVD vs. theatrical. Things that are utility based, applications, do very well. We also have content from top tier providers who are experimenting with simultaneous introduction through us and carriers. They are measuring cannibalization careful and finding none – we’re just an addition channel.
What are you seeing as the relative importance of carrier vs. handset vs. direct to consumer distribution?
Scott – For HandsOn most of the revenue comes from the carrier deck. For B2C, it’s less about creating a portal for us, and more about working with larger brands like World Poker Tour where it makes sense – we run a website that offers free play online and then upsell to mobile
Jill – Certainly today, the lion’s share of the business comes from carriers. I’m actually interested in learning more about how much money you’re seeing from advertisers, Erica. There are other channels that are more direct that we are exploring. Over time this will look more like one-to-one marketing. The great thing about mobile is that literally it is always with people.
Mobile as an industry is a real pain, with so much fragmentation and handset standards. Is that getting any better?
Jill – We really like the complicated part. Not only is it a barrier to entry but it’s something that for us is a competitive advantage. We also do localization, day and date launches, event marketing tied in with carrier marketing. It’s similar to any other entertainment business. You can’t let people have a game only on one type of phone. Consumers don’t understand the technical complexity, it has to be seamless for the consumer.
Scott – For us it’s a lot like what Jill said. License partners expect global launches across carriers. We end up doing dozens of unique builds instead of a “high” and a “low”. It ends up creating a lot of extra work that changes the economics of the business.
Kay – What this discussion shows is that if you really want to grow this business you have to look across these issues as a whole. How you distribute. Consumer experience and discovery tools. Billing mechanisms. We are trying to address these as a whole, and those who do will be successful.
What would the panel’s advice be for people making games on other platforms and are eyeing mobile?
Kay – My key advice is do not copy and paste, it will not work. You can ruin great IP and a great brand by copying and pasting. The technology is a lot different from a PC and a console. It has a lot more – cameras, motion sensors, touch screens, wifi, GPS. Don’t just slap what you have onto mobile.
Erica – What’s interesting is that might decrease your chances of getting carrier distribution. But we believe that consumer choice leads to real experimentation, original IP, and reinforce the entire system.
Jill – If I were a strong brand holder I would build a really strong license business given the risks and uncertainties. If I were a developer I’d talk to carriers and publishers. You need to understand the carrier retail environment, and then partner with a publisher as a way of getting in the channel. On the flip side if you were going to develop for nGage, iPhone, etc, you wouldn’t have to deal with the porting issues but do have to deal with the complexity of developing for these platforms. There’s room for innovation. Even the videogame business, which is dominated by large publishers, has room for this kind of innovation (look at Guitar Hero).
Erica – It’s actually a wide open market, and new developers have the opportunity to take share with hit products.
Mark – But most of the volume is through the carrier channel, and that’s a tough channel to crack if you’re two guys in a garage.
Is Location-Based Services (LBS) games a component of games you are developing or see in the market?
Kay – Location is something that needs to develop, especially location based gaming. The only reason it’s not out there bigger is that noone has yet been able to develop a valid business model for it. With GPS in so many devices, it’s something we have to look at. I can’t say more at this point. If anyone here has a great concept, hit me up after the panel!
Erica – We’ll experiment with anything and we have a very cool distributed mostly in Japan that is all location based treasure hunting etc.
Are you seeing things outside the US that foreshadow what we’ll see here?
Stephen – We’re seeing a lot of interest in off-deck distribution models outside the US.
Jill – As an industry we make the mistake of talking about mobile from a US perspective. It’s also not one size fits all outside the US. We’re very successful in China and it’s all very local content that would probably be rejected by Verizon. In Europe networking is just starting to happen in terms of game play. Or in Latin America people are experiencing entertainment the first time through mobile, they don’t have cable or Wiis because of cost.
Mark – Did you just suggest that Verizon is a stronger censor than the Chinese government…
Are mobile games being usurped by casual online games; are these competition for eyeballs, dollars and entertainment?
Kay – Everyone is competing, it’s entertainment as a whole whether movies, mobile, or others. One note is that we are now looking at cross platform gaming across mobile and PCs.
Jill – From the consumer point of view, people are used to being on many screens simultaneously. There’s a lot more gender neutral user base for mobile, so it’s more akin to and complementary with what you see in casual games. That seems to make the brands grow far more than a cannibalization effect.
Stephen – One of our customers is Cartoon Network and we’re taking their online games and immediately bringing them to mobile.
Are we seeing games start on mobile and then go to other platforms?
Jill – That’s where we are trying to go as an industry.
Kay – There are pretty good examples already of that happening, one example from Germany that went from mobile to retail distribution in supermarkets for PCs.
Stephen – The challenge for us is monetization. We are able to sell clicky sticky games for mobile, but not Flash games for online.
Erica – That’s a challenge as games go cross-platform, consumers free expectations transfer to mobile, so advertising is important.
You still haven’t told us how much money publishers can earn through advertising!
Erica – In places like India and China we are seeing advertising with higher CPMs through advertising than through purchase. We’re seeing CPM’s in the US as high as $40, and in India as high as $15.
What do you see for the mobile games market going forward?
Scott – The real innovation will be through multiplayer connected games, which is a way of having a terrific experience, to reach out and add new experiences.
Jill – All these new technologies and devices are not for technology’s sake but to create more immersive, richer experiences.
Stephen – We’ll see much better discovery, the ability to find, share and play content.
Kay – Richer, more immersive experiences. Multiplayer and connected game play going beyond what you can have on your PC because mobile is something you walk around with.
Erica – More UGC, more social viral content now that there is a revenue model that can support free things.
Mobile Games: Challenges & Opportunities to Create a Mass Market Phenomenon
Scott Scherer, VP Product Management, Hands-on Mobile
Jill Braff, SVP, Global Publishing, Glu Mobile
Stephen Jackson, CEO, Smashing Ideas
Kay Gruenwoldt, Head of Industry Marketing, Nokia
Erica Chriss, VP of Strategy & Business Development, Greystripe
Moderator: Mark Donovan, CMO & Senior Analyst, M:Metrics
Jill, what have you seen shift in the last year in terms of drivers of your business?
Jill – The increase in people playing mobile games. Back in 2002 with Sprint, we were doing focus groups and couldn’t find anyone playing. Now we can find active players a day after posting an ad in CraigsList. The core audience may be different from the typical mobile user, but that’s what you need to grow a business. Also, we’re trying to see the carriers start to measure RPU (Revenue Per User). As the networks become a commodity, these services become more important.
Scott, HandsOn involves bringing titles like Incredible Hulk to market. How is that doing?
Scott – Guitar Hero 3 has been a tremendous success, the number one title since it’s launch in December. It’s a brand that’s hard to screw up, but also hard to create a long tail and ongoing revenue stream. So we deployed an option where if you buy the game you get three additional songs each month, which drives people maintaining their subscription. People are coming back and trying out the new songs and getting more great experiences each month.
Mark – That underscores the shift to subscription models and evolving content.
Jill – It’s awesome to see this kind of stickiness to content and episodic content. Mobile really should be about this kind of close relationship with consumers.
Steven, you’re a serial entrepreneur with Smashing Ideas, a smaller company. What does this market look like to you?
Steven – The company has been a casual game maker for 12 years, generated 150 million game plays last year. We’re the largest independent Flash developer in the US. Adobe decided they’d spend $900M to address the mobile space with Flash Lite and we jumped on the Adobe bandwagon for the mobile space. We have 30 applications on Verizon and 80 screen savers. We create 60% of our games, and then for the other 40% distribute for other developers. As a small player, we play in the Adobe Flash Lite niche and that’s where we focus.
Kay, tell us what’s happening with Nokia. When nGage was first launched it was laughed at, but you’ve been tenacious and successfully relaunched. How does it fit in?
Kay – We’ve learned a lot over these last 3-4 years. It took quite a while to come up with the new nGage platform, and we’ve accomplished all the points we set out to address: fragmentation, discovery, purchase process. We’re focusing on a premium experience for higher end phones. The average price for games on the platform is from $8-14. People pay for it because they can try the content out first and perceive the value. Now, original IP is leading ahead. The content that our games publishing unit creates is selling very well. That’s great news for smaller game companies and developers, they have a chance to be successful.
Erica, your business model is what Greg just said is way too early, ad supported games. How does that work, and is it cannibalizing the market?
Erica – We see it as a great market, and we know we are not cannibalizing it because our publishers are telling us so. It’s increasing the scale of the entire market, enabling discovery, and providing content for folks who will never pay for content. Instead of having them pirate your content and pay you nothing, why not allow them to create meaningful experiences that you can monetize. We’re seeing 300K downloads per day, and a large percentage surveyed would not pay for games, and are experiencing similar conversion rates as other distribution models.
Are there top tier publishers signing on with Greystripe?
Erica – We do have a number of top tier publishers whom we work with, including Hands On and Vivendi. First, we can be thought of as part of a windowing strategy, like DVD vs. theatrical. Things that are utility based, applications, do very well. We also have content from top tier providers who are experimenting with simultaneous introduction through us and carriers. They are measuring cannibalization careful and finding none – we’re just an addition channel.
What are you seeing as the relative importance of carrier vs. handset vs. direct to consumer distribution?
Scott – For HandsOn most of the revenue comes from the carrier deck. For B2C, it’s less about creating a portal for us, and more about working with larger brands like World Poker Tour where it makes sense – we run a website that offers free play online and then upsell to mobile
Jill – Certainly today, the lion’s share of the business comes from carriers. I’m actually interested in learning more about how much money you’re seeing from advertisers, Erica. There are other channels that are more direct that we are exploring. Over time this will look more like one-to-one marketing. The great thing about mobile is that literally it is always with people.
Mobile as an industry is a real pain, with so much fragmentation and handset standards. Is that getting any better?
Jill – We really like the complicated part. Not only is it a barrier to entry but it’s something that for us is a competitive advantage. We also do localization, day and date launches, event marketing tied in with carrier marketing. It’s similar to any other entertainment business. You can’t let people have a game only on one type of phone. Consumers don’t understand the technical complexity, it has to be seamless for the consumer.
Scott – For us it’s a lot like what Jill said. License partners expect global launches across carriers. We end up doing dozens of unique builds instead of a “high” and a “low”. It ends up creating a lot of extra work that changes the economics of the business.
Kay – What this discussion shows is that if you really want to grow this business you have to look across these issues as a whole. How you distribute. Consumer experience and discovery tools. Billing mechanisms. We are trying to address these as a whole, and those who do will be successful.
What would the panel’s advice be for people making games on other platforms and are eyeing mobile?
Kay – My key advice is do not copy and paste, it will not work. You can ruin great IP and a great brand by copying and pasting. The technology is a lot different from a PC and a console. It has a lot more – cameras, motion sensors, touch screens, wifi, GPS. Don’t just slap what you have onto mobile.
Erica – What’s interesting is that might decrease your chances of getting carrier distribution. But we believe that consumer choice leads to real experimentation, original IP, and reinforce the entire system.
Jill – If I were a strong brand holder I would build a really strong license business given the risks and uncertainties. If I were a developer I’d talk to carriers and publishers. You need to understand the carrier retail environment, and then partner with a publisher as a way of getting in the channel. On the flip side if you were going to develop for nGage, iPhone, etc, you wouldn’t have to deal with the porting issues but do have to deal with the complexity of developing for these platforms. There’s room for innovation. Even the videogame business, which is dominated by large publishers, has room for this kind of innovation (look at Guitar Hero).
Erica – It’s actually a wide open market, and new developers have the opportunity to take share with hit products.
Mark – But most of the volume is through the carrier channel, and that’s a tough channel to crack if you’re two guys in a garage.
Is Location-Based Services (LBS) games a component of games you are developing or see in the market?
Kay – Location is something that needs to develop, especially location based gaming. The only reason it’s not out there bigger is that noone has yet been able to develop a valid business model for it. With GPS in so many devices, it’s something we have to look at. I can’t say more at this point. If anyone here has a great concept, hit me up after the panel!
Erica – We’ll experiment with anything and we have a very cool distributed mostly in Japan that is all location based treasure hunting etc.
Are you seeing things outside the US that foreshadow what we’ll see here?
Stephen – We’re seeing a lot of interest in off-deck distribution models outside the US.
Jill – As an industry we make the mistake of talking about mobile from a US perspective. It’s also not one size fits all outside the US. We’re very successful in China and it’s all very local content that would probably be rejected by Verizon. In Europe networking is just starting to happen in terms of game play. Or in Latin America people are experiencing entertainment the first time through mobile, they don’t have cable or Wiis because of cost.
Mark – Did you just suggest that Verizon is a stronger censor than the Chinese government…
Are mobile games being usurped by casual online games; are these competition for eyeballs, dollars and entertainment?
Kay – Everyone is competing, it’s entertainment as a whole whether movies, mobile, or others. One note is that we are now looking at cross platform gaming across mobile and PCs.
Jill – From the consumer point of view, people are used to being on many screens simultaneously. There’s a lot more gender neutral user base for mobile, so it’s more akin to and complementary with what you see in casual games. That seems to make the brands grow far more than a cannibalization effect.
Stephen – One of our customers is Cartoon Network and we’re taking their online games and immediately bringing them to mobile.
Are we seeing games start on mobile and then go to other platforms?
Jill – That’s where we are trying to go as an industry.
Kay – There are pretty good examples already of that happening, one example from Germany that went from mobile to retail distribution in supermarkets for PCs.
Stephen – The challenge for us is monetization. We are able to sell clicky sticky games for mobile, but not Flash games for online.
Erica – That’s a challenge as games go cross-platform, consumers free expectations transfer to mobile, so advertising is important.
You still haven’t told us how much money publishers can earn through advertising!
Erica – In places like India and China we are seeing advertising with higher CPMs through advertising than through purchase. We’re seeing CPM’s in the US as high as $40, and in India as high as $15.
What do you see for the mobile games market going forward?
Scott – The real innovation will be through multiplayer connected games, which is a way of having a terrific experience, to reach out and add new experiences.
Jill – All these new technologies and devices are not for technology’s sake but to create more immersive, richer experiences.
Stephen – We’ll see much better discovery, the ability to find, share and play content.
Kay – Richer, more immersive experiences. Multiplayer and connected game play going beyond what you can have on your PC because mobile is something you walk around with.
Erica – More UGC, more social viral content now that there is a revenue model that can support free things.
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