Mobile Games: Have we learned anything at all?

It seems games publishers are an ungrateful group. A couple of years ago you heard them (myself included) endlessly complain about deck placement, carrier content managers who didn’t call them back, lacklustre revenue shares or outrageous porting requirements. Then came the App Store and the rest is history. Right? Wrong. The carrier is now called Apple, the deck is called the app store and although you only have one handset to develop for the submission process makes the carrier submission process look almost inviting by comparison. Although the revenue share is much better then it was with carriers the “open” nature of “set-your-own pricing” has – predictably driven prices downwards. As more people have piled in pricing has eroded so badly that only the highest quality games (mostly branded games titles) are able to maintain their margins. So if in the carrier model the winners were the likes of EA, Gameloft and Glu, the Apple model winners are more mixed. The big winners on the App Store are consumers who have an amazing choice of free and low cost games, small developers who would never have made it onto the decks of carriers and some of the larger publishers who have high quality branded titles who’s franchises they actually own. So although the winners seem to have changed one of the industry’s most fundamental challenges remains: how does it build enough scale to give rise to the next EA Games or Gameloft?

Part of the answer is what many iPhone developer don’t want to hear: cross platform development. Gaming is a mass-market pastime that appeals to people everywhere and more people have phones than PC’s. It should work. Tackling other platforms to ensure people all over the world can enjoy games regardless of platform / handset will help drive the viral awareness of games and generate word of mouth. Research has repeatedly shown that recommendations are one of the best ways to drive adoption (as is free trial). That’s hard to do on only one platform. The other part of the answer lies in the business model itself. Some people will simply never pay for games. The reasons are many but in a recession where people have to prioritize voice / text they will forego the rest (including games). Furthermore, in emerging markets like India where over 95% of the population are on pre-paid cards, paying for games simply isn’t an adoption. But this challenge is also part of the solution.

Innovative developers have shown that they can make money from games and apps without charging consumers. Flirtomatic, a mobile dating service, sells virtual goods. Google pays Opera Mini, the popular mobile browser, for search results. With mobile web usage surging in the emerging world and the mobile becoming an integral part of people’s lives the possibility for mobile advertising to finally deliver is starting to become a reality. Could in game ads be the solution to monetizing games in the 3rd world?

Patrick