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

Open vs. Closed App stores: where do we go?

Apple has removed Google Voice from the App store today. Although frustrating for Google and consumers this is a simply a reality of working within the App Store world. Developers may ask themselves whether they prefer a Closed App store or an Open one. The reality will be, and already is if you look at smart developers like ebuddy, EA, Google, and Nimbuzz, that successful developers will have to develop cross platform and consider multiple distribution channels to reach consumers.

Through all the hype developers are starting to realize two things: First, not everyone will make a fortune on the iPhone. With over 65,000 apps and no in-store merchandising tools developers will struggle to get cut through. Adwhirl estimated that getting into the top 100 on average costs a developer over $2500 / day. how many can really afford this level of spend before recuperating their royalty check from Apple? Two, closed gardens have their drawbacks (ask developers who have worked with carriers). In Apple's case these seem to be a) Unclear editorial guidelines on what gets on and what doesn't and b) applications that may be significantly better then Apple's own software may not make it due to conflict of interest with Apple.

The more important picture though is what this means for consumers long term. Consumers at the end of the day will be looking for and should have access to the best possible content no matter who makes it. If Opera or Bolt offer a better browsing experience then Safari consumers should have access to them. If Spotify offers a better music alternative to iTunes then it should be available. Sadly, this is not likely to be the case on the iPhone and this has been proven repeatedly over the past few months. The strangest thing is that you can't really say it's distinctly Apple. After all you can install other browsers and music applications on a Mac's OS X.

One thing remains certain: given today's environment consumers aren't likely to find the best Apps just on the iPhone. That's bad news for iPhone users but good news for the 99% of the world who might reap the benefits of frustrated but highly innovative developers ;)

Patrick Mork
VP Marketing
GetJar