Month: February 2008 (Page 1 of 2)

From A to Zed in 1/2 billion dollars

This one leaves me a bit speechless: other than reporting the press blurb, there seems little to say but then, the press blurb is too large to ignore it. So here goes: :LaNetro Zed announced 2007 revenues of a cool $ 554 million with an even cooler $100 million profit (this last bit is only reported by ME; others mention that it actually does not report any profit). There you have it. Revenues from what? Don’t know. “Proper” US-GAAP revenue? Don’t know. Profitable or not? Don’t know. Everyone reports it, no one seems to know the details. A dilemma…

It is the usual crux with private companies: one never really gets the whole picture. On the other hand, I want to be fair: half a billion dollars in revenue is rather honourable by anyone’s count. So let’s try to dissect it:
– In early 2007, Zed bought a piece of Monstermob and, as part thereof, 9Squared. So this will account for quite a bit of the growth. But still! Zed claims to derive revenue from content 85% of which it owns outright. They do sound-alikes (or “original compositions”) rather than the real thing although 9Squared also licenses the SonyBMG and – recently – KOCH catalogues (for ringbacks). Their rationale for going “original” is compelling though: there isn’t enough money off-deck to pay for royalties, said their US CEO last autumn.
– In October 2007, 9Squared reported over 60m downloads to consumers through its BREW application catalog. “This includes real music ringtones, polyphonic ringtones and wallpapers from 9 Squared’s RealTone JukeBox, Univision Tonos, Alltel’s RealTone JukeBox for Celltop, RingTone JukeBox, mTat2 Wallpapers, Musica Real and GAC Country Ringtones.”
– Zed is an early runner on convergence: its Zed StatiOn combines desktop, online and mobile in one offering. Smart move, I’d say: capture the users wherever they are and hook them in with free services that stick (IM, etc). They hooked in MetaCafe into this, too.

In particular the amount of generic content utilised (which improves margins) is, in a content world driven by brands, brands, brands, a very interesting phenomenon – and no mean feat to pull off: to build a customer base (most of them tied into subscriptions, yes) based on unbranded, generic stuff shows that surrendering to the big brands (and their up-front) demands may not be the only way. If all is clean, then my call will be to the carriers: listen, there is a world out there… There is of course always the suspicion that a lot of the revenue might come from subscribers that cannot extricate themselves from nifty and well-crafted subscriptions and suffer a life of funding Zed’s success. Is that so? I don’t have the foggiest clue!

The whole unbranded thing has an interesting twist of course: if it is possible to get so many consumers into this, then – arguably – quality isn’t the big thing after all: Zed’s games don’t seem to rank high (at least I have never seen them rated by anyone of note) and, with a volume-driven business (on their website, Zed claimed to have more than 27,000 games available today), there is presumably little time to cater for high production values and highly polished games.

It is, in any event, a remarkable story: the ugly duckling into which Sonera sunk hundreds of millions, evolves as one of the powerhouses of mobile content. If only their guys would now get in touch and explain to me in a bit more depth how all this adds up… Hey, dear Zed people: drop me a note (volker [dot] hirsch [at] gmail [dot] com) and let me know how this works (OK, or at least get me a bit more insight on those numbers). Thanks!

LinkedIn only a little bit mobile…

And here’s a somewhat disappointing mobile debut: business network superstars LinkedIn announced the launch of their (beta) mobile “application”. However, the app is a mere WAP site with, alas, all the downsides of that: latency, onerous navigation and the whole info from the website only toned down in graphical appeal.

Now, whilst I am big fan of LinkedIn, this is sub-par. Have a look at what Facebook did for the Blackberry: a small downloadable app (yes, I know, it’s painful but probably for the time being the only way to enhance the user experience on mobile), information reduced to the key things one might want when accessing this from a mobile device and then the option (sic!) to access the full monty via WAP. The one piece of information I couldn’t access on the LinkedIn WAP site was the contact info. Hmm. Wouldn’t that arguably one of the key pieces of information I would want to have when I’m on the road (“well, I’m in London. Why don’t I drop John Doe a line. Don’t have him in my address book as we haven’t spoken in a while but we’re still ‘linkedIn’. Doesn’t work. Doh!”).

With all due respect, dear LinkedIn friends, you’ve got work to do!

New Phone flies with Nintendo Games

Little-known handset manufacturer Fly has announced its new MC100 handset which features both Java MIDP2.0 / CLDC1.1. as well as – and that is the cracker – support for Nintendo NES, SNES, Gameboy and Gameboy Colour game formats. There are some neat dedicated gaming buttons and a rather useful-looking “D-pad”.

The handset is powered by a Yamaha chip and also has an MP3-player. Whilst Fly seems to be mainly active in Eastern Europe (that’s at least the only region where they have service centres), the handset is retails at the not too shabby price of $270 a pop; where it goes on sale, remains a miracle: the currency would suggest the US but perhaps it is Russia after all?

Also, the issue if these games are legit remains a bit in the dark. Fly only says that “games (nes/smc/gb/gbc) can be freely downloaded from the Internet and set up in your Fly MC100”.
This would suggest that Nintendo is not involved in this, and there is indeed no active (or passive for that matter) endorsement from Nintendo anywhere to be seen. So this would almost certainly exclude any “proper” Nintendo games from being included (unless Fly wants to risk a visit from Nintendo’s legal eagles). All a bit odd really but, boy, would it be cool were it legit…

How many handsets does a game need to support?

GDC Mobile co-founder and, I am honoured to say, my good friend Robert Tercek, came out with all guns blazing against the carriers’ demand for maximum handset coverage for mobile games that they allow to publish through their deck. Tercek called it a “lie” that operators basically insinuate that a game will run equally well on every handset, and he called mobile games publishers hypocrites as they moaned and whined about it but still play ball… Well, what else are they to do? Stop publishing games?

Since I still work in this industry, I would not perhaps put it that harshly as Rob did but the question is indeed if the network operators’ rationale (“we need to provide for the best possible user experience for every one of our users”) stands true when it comes to this. After all: if you offer a full music track for download, your phone needs to be able to support MP3; an old battered brick that only plays monophonic ringtones won’t do. To put it into slightly starker contrast still: it would be like an ISP would prevent a web publisher from putting a site live only because there are a lot of PCs out there that do not have the right software support. Or if the Germans would not allow any car to be imported into Germany unless its engine software was geared to allowing a top speed of min 200 mph because otherwise the user could be disappointed with the driving experience on the Autobahn.

Is the assumption that someone who has an old T610 would actually expect to be able to play a modern-day 3D racing game on his battered old handset really correct? If I drive a 10-year-old little Twingo, I know that I will not go 200 mph, Autobahn or not. And I will certainly not blame it on the operator of those roads.

If I want Vista Premium or Leopard, I need the machine to support it. And that is an informed decision I need to make. The operators’ approach may have been understandable a few years ago: mobile was a very, very new platform and people had not actually got round to the idea that one could actually do more with one’s mobile phone than making phone calls when away from a fixed-line phone. However, this has changed very quickly very much: even my 80-year-old neighbours now communicate via SMS with their kin. I believe it is safe to assume that the consumers of the year 2008 can very well distinguish between a low-end and a high-end phone and will actually appreciate the difference in performance without blaming their operator for a sub-par one when their phone happens to be a sub-par one. Time for change then, folks!

The constraints of having to support hundreds of handsets impacts the mobile games sector manifold: it makes it prohibitively expensive to develop and publish games with porting costs often being equal or even higher than the actual development. The effect is less innovation (how can you dare trying something new if you have to expend so much money before you even get it in front of a consumer?) but also less usage: it is often more of the same as developers try to minimize their cost by re-using engines (Gameloft has used the same basic side-scrolling engine for at least 20 games to date; highly polished and constantly evolving though, to be perfectly fair to them) and running risk-averse design philosophies where they try to stay as close to a proven hit as possible. This will however not drive consumers to get back for more.

I am however doubtful if operators will come to terms with this in the near term, and, let’s face it, they are not the originators of this platform mess: isn’t it more often the handset manufacturers that fiddle around with screen sizes that differ for more or less every device, that take great pride in running a gazillion different operating systems only to be slightly different to the other guy, that allocate soft keys rather randomly and occasionally swap the green and red call/end call keys from one side of the keypad to the other? Just imagine this last bit on a computer keyboard: is now on your left… try get going with that… Add to that the – yes, they’re here still – operators and their specific demands for this, that and the other, and the fragmentation does indeed create an economic landscape that is very hard to navigate.

This is one to the OEMs and the operators alike: get down to business, compete on the strengths of your devices and services and not on some OS and other software tweaks where the upside to the consumer is, if distinguishable at all, minimal.

In the interim, it would indeed be upon the operators to start trusting the good judgment of their customers in the hardware they hold in their hands better and start dropping those old devices from their requirements that will manage to screw up even the best game.

The prosecution rests… 😉

Zeemote, the 2nd…

I blogged about the Zeemote joystick for mobile phones a while ago (see here). Since then, it seems to have become all the hype: developers at GDC were apparently raving about it (no wonder, as the geek factor is really high: just look at the party photos). I have also had the opportunity to get my hands onto one at MGF last month and saw it in action with Fishlabs Heli Strike 3D helicopter game.

Now: I had not, at the time, made any remarks on the technical ability of this device, and it does play well. BUT I still stand by my grave doubts as to its commercial viability, and I think there are two things one needs to distinguish here:

1) Can it sell? This, I think, is a question of whether or not they manage to bundle it up with handsets. I cannot see this becoming a device capable of shifting serious units all on its on in the Carphone Warehouse or Radio Shack shelf right next to extra batteries, SD cards and headsets.

2) Will it be used? Again, and in spite of its technical capabilities: I cannot see people taking yet another device with them. I said it before, and I say it here again: “Do I have everything I need? Wallet, keys, phone, errm, joystick?” That just doesn’t seem to work.

The State of Play…

This week (nearly everyone) trecked out to San Francisco for the Game Developers Conference (no, not me), and we therefore could hear and read a lot about where gaming, specifically also mobile gaming, is these days. So what is the state of play? Varied, it seems:

On-deck/off-deck was addressed: Kristian Segerstrale, formerly of Macrospace/Glu, now fresh start-up entrepreneur with his Playfish offering described the current landscape rather neatly: “Competitive development, Ogopolistic publishers, but monopolistic retail.” (This was – unsurprisingly – seconded by Nokia‘s multimedia guru, Anssi Vanjoki). Segerstrale damned the economics of the space with carriers syphoning off 30-40% for billing when the same can be had for a few points from Google check-out, Paypal, etc. He went on to predict that it will be the carriers’ doom to stick to that model and painted a bright future. I quite agree with him on this, mainly for two reasons: 1) the move into flat-rate data plans for mobiles; these will take away the fear of people browsing outside the constraints of the carrier that they will face huge bills, and – to some extents connected to the first point – 2) the fall of the walled gardens. This will mean that a whole new playing field is opening: consumers will no longer be constrained to buy games (and, for that matter, any other content) on their carrier deck where choice has been limited and innovation not always prevailing but anywhere on the whole wide web.

Such a development would arguably also clean up with another of these quirky carrier specifics, namely content discovery. On one of GDC’s panel discussions it was noted that, “[w]hen shopping on the deck, it is easy to know what an application does based on its name. However games are much harder to sell based on a 17-character title. There is no description and no ability to preview a game (such as viewing a trailer) before downloading. In the discussion, the example of Amazon was used to describe the kind of preview and recommendation system that needs to develop for mobile games.” True enough…

On the market as a whole, others, namely some of the money-men, were less buoyant: Mitch Lasky, formerly of Jamdat, now a VC with Benchmark Capital, warned that finding an exit in the next 2 years would be tough as the industry was “in the midst of a multi-year transition”, whatever that is supposed to mean. He is of course right in that the sector is consolidating, and 2007 was a tough year for most in the mobile game space (more on that below).

And then came the mobile gaming heavyweights from Gameloft and claimed that there had not been a Christmas in 2007. How’s that for a bleak outlook? The mighty Frenchmen’ President & CEO, Michel Guillemot compared that to a transition (is this a theme?) between console platforms: before the new one is really in, no one will buy a game anymore. Now, with all due respect, I do not believe that the slump of the mobile games market that many seemed to have been experiencing is hardware-driven. I would rather blame it on the choking hold the severely flawed business model in the space (see above) and actually increasing scarcity of deck space due to carriers reducing the number of slots available.

This last bit specifically was stoically conceded by Glu’s Jill Braff: she said one had to understand the way carriers operate (and, yes, from their perspective I think I do) and then “work in the system”. That might all be fine and dandy for the few who manage to place it. It does not, however, grow the market, educate consumers (and retailers) or gets games to that next level. I mean, on 5-8% take-up on downloadable mobile games, you are talking about a niche. Shouldn’t Ms Brasff rather be pondering on how to break that mold and make mobile gaming a true mass market phenomenon? Getting your head down, sighing and “work in the system” might not actually be an approach that helps that.

The gordian knot will only be cut if the distribution funnel opens up: this does not necessarily mean that carriers will lose the war but they will have to change their approach — eventually. Just imagine an ISP trying to dictate what game you’d be allowed to access. There used to be one, you say? True enough: the old AOL model. And where are they now when it comes to access? The iron curtain fell, the walled gardens on the Internet fell, and they will fall on mobile, too.

Mobile will be big, no really!

This is something of an old hat but, alas, the conference season in full swing (with my day job making serious demands there) and a little flu to go with it, and I keep falling behind.

Anyhow, at the Davos World Economic Forum‘s “power panel power panel” with the head honchos from Google (Eric Schmidt), Sony (Sir Howard Stringer), NBC Universal (Jeffrey Zucker) and, to top it all off, China Mobile (Wang Jianzhou), a couple of interesting comments were made that do merit some reflection, I think. Google CEO Schmidt in particular was vocal on a couple of points of interest.

One point is so blatantly obvious that I hardly dare to repeat it: “it’s the recreation of the Internet.” Doh. Yes, all the same features, all the same cornerstones: restricted bandwidth, warped business models (one used to pay per minute for dial-up and/or for KB of data, remember, and that would include any ads delivered to you [only that there weren’t that many — for rather obvious reasons]), restricted processing power of devices (my 80286 with a whopping 2o MB hard drive was considered a rocket at its time, and I was the first in my class with a 9,600 bps modem), etc, etc. So for the whole world to get all excited when Mr Schmidt mentions these parallels, I was, well, somewhat disappointed.

Moving on, Schmidt suggested that mobile phones, in particular future ones, would increasingly offer the wonderful touch of being location-aware, in other words come with GPS, and this is indeed what users seem to want. China Mobile’s Wang pondered that phone calls might in fact come for free as LBS may well take over… But isn’t Google one of a very select few who can actually can run carrier-independent zone detection, i.e. get proximity data already? Why do I need to know when a user is within 3′ from my burger shop, aren’t 100 yards enough? As long as he/she’s hungry, I’d say it is. So, is it all there already then? It of course is only one piece…

I would venture that it is in the process of unfolding: next to the handset technology (data usage per se isn’t much fun on a 4-year old black-and-white 6310i), the main obstacle to a more comprehensive take-up is costs of use, namely data charges. Do you remember the Internet in dial-up days? Connect, retrieve e-mail, disconnect. Not much time for anyone to get additional messages (commercial or not) across then. Only when flat rate data packages became available did people start to use the medium to its potential. And this seems to be where we will go in 2008. A lot of the large carriers now offer flat rate data plans and, as it wouldn’t be much fun otherwise, open their walled gardens in the process. This effectively gets the Internet proper onto the user’s phones, and not only a minutely small, hand-picked extract from it. Will this stir usage and uptake? You bet!

Could it be better? Oh, the holy grail of connecting data: see who was where when with whom doing what… This meets widespread privacy concerns and would also require a number of rather complex arrangements between key players that all guard their little secrets jealously as they don’t want to give their advantage away: the carrier doesn’t want to tell, the advertizer either, and the solutions provider wouldn’t ever.

But, hey, aside from that, it is only the “usual”, i.e. the things that I and so many other frequently lament: fragmentation, non-availability of consistent platforms and interfaces. But on all of these fronts, huge steps have been made forward (e.g. do Apple iPhone users google 50x as often as others, and 95% regularly use the Internet; other carriers moan the data usage is “unheard of“). If it is Google’s 4 demands or less doesn’t matter so much: as long as there comes more consistence, so that users get familiar with the approach and the use, it’ll fly. With the mobile phone always sitting in their pocket, i is too close to people’s hearts — well hands.

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