Month: February 2008

Convergence in games

On 08/02/2008

It’s been the buzz for some time but no one had, with few exceptions, been seeing too much of it but now it seems to start taking off: cross-platform convergence of games. It is a bit of a holy grail: the network operators (or carriers) are not always the most creative and daring bunch when it comes to trying things out and they take a very healthy cut of the revenues from a tough, fragmented and still relatively small market. No wonder then that a lot of people are praying for alternative solutions. But, alas, it never really worked: every games publisher will tell you that, other than for music, wallpapers, etc, the direct-to-consumer model never really worked for games; the operators dominate the space as the, by far, most important distribution channels.

This could be, one thinks, overcome when more users would actually get themselves familiar with the games in a less constrained environment, the web being an immediate answer. Many have tried, many have failed (even the superstars of mobile games, Gameloft, stopped their in-house offering). But, hey, maybe it was just the wrong approach. Trip Hawkins‘ brainchild Digital Chocolate showed with their approach to their award-winning game TowerBloxx how it can also be done: they created a Facebook app and an online Flash version of the game that have been roaring successes: allegdely, the Flash game saw more than 10 million plays to date and the Facebook app has had 430,000 lifetime users. For a property that sprung from mobile, these are very respectable numbers indeed. And whilst I have no idea if it actually helped selling more games (300,000 clicked the “buy now” button but, for some odd reason, they don’t know how many actually bought it), it will have played its part to keeping the game in the front of people’s minds – and that’s half the work done, isn’t it?

Other players are onto it, too: online gaming giant Oberon Media bought mobile publisher I-Play last year in order to offer a more comprehensive line-up across media boundaries. Real is doing similar things. It is probably only a question of time before EA connects its pogo.com online destination with its mobile titles. I also know of quite a few smaller developers that start to very actively incorporate the multi-platform into their game design and development considerations. Very encouraging, that is!

And it makes so much sense of course: handsets get more and more powerful, the garden walles gardens start to come down with flat-rate data plans for mobiles becoming more and more the rule: all in all, a perfect runway for the ascent of convergent media consumption.

Now let’s add (mobile) Flash to the equation, and things could become very interesting indeed… (and, yes, I know, we may not yet have the install base but it’s getting there…)

Helio numbers…

By Volker

On 08/02/2008

In Earthlink‘s earnings call, they unearthed some usage numbers for US MVNO Helio, the joint venture between Earthlink and South Korea’s SK Telecom. And, despite the fact that Helio still seems to burn through cash rather quickly, these numbers do not look too bad:

– Helio’s ARPU was more than $85 a month compared to an industry average of under $50.
– Its users average more than 550 text messages a month, and instant message penetration is 3x the industry average.
– A whopping 95% of Helio customers access the web through their mobile devices (industry average: c. 13%.
– In December, Helio’s users uploaded photos from their devices to the web at a rate 5x of the industry average.

But then came the bad bit: Helio finished the quarter with just over 180,000 subs, which is a 28% growth rate over the prior quarter, but its revenues of $56 million may be an increase of 147% over the prior year but only 8% over the prior quarter. That means their top-line growth was not matched by their bottom-line one, quite to the contrary. The available news do not shed light onto why that is so but it is concerning as it means that they do either not have their costs under control (expending more per added user than per previously existing one) or they have a serious CPA problem: if the margin per incremental user gets slimmer, they may have to spend more to recruit them. Not healthy…

Because Earthlink has pulled out of additional funding requirements for Helio, the burden rests on SKT’s shoulders. For how much longer is anyone’s guess although, to be fair, SKT has shown a pretty healthy amount of patience in this.

Barcelona, here we come…

By Volker

On 05/02/2008

I, as pretty much everyone else involved in mobile telecommunications in the wider sense, will be trotting to Barcelona this coming weekend and mingle with the crowds there, looking for further enlightenment at the Mobile World Congress (formerly known as 3GSM).

My agenda is filling up pretty quickly but if you would like to get in touch, get me acquainted to the next big thing, or divulge other exciting progress, drop me a note at volker (dot) hirsch (at) gmail (dot) com…

I will be in town from Sunday afternoon (yes, also attending the Mobile Sunday event) all the way through Friday morning.

Linux Mobile on track

By Volker

On 05/02/2008

After delays on the part of the much awaited Android (see my original take on that here), one of the “other” Linux Mobile initiatives, namely the LiMo Foundation announced the release of its first version (“R1”) on schedule for March. The beta version of the respective APIs is available on their website immediately. They also said there would be sneak previews of all the good things at next week’s Mobile World Congress in Barcelona, and I will be sure to check it out!

The LiMo Foundation, which is backed by an impressive number of industry heavyweights (quite a few of which are also members of the Open Handset Alliance, the maker of Android), seems to be moving swiftly ahead, and their platform is, in their own words, basically the following:

“The LiMo Platform—leveraging standards and open-source projects—is a modular, plug-in-based, hardware-independent architecture built around an open operating system, with a secure run-time environment for support of downloaded applications. Linux was selected as the core technology for the LiMo Platform for its acceptability by the whole mobile industry, its rich functionality and scalability, its record of success in embedded systems and mobile phones and its potential to easily “cross-platformize” with other product categories.” Middleware components for the platform can apparently be implemented in either C or C++ programming languages.

What seems noteworthy is that the good folks at the foundation seem to have managed to leverage the substantial resource of its members. Its chairman praised “the transparent, balanced and harmonious contribution process […].”

Just before Christmas, the third consortium, LiPS, had announced that its first release was now complete.

However, it would appear of not so much being a race of who is first but of who manages to deploy on most devices. Given the membership of the three consortia comprises most of the big players (with the notable absence of Nokia although its recently acquired Trolltech is a member of the LiMo Foundation; read the excellent analysis on that deal here), one might ask if would not be perhaps the best idea to merge the whole thing, and deploy one common platform. Wouldn’t that have real impact?

But waiter, please, I did not order this (SMS)…

By Volker

On 03/02/2008

Now, this has been puzzling me for years: the US carrier policy (I am not sure how many still do it) of charging the recipient of a text message for that message. How odd is that? You sit in a restaurant, the waiter brings you a bottle of wine that you did not order. You do not drink the wine (because you did not order it and you do not like wine) but you are being charged nonetheless. There is even a bolder version of this: the same waiter works for a winery, and they send you that bottle as a marketing trick, say to lure you into booking travel to the Loire wine region. Yet again: you did not order it, you did not drink it, they charge you. No, you say, this is surely not possible. And I agree.

However, the US arm of T-Mobile (and I am sure others before them) is doing just that: if users that do not hold a special data plan (something like a don’t-pay-for-wine-you-did-not-order-plan) are being charged for every SMS they receive, be it your teenage son telling you that he didn’t make it [home/to school/to your appointment 3 hours ago], be it your partner announcing that he/she is on the tube and will be home in 10 minutes or be it the tourism authority of the Loire region working hard on improving travel to their area – you pay.

This now seems to backfire as there has been a class action filed against T-Mobile US seeking redress for exactly that. According to the report about it, “the plaintiffs allege T-Mobile USA’s texting policy violates federal telecom law and Washington state’s consumer protection-unfair business practices act” but, quite frankly, I would have thought it would also violate a string of other, more mundane laws about contracts and invalidity of coercive business practices, etc. Unfortunately for all of us who like to drool over those incredible sums in US law suits, “the suit did not contain a dollar figure for alleged damages.”

It is about time that this stops: it estranges your customers, it provides for horrendous customer experience, and, really they shouldn’t say they didn’t see it coming…

Super-Glu!?

By Volker

On 01/02/2008

In Deals

It is the conference season, so I am falling a little behind but this is one that needs to be recorded here: The good folks from Glu announced that they would acquire AIM-listed 3D games specialist Superscape for $36 million (which however includes $11m in cash Superscape is still having in its savings account). On $7.2m revenue for the 6 months ending July 2007, this would equate to a revenue multiple of c. 1.7 (based on flat sales and a purchase price from which the cash at hand is deducted) which should be substantially higher than Glu’s c. 0.6 (awaiting the announcement of their 2007 results).

Glu has been hit brutally following their announcement of their Q3 results, falling from somewhere around $10.40 per share to $4.19 tonight based on worse than expected growth and earnings. They had recently announced expansion into China – a market with numbing growth numbers but also hard commercial parameters – through the up to $40m acquisition of MIG, which however failed to help their share price.

Now, Superscape adds market share in more familiar pastures, namely in the US where 98.4% of its revenue are generated, and this may well have been the main reason for the buy: it will cement Glu’s position in this key market. I am however not sure if there is more to this deal than that because the remaining parameters of Superscape do not look too good: the company focussed on the niche 3D sector, which did not fly as predicted (or should one say demanded) by the carriers. It is loss-making (and has been for a while if not forever). It grows less than Glu (as remarked by an analyst (report courtesy of MoCoNews).

Even if the deal rationale was synergies (reducing headcount as all they would really need from Superscape is their Moscow development facilities [which are a rather impressive operation as I could learn a few years back during a visit] and shut down their US and possibly UK offices), one would have to ask if this was the right deal. Superscape lost more than $2.8m on $7.2m revenue, so it is rather questionable if they could swing this into profitability quickly. I would posit that Glu would be rather capable of fighting for revenue and market share if it would not have to look at cost (their roster of titles is pretty impressive and they have been on an aggressive growth path), so would they not have been better advised to look for a profit-boosting acquisition as this seems to be their Achilles heel? Prove me wrong, Greg, please!