Volker on Mobile

I know, I know, there’s a ton of conferences out there at the moment but this one has some real goodies to offer. The Social Media World Forum packs a lot of stuff into one by running no less than five different streams (next to mobile, this is the general one, enterprise social media, social TV, and cloud computing). There is a Facebook Developer Garage to go with it, too.

It’s running on 15/16 March in London (Olympia).

I’ll be speaking on mobile & social, making a case for the gaming side of things but there are some others, too… Companies sending top-level speakers include:

• Facebook
• Xing
• Mercedes Benz
• Mars
• Mattel
• Orange
• Vodafone
• LinkedIn
• Yahoo!
• Cisco
• IKEA
• DHL
• StudiVZ
• Netlog
• CBS
• BBC
• Fremantle
• Endemol
• Beck’s
• Lufthansa
• Shell
• ING
• Marks & Spencer
• Virgin Atlantic
• TalkTalk
• bebo
• Ecademy

I actually feel quite small now! Come along, it should be inspiring and entertaining. Tweet me @vhirsch to meet for a chat.

This week’s Carnival of the Mobilists is out, and it is hosted – very, very fittingly – from Vancouver by the good folks over at WIP Connector.

As always, there is exciting stuff on there. Besides not one but two posts of yours truly (which I trust you have read by now; if not, they’re on the Freemium model for mobile and a look on the web v apps), a lot of the industry’s luminaries are speaking out:

• AJ Wright has an intriguing post on how software and services dominate the overall experience (over and above hardware). A sneak preview into the future…;
• MobiThinking’s Andy Favell looks at if mobile search is working;
• Ajit Jaokar offer us a free download of his latest book on “Open Mobile: Understing the Impact of Open Mobile – Implications for Telecoms/Devices, Web, Social Network, Media and Personal Privacy” (I know the title is a mouthful but the man has a very sharp mind indeed!); and
• Tomi Ahonen, master of stats (and many other things) treats us to an account of Google’s mobile firsts.

Enough teasers, this. Now, go over and read the good stuff here.

The term “Freemium” has been coined first a while ago by Union Square Ventures founder Fred Wilson and has been articulated further by Chris Anderson of Wired fame in his book “Free”. It has since attracted significant interest, last but not least because the concept seems to work…

Ngmoco goes Freemium

Yesterday, Ngmoco, one of the new world’s (scil. Apple App Store’s) giants announced it raised another chunk of money ($25m to be exact) and acquired Freeverse, an iPhone developer that recently announced it had sold (sic!) more than 5m games, which are, alas, not always free – in the contrary. Together with this, Ngmoco announced a push into the Freemium model. So there we are…

To recap: the company had released two titles so far under the Freemium model, namely Eliminate Pro and Touchpets. Both are rumoured to having done, well, OK in terms of revenue (although Ngmoco CEO Neil Young said they were clumsily made). They had previously acquired Miraphonic, makers of Epic Pet Wars and other games, and Neil wants to use the the combined forces of development power to push the Freemium model onto the iPhone properly. Good on him!

What is it about this Freemium?

The term describes games (or apps or services or whatever you can think of) that are initially free to use but use micro-transactions from within the game to monetise it. Eliminate Pro did this by selling Power Packs without which players needed to wait X hours before they could continue. Online, we have had other examples, e.g. Zynga’s Farmville where you can buy hard cash in order to immediately acquire items for which you would otherwise have to play hour after hour after hour. You get the gist… If interested, you should read Chris Anderson’s book since the underlying rationale does not only work in the little work of games.

The principle is simple and also compelling – from both the developer’s and the user’s side: the developer gets a shot at grabbing a multiple of eyeballs allowing for a multitude of chances to convince users that it is the real deal. Users get to look into the mystery bag before having to cough up hard cash. Win-win, you think.

And yes, it is: act honestly and transparently and you shall win over the hearts and minds of your users. IF your product is good and useful, the users will appreciate it, become fans (and maybe even fanatics) and will thus serve as your secondary sales force by recommending things to their friends who are much, much more likely to buy on the recommendation of their friends than from anyone else. What a wonderful idea.

Things to get right

There are two issues with this though, and it is important to get these right:

1. Make sure to get the mechanics right. This does not work for any game or app or service. There must be some initial intrinsic and compelling value. Why would users otherwise use it? There must also be a good reason to buy. Why would users otherwise want to buy premium features? If you get it wrong (i.e. if too many users do not feel fairly treated), your users are gone. And what is the price of user acquisition? Yeah, you get it. It is MUCH more economical to treat users well; they will come back AND they will recommend you and your products.
2. Make sure you get the balance right. Don’t be greedy, don’t be too tight. The aforementioned Eliminate Pro didn’t get the weighting right. The result was a) a couple of seriously upset users and b) sales that were not comparable to the top of the class (anecdotally, Eliminate Pro featured in the top-100 top-grossing list of Apple only very shortly). Remember that you need to deliver value; otherwise users – rightly – won’t feel properly treated but ripped off. And then? See above on customer acquisition costs.

The other side of balance is, however, that giving away too much will kill your business. And that is no good either.

Tools

There are tools to make your (the developer’s) life easier on this: create avenues of the players’ passion, make it easy for them to communicate their passion to their friends (which form the only community that truly matters to most of them) at a time when it is relevant to them, and you’re a big, big step closer to getting the principle right, which is to deliver value. Very, very few users will object to paying for value. But they will only do so (and in this fluid, transparent world more than ever) if the value is true and not some cheap glass pearls conceived to deceive.

Challenges, rewards, and incentives etc have shown to be powerful tools to spurn user activity. If you deliver value, there will not be hard feelings. If you want to learn more about available tools, get in touch…

The Power of Fanatics

74% of users buy things based on recommendations of friends. That is an astonishingly high number. If you manage to convert simple players into fanatics, you turn them into ambassadors and then you just need to do the maths: if the average iPhone user has 100 friends, you have a potential 74 sales (or free downloads with subsequent monetisation) per initial user. Woah!

Most importantly though: this approach does not alienate users. Why not? Because you delivered value. Deliver value and users will appreciate that (just ask Tony Hsieh, he just sold his company for $887.9m; he sells happiness, he says!).

Cartoon Credit: http://www.gapingvoid.com/thisbusinessmodel876-thumb.jpg

Here is the presentation I delivered at Casual Connect Europe in Hamburg.

We said it before: mobile is the biggest mass medium on the planet, and now game developers (and not only the sometime masochists that have been there for years) flog to it. According to a fairly large survey by GDR (which can be yours for too many dollars to count and has been reported about here) among 800 developers, a quarter of them are now making games for mobile phones with most of them (namely 75%) – surprise, surprise – choosing the iPhone as their platform of launch. This is doubling last year’s figures (apparently).

The iPhone and its non-phone sibling, iPod Touch (and you have been reading that a year ago here, here and here) are proving a more attractive launchpad onto portable gaming platforms than dedicated gaming systems like the Nintendo DS and Sony PSP.

The reasons will be the same as they were a year ago: a platform that is relatively easy to work to and a simple distribution model. With the number of downloads Apple continues to pile up, it is no wonder that developers from “traditional” platforms (PC downloadable, online, etc) are attracted to that. They will also be less scared of the marketing challenges since they had had to market their games in the whole wide oceans of the Internet previously (i.e. there were no carrier safe havens with feature slots). Whilst this does not mean that every traditional developer’s games will be successful on the app store, the threshold to enter is lower.

It will be interesting to see if the wave will roll further into other “smarter” platforms, including Android, Windows Mobile (see the latest rumours for WinME 7, including full Xbox Live gaming implementation here), Symbian Maemo and Blackberry. With the device numbers clearly speaking in favour of that, platforms becoming more accessible and, last but not least, with easier paths to the users via OEM app stores, this is to be expected. Good times for mobile gamers!

We’re in full swing in the conference season, and next week, one of the more exciting conferences in the game space opens its doors in pretty Hamburg again: Casual Connect Europe, the old world iteration of the event by the Casual Games Association gives a fantastic cross-section of the state of the game across platforms. There are a number of strands to follow, including mobile, where a lot – unsurprisingly – centers around smartphones and the iPhone as well as the change to ecosystems that app stores but also the higher (actual) connectivity of these newer handsets have brought about.

I will be there, too (attending and speaking). So if you are in town (or want to get a good grip on the latest and greatest in the casual games space, head over to Hamburg and give me a shout.

The mobile version of Tetris, the iconic game published by EA Mobile, has now clocked up in excess of 100m paid downloads, cracking a landmark that is arguably miles ahead of everything else. This in itself is to be lauded.

However, in the press buzz around this incredible achievement, I have not seen anyone reminiscing on what brought this franchise to EA Mobile, and the deals leading up to that are something not to be sniffed at either, so here’s to the people who made an audacious move in 2005 when they bought Blue Lava Wireless, the Hawaiian studio run by Henk Rogers (who is also the CEO of Blue Planet Software, which still controls the rights to the game), together with a 15-year license to the mobile game for a rather breathtaking $145m ($137m + c. $8m non-recoupable license advance to the Tetris Company in which Blue Planet Software holds 50%).

The company at the time was Jamdat who some people described as the only company ever to go public on the back of a bowling game (Jamdat Bowling was one of the first run-away successes in the mobile space). Jamdat had just floated on Nasdaq in a $86m IPO (here’s the original S-1) with its market cap at the end of the first day of trading standing at $439m (up 45% from opening). They had struggled a little outside North America (as per their S-1/A nearly 80% of their revenues were North American) and were hence pondering to leverage Tetris’ global appeal to grow their markets outside the US. And how well they did!

At the time, however, few people thought the transaction would amortize ever. This might have been besides the point since the amortization for the original Jamdat shareholders came soon by the $680m acquisition by EA but few people (me included) had thought that the mobile Tetris property could yield a positive ROI (in isolation) on the back of, effectively, one game. This is naturally grossly simplifying since the lever of Tetris into carriers Jamdat did not reach prior to that provided incremental growth across the portfolio but the fact that it appeared to being an extraordinarily rich deal remained.

I do no longer have my numbers on what was needed to provide a satisfactory return but, over the 15-year license term, I believe it stood somewhere around $225m. With 100m paid downloads, EA may very well be there already – and this after only 5 years or so (this is again a simplification since there were of course sales prior to the acquisition).

I therefore tip my hat to Mitch Lasky, Jamdat’s former CEO and now a General Partner with Benchmark Capital (his very enjoyable personal blog is here), who had the foresight and/or luck to score this deal and I bow before the success of Tetris!

The biggest event in 2010 is, distinct to certain fanboys opinion, the launch of the iSlate or new iPhone or iAnything nor, as Canadians will have us think, the Olympic Winter Games in Vancouver, but the Football World Cup this summer (and, no, my dear American readers, this is not the Super Bowl). And whereas one could already see mobile rearing its beautiful head at the last World Cup 2006 in Germany, many people think that South Africa 2010 will provide a breakthrough in mobile service provision around this.

Therefore, quite fittingly, the wonderful guys at Camerjam have put together a conference on the topic, and a nice one, too. The speaker line up includes some proper rock stars, such as (in no particular order):

• Former FIFA Product Director Rupert Daniels
• Author and Blogger Tomi Ahonen
• WPP Global Client Leader Matt Linder
• ITV Media’s Commercial Director Alex Goudsmith
• Real Madrid’s Head of Mobile Pedro Duarte Gonzalez
• MMA Managing Director Europe Paul Berney
• AdMob VP Russel Buckley
• BBC VP Global Adsales & Strategy Tom Bowman
• Sky Mobile GM David Gibbs
• Layar co-founder Claire Boonstra

and many, many more including yours truly (and as a licensee, I will be cheering the reigning World Champions, Italy, on this time, believe it or not!). Besides all that, the venue is the best: Arsenal’s home ground, the Emirates.

If you want to come, it’s on next week (21 January) and you can register here: http://www.camerjam.com/events/m-football/register/

Mobile sports specialist Player One, that were acquired (or so everyone thought) by ROK Entertainment in October, seems to have hit the wall or, in proper English, entered administration. ROK is – understandably – said to be fairly unhappy about this.

So: the mere fact that Player One folded is not all that surprising. Many in the sector had wondered for a while how a company that focused largely on niche sports properties (a lot of their licenses where very Brit-centric) could survive for so long. However, that they should bite the dust two months after allegedly being acquired by ROK, which is, at least, listed somewhere even if only on the Pink Sheets (not too healthy looking either, mind you…) is surprising.

How can you acquire a company that is in such dire straits that the directors feel compelled to file for administration? Where is/was due diligence? Or was there foul play, lack of disclosure, anything else? Oh gosh, the joys of the Wild West of mobile content… NOT.

Here’s a cool graphic from the good folks over at Lifehacker/Gawker on the size and significance of the Internet.

Image credit: http://cache.gawker.com/assets/images/17/2009/12/500x_theinternetisbig.jpg