OK, this suffering a little from the usual simplification inherent to this seemingly favourite pastime of many, namely of creating infographics, but I thought there were a few interesting bits in there nonetheless, so enjoy…
A fresh new year and it is time for the latest numbers of the Angry Birds phenomenon, and they are impressive indeed!
Most mobile game developers would be quite happy if their game would clock more than 5m downloads. Hell, they would probably throw a massive office party for that! Well, Rovio made more than that in a day (OK, it was Christmas Day): 6.5m copies of the various Angry Birds games (paid and free) were downloaded on 25 December 2011 alone. Woah!
The formidable Stuart Dredge treats us to some more background on Angry Birds. To cut it short: by December 2011, Angry Birds had more than 600m downloads. That is more downloads than people living in all of North America – all the way from Alaska down to Panama! About 1/3 of those are monthly active, 1/8 daily.
Given that they also make money (seemingly nearing $100m in revenues) and not only from games but from selling 1m toys and 1m t-shirts per month, too, it is perhaps understandable that they are said to have rejected a $2.25bn acquisition offer by Nasdaq newbies Zynga. I can understand that they may not have been too thrilled to work under the hard-charging (according to some, too hard-charging) “CityVille-ains” but I still wonder if that would not have been a worthwhile cash-in (though it would arguably have been a share deal and Pincus only knows what on which valuation of Zynga that would have been based!).
Rovio has great plans, they are hiring senior entertainment talent (Dave Maisel of Marvel fame for instance), they are diversifying quickly, they execute with adorable flawlessness. But they have not yet shown that they are capable of repeating the creative spark with equal vigour and verve. On the one hand, they are a very, very talented bunch (I published games by them previously: great content and lots of polish). And they have some serious reach now, which gets them a lot of promotional punch. They have also been great in getting out on as many platforms as possible to make sure to fuel the brand as a true mass market proposition rather than contentedly sitting on iOS only and being happy with that niche (bear in mind that J2ME is still many times larger than iOS in terms of reach; for brand awareness of a consumer brand, this is a crucial factor).
However, it is a hit business, isn’t it? And I doubt there is a recipe (or that Rovio has it): Anecdotally, Chillingo, the publisher of the original Angry Birds on iOS (subsequently acquired by EA), uses its Chillingo label for the “premium” games and their Clickgamer for the rest. Angry Birds was published under the Clickgamer label. So did anyone know? I don’t think so.
I would love to see them thrive because they deserve it: they are a hard-working and lovely bunch. So go, my good folks, mighty Eagles, Albatrosses and the whole swarm!
I have been blogging way too little recently, so here’s – finally – a bigger one again.
What is a Publisher?
I have recently been asked more and more what the role of a publisher in mobile gaming is today. I mean, heck, there are now even websites proclaiming the (traditional) publishers’ death. On the other hand, venerable old and ruthless new ones are on a spending spree acquiring – seemingly – studios and smaller publishers by the dozen: In the past year or so, EA gobbled up Playfish, Chillingo and Firemint (and probably a few more I don’t know of). Zynga, even hungrier, absorbed XPD Media, Challenge Games, Conduit Labs, Dextrose, Bonfire Studios, Newtoy, Area/Code and Floodgate Entertainment. So what is right?
According to Wikipedia, a videogame publisher is (was?) someone who
publishes video games that they have either developed internally or have had developed by a [...] developer. [...] They usually finance the development [...]. The large video game publishers also distribute the games they publish, while some smaller publishers instead hire distribution companies (or larger video game publishers) to distribute the games they publish.
Other functions usually performed by the publisher include deciding on and paying for any license that a game may utilize; paying for localization; layout, printing and possibly writing of the user manual; and the creation of graphic design elements such as the box design.
Pretty old-school stuff, you say? Erm, yes. Broken down from its beautifully naive pseudo-scientific language, we arrive at the following:
Is the Same in the Digital Realm?
Now, the Wikipedia definition pretty much focuses on traditional console and PC publishing, it seems (box art anyone?). And this is where the new world sharply departs. No box art, no Walmart or GameStop deals are required if digital distribution is in place. How difficult can it be then for the more modern, more evolved (?) world of digitally distributed and, perhaps (but only perhaps) even more specifically for mobile games?
Nos. 1 and 2 above are pretty much arbitrary parts of the puzzle: you can get money from many places (or not of course) but it is a financing game, and video games could be called a specific (because intrinsically hit-driven) asset class. That is to say, these are not unique attributes.
No. 3 is a combination of money, know-how, experience and network. The more complex the landscape the higher the value of a specialist in the field.
No. 4 is, well, arguably a much easier game when you can feed your distribution channels from your own desk – via the Internet. However, again, the more channels you need to serve, the more complex the landscape, the higher the value of someone "who knows".
Nos. 3 and 4 are – arguably – what made Chillingo (based in the same honest North-West English town as I am) what it is (or, prior to its acquisition by EA, was): Chillingo seems to have had a knack of identifying good or at least decent games and promote them effectively across digital channels. Alas, their biggest hit, Rovio’s Angry Birds had not much good to say about them in terms of support. And indeed, if one looks at what Rovio did with its hit title outside of the Chillingo relationship, one can argue about the value add it had received from its publisher. But then again, Angry Birds seems to have been one of a kind, and there are other titles Chillingo brought to reasonable success that may not have had the same success – be it for lack of a Mighty Eagle such as the fearless and tireless Peter Vesterbacka or otherwise.
Chillingo, alas, is not where it’s at, I think. The war is being fought over those (in)famous MAUs – or monthly active users. You see, if you can command those hundreds of millions and parade your own wares by them, the likelihood of your next game becoming a success rises: Digital connectivity solves the dilemma of publishing of old, and that was to attract the attention of the gamer (your customer!) for your next release.
In a box-product world, you had to shout again, and very loudly, in order to have your customer part with his hard-earnd monies for the benefit of your title rather than your competitors’. This is – arguably – why EA Sports sponsors UK football (scil. soccer) broadcasts: "please, God, let people not defect to Konami’s PES from my very own EA FIFA".
Now, Zynga laughs all the way to the bank on this: if you played FarmVille, you will not have come around of realizing that CityVille was out. And you would also get additional points if you also played Zynga Poker. The result? Well, check the top-10 games charts for Facebook games for yourself. Suffice to say that Zynga is – according to the second market – worth more than Electronic Arts… Why is that? Eyeballs, addressable users, dollars spent per acquired user. That the business model is a little different for console games than it is online, doesn’t really matter for the argument here: you can drastically reduce the user acquisition costs if you play it smartly, so no need to take in $39.99 per game in order to break even. $1 or $5 will be just fine, thank you very much.
The above is also the reason for the spending spree of the publishers, I would suggest: if you can buy eyeballs and get a studio with proven skills (just check out either of Newtoy or Firemint on the mobile end), and you can combine it with a mechanism to attract people to future releases, there is a much better chance you can recoup your investment on that future release (effectively de-risking nos. 1 and 2 from the above list).
And now for Mobile!?
Zynga, EA’s Playfish and Crowdstar have shown that you can tweak the fortunes your way if you smartly combine game releases, updates and promotions to work with each other. But how is it for mobile? Backflip Studios, which rose to fame with a simple but well-executed game ("Paper Toss"), claimed to have had racked up more than 2m daily active users and 50m total downloads, mostly driven through promotion of its own titles inside, well, its own titles. Did it have a publisher? No. Does it have a very smart CEO who solved nos. 1 and 2 above and knows how to play no. 3 itself? Yes. So what about no. 4, distribution? Well, on iOS, that is a non-issue: one distribution channel to bind them all. However, on Android, it still falls short of a copycat, "Toss It", who were there earlier, are as ingenious and still rule. And elsewhere? Not much.
But we don’t have to rely on one case alone, and one by a small – though incredibly smart – studio no less. Look at Zynga’s performance on mobile. It is mediocre at best. EA though? Not so bad. What do they do? Well, apply the good old publishing principles learned in the olden world.
And this is where the specific complexities of mobile come into play: mobile is fiendishly complex. On the OS side, there is iOS, Android (in an increasing number of iterations), Windows Phone 7 (with some added spice since the announcement of their Nokia partnership), Blackberry, Samsung’s bada, and then maybe BREW, perhaps still a little bit of Symbian and J2ME. But then there are also the still mighty gatekeepers, the mobile operators. And then you will see that users tend to want to have it their specific way, ideally localized. The plethora of channels thus created makes it tough on a developer to maneuver its way through…
There are tools that can aid progress (and, yes, our very own Scoreloop provides some of them) but it is important to recognize the complexity of it all. Reaching users and convincing them with compelling offers is key to success in any world. It is important to bear that in mind in mobile, too. And if you think you cannot walk it on your own, a publisher might just be the right partner for you.
Since 1. and 2. above might not be such a big thing anymore (mobile titles can be developed for less – and, yes, I know this does not necessarily apply to the likes of "Galaxy on Fire" or "Real Racing") and 3. might be manageable but 4. might (not: always is) still be a key reason to part with some share in order to reach the user, convince the user, be able to bill the user.
Earlier this week, I gave a talk at the Mobile Gaming Conference at ICE, the premier i-gaming (that’s gambling to you and I) event in London. Below, you will find the slides to the talk.
Let me outline briefly though why I think that social elements to gaming is something that I find the gaming (as in gambling, real-money gaming, etc) sector should be excited about (and it was hard to tell if many people were; ’nuff said):
“Social” games work if they address or are based upon a community of sorts. This needs to be supported by the game design and its mechanic as well as through tools that actually allow those communal juices to flow (and, yes, that’s what we at Scoreloop are doing and that’s why I am preaching about the subject so regularly). Now, the gaming folks have a lot of this sitting on a big silver plate right under their noses: “proper” gamers, i.e. those who spend money on their pastime, are tied together by that particular passion (this of course equally applies to all those passionate about lost puppies, cows and golden eggs…). For the real-money folks, there is also the billing side to consider: their clientele is used and quite willing to pay, and a billing relationship is often already in place.
The addition of social elements to such “real” games can essentially do two things then:
Cement existing customer base and avoid promiscuity of users
I have been hearing this a lot: users on, say, real-money poker sites often play on multiple sites. This is painful to the gaming operators as they spend considerable amounts recruiting their folks. It is a race to the bottom (of sustainable margins) and the adjustment mechanisms are scarce and largely reduced to bounties and clever marketing. Adding social elements adds that glue that increases the likelihood that players will stay with you. Why? Because they receive value over and above the core proposition: they feel better nestled into their community, which is – albeit a little intangible – real and not only perceived value. Incidentally though, it is also value that is not that expensive to create (cf. above under “margins, low).
Attract new users
Outside the hard core of gamers, there is a whole lot of people who are quite content to play for fun (Zynga Poker still has more active users than most “real” poker sites combined). Funnily enough, Zynga also makes more money with its soft version than a lot of gaming operators do with its real one. This is because a) they tie it into the social graph and b) a lot of users just like to play for fun – but they still spend money, only in more manageable increments.
I suggest that this is a major entry gate for gaming operators to attract new users (though I do not suggest that “hooking” people is something good!). A softer approach that introduces many shades of grey rather than only offering black and white will make it so much more compelling to play, properly or only trying it out and the very folks that are in the prime spot to capture these users (because they have all the experience, background and know-how) leave a lot of money on the table there (pun indeed intended).
But now, without any further ado, here are the slides:
For those of you who like that better, I have also uploaded it to Sribd here.
I stumbled across an interesting piece of intelligence today, which looked at the development of virtual goods in the market place. According to this, median spend on virtual goods by users in North America has climbed a whopping 67% year-on-year to $50 p.a.
Equally interestingly, males are the largest spenders and, broken down by ethnics, Asians (26%) lead Hispanics (20%) by some margin over whites (11%).
So far (sic!), most virtual goods (how many? I don’t know) are purchased from stand-alone web-based games (World of Warcraft anyone?) but 31% had bought items in social networks (that would be the Zyngas and Playfishs of this world) with 29% in “network-based games” (what are they, I wonder). Facebook credits were used by 16% of buyers. Mobile? No word. It’s coming though: do bear in mind that there are 3x more mobile subscribers in the world than Internet users! And, yes, that’s true…
In my last post, I hinted that the Google/AdMob deal might just not be the #1 deal of the week and, whilst one can of course dispute this, here’s why:
On the same day Google’s AdMob acquisition was announced, there were more guys walking to the bank, namely the good folks from Facebook games kings Playfish (well, joint kings with Zynga) who have been acquired by Electronic Arts for a cool $400m (incl. earn-outs).
Why is this more significant? Because it is (like Google/AdMob) a cross-platform play that (unlike Google/AdMob) also expands the basis of business models deployed. Playfish derives the majority of its revenues from so-called virtual currencies, and in particular also from lead-generation deals (which recently have become “a little bit” under fire for queries of their ethics). But ethics or not (and Playfish seems to have been fairly clean in this respect), the main point is that there has been a business model that is new, well -ish: it is not reliant on display ads nor paid subscriptions or download fees, etc. It is a new form of engagement there, crude in its beginnings but new no less: users are encouraged to interact with brands in exchange for personal details. Now, if done – as often – crudely, this has a bad feel.
But brands might also want to grab this with both hands because it offers unprecedented opportunities to truly enagage their users: interact with them and they will be more forthcoming. Behave and their sentiment will be positive. Be sincere and they will recommend your brand to their peers (which accounts for 74% of purchases online!). Check my recent keynote on this topic…
EA had changed the mobile gaming world when it acquired Jamdat by using a significant distribution footprint and leverage it with its own brands and the financial muscle only someone with its revenue HQ outside mobile could at the time. The acquisition of Playfish provides a similar footprint in the online world (do not forget that Facebook is “only” the largest bridgehead of online games).
As with Jamdat, EA is expanding the options of available business models and this is to be commended!