Mobile Gaming: the truth – and what we can learn Part 1 – Commercial

Posted on April 24, 2012

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This post was originally posted on my internal IBM blog on 16:36 01/02/2012, Steve Devo, commercial, discoverability, freemium, games, internet, mobile, mobilegames, Mobile Internet

There is a thriving and vibrant mobile gaming industry in the UK, and it is starting to have effects beyond gaming with so called “gamification” and “socialisation” (you are allowed to smile or groan at this point) of applications starts to become more mainstream. So lets take a look at the gaming market and some of the more prevalent aspects.
I have written this after attending a Mobile Monday London conference this week with my own experiences talking with the mobile community here in England.
There are three parts: commercial, technical and buzzword. This email is the commercial, the second is the more technical and the third is, you guessed it about those two concoctions mentioned above.
I put a few cheeky “IBM should …” statements in to hopefully spark a little debate.

Commercial Aspects

Freemium model has taken hold and is now the main driver of revenue.
Freemium is where a game or app is provided free to try, and if you like it you pay (in app charging) to have access to the rest of the game, or to buy upgrades in the game such as better weapons, extra levels, better cars etc.
It should be noted that when freemium is added after a game has been built it nearly always leads to a poor user experience, therefore in app upgrading must be built into the design.
Lots of games cross sell/advertise the publisher’s other games, and analytics is starting to be used to maximise these opportunities.
Starting to see that games will send back usage and activity data to the server to drive this analysis, indeed this is critical to success.

IBM should consider a more explicit fremium model in their big tools like RSA, the ability to buy access to advanced functions as and when I as a user need them would make the management of license fees far more acceptable, especially in the mid market. This also support the gamification of apps more of which in the third email.

Discoverability is a big issue, because there are 380k and 500k apps in the android and apple app stores, and they are averaging 100 new games per day. You can pay to be in the apple preferred top 25 lists or selected lists however this is very expensive and if the game is not a natural hit it will die quickly, obviously cost of getting those people back is much higher again, so make sure game is ready before you attempt this type of marketing.
Conversely it is wise to get the game out early and see what the user reaction and usage patterns are. This is aided with freemium as you can add new sections and better replacements later (if the app is able to load modules) or use the upgrade functions of the platforms to send new better versions to the users.
Yoshi Monsters spent 10 of their £11M funding getting the game of the ground, that’s not good enough and way beyond the budgets of most game publishers so the Games industry investors are now looking to see that a publisher has not just build and creative skills, but also analytical marketing skills.
Acquisition of these analysis skills is a problem for a lot of these smaller companies, but it is one of the ways that some small publishers are rising above the crowd and solving the discoverability problem.
A further use of the analytics is to alter the game design as well as the price of the premium parts, thus parts of the game move in and out of the premium sections, and the costs change in response to usage, including the equivalent of abandoned carts within the game. Clever stuff, you might say this is taking scrum/agile methods into the post launch period, and that is what is so smart. You could say this is games companies version of “live life in beta”.
IBM should consider extending/selling cloud services from Unica and the like into this SME/mid market segment as soon as possible. This may just mean a bit of focus in our advertising/marketing budget. Setting up a presence around the silicon roundabout may be a way to tap into this market, and indeed the woder technology greatness that is happening there, and hey Hoxten is a nice bit of town (honest guv)
Interestingly game publishers with games that are on both iOS and Android tend to spend advertising dollars on android more than iOS as the costs to get noticed in iOS are too high for most to afford (see Yoshi above).

The inability to get your game noticed without being clever and/or having some decent wads of cash meant that out of the 248 mobile game startups in England last year (most in London) 135 died within the year. This is about double* the usual attrition rate. (* having trouble confirming this statement though, so grab some salt)

Copycat games are a problem because a successful game will get copied ad infinitum.
There is still money to be made from java games, but this is in the growth markets rather than the western markets where smartphones are dominating.

Revenues
But what is the income split for a game ? well typically it looks like this
20% advertising- other people advertising within your game/site
20% is for game – purchase of the game
60% is digital goods – upgrades and additions. eg in a zoo game you might buy extra ground, a cafe, more exotic animules etc.
you’ll notice there is no product placement in that list, this has not worked on the console gaming world because the amount of effort required to manage the relationships is too great for the small amount of income it generates. Also gamers are quite a harsh audience and decry any placement that are too obvious or get in the way. It is expected that this issue will not change with a switch to a mobile platform.

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