NMBA panel looks at mobile, PC gaming

Whether the platform is a console, PC, mobile phone or interactive TV, electronic games are a thriving business. But, not all games make money. An event organized in Toronto on January 20th by the New Media Business Alliance looked at business models, demographics and other facets of game development for gaming in both Canadian and foreign markets. A discussion panel – moderated by Warren Currell, president and CEO of Sherpa Games – featured Damir Slogar, founder and CEO of Big Blue Bubble, which since 2004 has been developing games for mobile devices, as well as Jennifer Crisanti, a founding partner and VP of new business development at Splashworks, which has been developing online games since 1997. Slogar, a 20-year veteran of the gaming industry, said his firm develops 70% of its games for cell phones and the remainder for consoles. Most of Big Blue Bubble’s output is marketed through "big publishers," though he conceded the description is a relative one in the mobile space. He estimated that 90% of the mobile games sold in the US and Canada have "seven or eight" major publishers behind them. Slogar presented a case study of Jewel Quest, a puzzle game that is one of mobile games vendor I-play’s all-time best sellers. It has been the most popular game for four months on the Sprint PCS network, the US telecom leader in mobile games. Overall, it has generated six-month sales in the "seven figures." Big Blue Bubble would be pleased if any of its other games earned even 20% of Jewel Quest’s revenues, said Slogar. "One hit out of every five or ten games you produce must make up for the losses on the others." While Jewel Quest "didn’t bring anything particularly new to the market," said Slogar, it fared better than many other games with similar mechanics because it was "polished to the maximum" so that every aspect worked perfectly. The developer anticipated the game’s success, so its pitch to the publisher focused less on recouping development costs than on obtaining a higher royalty on sales. "It was a no-brainer," said Slogar. "If a game is already selling well on PCs, why wouldn’t it sell on mobiles?" Similarly, games that are produced under licence from – and launched in parallel with – Hollywood blockbusters like King Kong can be expected to do well. "How much money you make depends on how successful the movie is going to be," said Slogar. "Being the number-one-selling game for a month is better than having average sales for a year." If, however, a game is original intellectual property, rather than a spin-off of an established brand, such as Big Blue Bubble’s forthcoming release of 24, based on the television counter-terrorism series, then it is much trickier to judge its potential. He recalled how the firm’s second launch, a game called Geeks, was well-reviewed yet proved to be a "total disaster," failing to earn back even 10% of its development costs. "The biggest mistake we made was putting numbers in the game. People just didn’t want to associate math with gaming." When a game is going to be designed with a well-known brand, the developer may receive an upfront fee from the publisher that covers development costs, which average $80,000 to $120,000 to customize the product for 10 different mobile devices. In the case of Destroy All Humans, Big Blue Bubble’s alien attack game, it was necessary to adapt it to 28 different mobile sets. If a publisher takes a game to the mobile market and sells it for $5 a download in the US, the developer will receive about $1. In Asia, which has the world’s largest market for mobile games, the price per download is much lower, and the developer may receive only $0.10. In any event, the key player in the value chain for mobile games is the telecom carrier, which "has control over everything" according to Slogar, and takes the largest slice of net revenues and leaves the responsibility for promotion and quality control entirely to the publisher. The carriers also block subscribers from downloading games sold through online portals rather than directly through them. "It’s a tough industry" for developers, he said. Crisanti noted that Splashworks has developed over 300 games over the past eight years, becoming Canada’s leading producer of advertiser-supported online games, or "adver-games." It has a client base of some 55 consumer-goods companies and ad agencies. Splashworks also has a library of over 80 titles that clients can license and brand to suit a particular ad campaign. Although Splashworks makes almost all of its money from adver-games, in the past 18 months it launched its first downloadable games that targeted individual consumers rather than corporate clients – Pipsoh and Bang On Blitz. It has three more in development, and views online downloadable games as an important part of the company’s future. The evolving business model at Splashworks, said Crisanti, is to "do everything with a game – get it out as much as we can in a downloadable form, create an online version with sponsorship and branding, and put it in our licensing library so that corporate advertisers can come in and buy the game to use as part of their advertising campaign. We do anything we can to make money with the game, because it’s our ." Splashworks’ biggest hit to date has been its real-time 3D game Mountain Bike Madness, which has been played six million times in four months on the shockwave.com platform and has been licensed to numerous anti-smoking campaigns in the US. "Being a little developer, we’re quite excited about the fact that licences don’t seem to improve the sales that much," says Crisanti. "Also, people like the same game play over and over again. A lot of times, you’re looking at re-skinning games that have a similar game mechanism." Games that are faring well online are ones like the gem-swapping game Bejeweled, the hundreds of different titles of Mah Jong, the action-puzzle games Zuma and Luxor, and the block-crunching Collapse and Super Collapse. In general, 3D action games are not the ones that are flourishing online, says Crisanti. Players who like sensational graphics and special effects will largely shun online downloadables and gravitate toward consoles, she said. The 3D games that do have an online presence tend to be ones that are advertiser-supported. Their players tend to be a younger audience of 10 to 14-year-olds who don’t have the disposable income to buy the latest 3D games created for consoles. Surprisingly, the major demographic for casual gamers are women aged 30-plus, according to Crisanti. "They have families, they’re at home, they’re playing in the middle of the night," she said. "They want these games online, they want it to be really simple, and they don’t want to be part of communities or read all the magazines or learn a new system. I think they will evolve and will be looking for original content at one point, but it has to be introduced very slowly. They will learn only one new thing in a game." The online game developers are operating in a less complex value chain than their mobile counterparts, said Crisanti. "It’s a lot easier for us to develop and release." The space includes just the developers and a small number of online distributors who are relatively easy to reach. "They’re always looking for new content, so once you get to a certain level of development, they will continue to look to you," she said. "We really believe it’s momentum. You just have to get enough games out there, and one of them is going to be a hit."

NMBA panel looks at mobile, PC gaming

Broadcast | February 3, 2006

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