Finland’s Rovio said on Monday it had inked a deal with Danish toymaker Lego to produce a line of Angry Birds building blocks as a bid to revive its ailing licensing business based on the popular mobile game.
Rovio, whose 2014 earnings fell 73 percent due to a drop in licensing the Angry Birds brand on toys, clothing and sweets, said the release of the Lego toys would coincide with the premiere of its full-length Angry Birds movie in spring 2016.
The Angry Birds game, in which players use a slingshot to attack pigs who steal birds’ eggs, is the No. 1 paid mobile app of all time, but the brand has been losing appeal and Rovio has struggled to produce new hit games.
The company is hoping the upcoming 3D movie will help the toy business turn back to growth.
Rovio recently cut about 110 jobs, or 14 percent of its workforce.
Is there a future for smaller developers on mobile devices? That’s an awful question to have to ask, yet it’s one being asked – with some variation in the phrasing or the approach – in quite a lot of contexts recently. Mobile platforms, once seen as safe refuge from the drastic collapse of the mid-range PC and console market, are now themselves displaying the same symptoms; soaring budgets, dependency on franchise or licensed IP, and a market increasingly dominated by the tiny percentage of games which “hit”, leaving not even scraps for the vast number of games that “miss”.
We watched that happen to console games over the course of the last hardware generation. It’s a vicious cycle and it can be hard to tell where it begins; did consumers stop buying sub-AAA titles, leading publishers to stop funding them? Or did publishers, spooked by rising development budgets, throw all their weight behind a handful of “sure-fire” hit titles, starving sub-AAA development of finances, resources and ultimately, existence? A little from column A, a little from column B, perhaps; though I suspect it had more to do with column B, for reasons which are now being recycled in the mobile industry.
There’s no doubt that costs at the top end of the mobile business are soaring, with development and – more notably – marketing costs trending upwards at a rate which makes the rise in console development costs through the 2000s look positively leisurely. Companies like King and Supercell are spending up to half a billion dollars a year on marketing alone, and margins are tumbling as costs outpace revenue growth. This creates a twofold barrier to entry for newcomers. Firstly, the rapid advancement of mobile technology has pushed up basic development costs – say what you like about the console model, which freezes hardware advancement in five or six year increments, but it does at least give a long-term level playing field that gives developers an opportunity to master and ultimately profit from the systems.
Secondly, even if you can afford the now much more expensive development process for a top-end mobile game, the chances are you can’t afford to market it – not when you’re facing an onslaught of expensive marketing from the likes of King, or takeovers of some of the world’s most famous public spaces by Supercell. Winning mindshare from those giants isn’t within the grasp of a plucky startup; much as we’d all love to pretend that it’s all about the quality of the games, the reality is that at the top end of the market, it’s more to do with brand recognition, amplified by the “flocking” behaviour that’s endemic to social games.
To some degree, these companies are victims of their own past success. Much of the marketing spend that’s inflating their operating costs is not aimed at supporting the launch of new games, but at sustaining the growth of games that first launched three or four years ago. Clash of Clans remains Supercell’s big hit; Candy Crush Saga is still King’s biggest revenue stream. GungHo has Puzzle&Dragons, Zynga has Farmville. These are all old games, yet they are the marketing focus of their respective companies. This is actually not just a feature of those companies, but a feature of the market overall; a look at the top charts on the iOS App Store reveals that many of the games which remain most popular now are games that date back several years. That forces mobile developers to view sustaining the growth of their old hits as being just as important as developing new hits; more important, actually, because the old game is already a proven success, while all money spent on new development is, by definition, speculative.
It’s a tough balance to strike – focusing resources on your existing games, risking having no new titles to take up the slack when the old star finally fades; or focusing on developing new games, effectively re-rolling the dice that gave you boxcars in the past, but with the ever-present risk that you’ll never see anything but snake eyes again. This has echoes, actually, of a similar balancing problem that console publishers faced – which brings us back to the question of how the vicious cycle that killed off mid-range development got rolling in the first place. Faced with rising development costs, publishers had two choices. They could keep funding lots of games, knowing that plenty of them would turn out to be sub-AAA and might lose money; or they could dump all of their resources into a handful of titles, “guaranteeing” that each one would be an AAA title through sheer force of finance, spending money to bulk out the feature lists in a quest to stamp out every market risk imaginable.
We all know which way that went. We sometimes say that companies like game publishers are averse to “risk”, but that’s not the whole truth; they’re actually averse to one specific type of risk, operational risk – the risk that a game will bomb and lose money – while being entirely too relaxed about another form of risk, financial risk – the risk that grows as a game’s development and launch gets more expensive. Essentially, publishers (and big companies in general) are remarkably comfortable about spending enormous amounts of money on things; they’ll pump endless amounts of cash into the development of a game in order to tick every box on the feature list, telling themselves that they’re reducing operational risk (“it’s got multiplayer now, people love multiplayer! It’s much less likely to fail with multiplayer!”) while ignoring the now catastrophically high level of financial risk which means that, should the game actually fail, it threatens to take the whole company with it.
I digress, but this is as much about the careers of the company’s managers and producers as it is about the health or culture of the company itself; managers make a perfectly rational calculation that operational risk is much more dangerous to their careers than financial risk. Being in charge of a small game that flopped looks pretty bad, and being in charge of a small game that did well is a career positive but not an enormous one; while being in charge of a big game that succeeded is a career-making move, and being in charge of a big game that flopped is actually not all that bad either, perhaps no worse than being in charge of a smaller flop, since the industry tends to respect experience of managing large projects, no matter how badly they did in the end.
That’s what happened in the console and PC games business, and it was nothing short of apocalyptic for the small development studios which had once been the backbone of the industry. Many of those studios and their staff saw mobile development as a liferaft; yet here we are again. The raft is sinking into the same sea that consumed the mid-range development sector on console and PC. Budgets are rising, launches are getting more expensive and, from what I can gather, publishers are responding just the same as before – throwing more and more money at a smaller and smaller selection of products, trying vainly to insulate themselves from operational risk while all the while constructing a huge, shaky tower of financial risk. If anything, it’s even worse on mobile than it was on console, since one of the best things about mobile – the long tail that means successful games can keep on being successful for ages – conspires to give publishers a whole new way of avoiding operational risk, by dumping money into old, proven games rather than new, risky ventures.
If that sounds bleak, though, I’d urge you to consider the flipside of what happened on PC and console. The mid-range disappeared, yes; it was upsetting, it wrecked people’s lives in many cases, and it narrowed the kind of games available for quite a long while. Yet at the same time a whole new low-end of games (and I mean “low-end” in budget terms, not quality) emerged. The indie scene blossomed, from a new generation of bedroom coders through to a whole new wave of small, creative, innovative studios who have done more to push the medium of games forward than almost anything else in the past decade. Not every indie game was a success, but most of them were sufficiently low-budget that their failure could be chalked up to experience and the creators could move on to the next thing. “Fail again. Fail better”; Beckett’s words could be the slogan of the indie game scene.
Moreover, and crucially for how we choose to perceive the change in the mobile games industry, these “low-end” creators have a different concept of success to a large publisher or studio. Sure, Notch made billions and bought a Hollywood mansion; but while much of our attention gets focused on such enormous successes, the truth is that for most indie creators and small developers, “success” looks like the bills being paid, the paycheques being sent out and the funds for working on the next title being secured. Never mind billions; many smaller games would comfortably cover their costs and pay their creators a healthy wage with a few hundred thousand dollars in revenue, or perhaps even less.
On mobile, too, far away from the giant marketing budgets and multi-million-dollar development plans of the big players, such a sector can and will thrive. We are rapidly approaching the point where everyone in the developed world, and a healthy percentage of people elsewhere, will carry a smartphone; that’s a whole lot of niches to be filled, a whole lot of niches to be satisfied, an almost unimaginable number of daily moments to be brightened with a spark of entertainment. It’s nonsense to imagine that King, or Supercell, or any of the other huge companies dominating the top end of the market, are going to release games that satisfy and enthral everyone with a phone in their pocket. For those plucky, interesting developers who challenge themselves to fill the cracks and flow into the niches, there’s absolutely a living – a good living – to be made. There are challenges, the greatest of which may be discovery, but just as PCs and even consoles have seen the flowering of indie talent, the end of the mobile device “gold rush” doesn’t mean the doors are shut for smaller developers; as long as your dream is to make a living from creating games, rather than to buy a Hollywood mansion and a private jet, your dream is still alive.
Finnish mobile games developer Rovio is pinning its hopes on a costly 3D movie project helping it return to growth after a 73 percent profit drop,the latest sign its mainstay Angry Birds brand is waning.
A decline in its business licensing the Angry Birds brand on toys, clothing and sweets is adding to the problems of Rovio, which has yet to repeat the success of its original slingshot-based game which became the No.1 paid mobile app of all time after its launch in 2009.
Rovio said total sales fell 9 percent last year to 158.3 million euros ($169 million), although revenue from mobile games grew 16 percent to 110.7 million, as new offerings such as Jolly Jam and Angry Birds Stella Pop! helped total annual downloads reach 600 million.
Operating profit slumped to 10 million euros from 36.5 million.
“It is clear that a growth company like us can’t be satisfied with a falling revenue,” Chief Executive Pekka Rantala told Reuters.
Rovio, whose long-term aim is to become an entertainment brand on a par with Walt Disney, has expanded the Angry Birds brand into a spin-off TV series and is backing an animated movie set to premiere in May 2016.
Rantala said the total production cost of the Angry Birds movie will be about $80 million, and marketing costs, which will be partly paid by Sony Entertainment’s Columbia Pictures, would total more than the production budget.
“The movie will help us get the licensing business back to growth. We are already seeing signs of pick-up in licensing business, and pretty soon we will be able to publish new major partnership deals,” he said.
Having cut the number of licensing partners to around 400, including toy maker Hasbro, the company is also striving to build new brands alongside Angry Birds to be expanded into new games, consumer products and animations, Rantala said.
Analysts have said Rovio has been slow to respond to a shift to freely available mobile games, where revenue comes from purchases inside the game, as well as advertising.
“We have been building our team on assumptions of faster growth than have materialized. As a result, we announced today that we plan to simplify our organization … we also need to consider possible employee reductions,” Chief Executive Mikael Hed said in a statement.
According to Rovio, the Angry Birds game, in which players use a slingshot to attack pigs who steal birds’ eggs, is the No. 1 paid mobile application of all time.
Rovio has expanded the brand into an animated TV series and merchandising of toys and clothing, but at the same time it has struggled to retain players, resulting to its earnings halving last year.
In August, the company named Pekka Rantala, a former Nokia executive, as its next CEO.
Social and mobile game company King Digital Entertainment Plc lowered its 2014 forecast after reporting lower-than-expected second-quarter revenue on Tuesday, as gamers continued to abandon its “Candy Crush Saga” game.
King also announced a $150 million special dividend, or 46.9 cents per share, payable to shareholders of record on Sept. 30. Its shares, however, slipped 22 percent in after-hours trading after closing at $18.20 on the New York Stock Exchange.
The company, which went public in March, said it has reduced its 2014 forecast and expects gross bookings in the range of $2.25 billion to $2.35 billion from its previous estimate of $2.55 billion to $2.65 billion.
“We have seen a step down in monetization in the latter part of Q2 and so we have adapted the view forward,” Chief Executive Officer Riccardo Zacconi said in an interview.
Investors have worried that unless King delivers a set of consistent and long-lasting hits, apart from “Candy Crush Saga,” it might suffer the same fate as “Farmville” maker Zynga Inc and “Angry Birds” developer Rovio Corp, which are struggling to retain players.
King’s second quarter gross bookings, an indicator of future revenue, was $611 million, up 27 percent from the year-ago period, but less than the last quarter when it reported gross bookings of $641.1 million.
King has yet to see its other titles such as “Farm Heroes Saga” and “Bubble Witch 2 Saga” fully offset user losses of its “Candy Crush Saga” puzzler game that accounted for about 60 percent of second-quarter gross bookings.
“We expect ‘Candy Crush’ will decline, but have a very strong tail and a long tail,” Chief Financial Officer Hope Cochran said in an interview. “We will be launching the ‘Candy Crush’ sister title in Q4, which will give more longevity to that title.”
“All apps that access location need to request permission from the Android platform,” Janne Lindqvist [cq], who led the research project, said via email. “The problem is that people don’t pay attention to these default disclosures.”
Android phones display a flashing GPS icon when apps are trying to access the user’s location. But few people notice or understand what the icon is telling them, the researchers found.
The app they developed is designed to fix that, by making it clearer to users when other apps are accessing their location data. They tried several methods, including a message that flashes on the device’s screen reading, “Your location is being accessed by [app name].”
There’s no obvious way in Android for an app to monitor whether other apps are accessing location, the researchers said, but they discovered they could exploit a method in the Android Location API as “an effective side channel.”
They’re are in the process of readying their app for the Play Store. It doesn’t have an official name yet, but the working title is the RutgersPrivacyApp. “I’m happy to hear suggestions for a better one,” Lindqvist said.
They tested the app with a small group at Rutgers University in New Jersey. They said it was the first study to examine how people respond when apps tell them they’re being tracked.
The issue of apps collecting data isn’t new, and recent disclosures about government surveillance have shown that intelligence agencies might also be tracking data from apps. A recent report said mobile versions of Facebook, LinkedIn and Twitter were of interest to government spies.
Other research from Carnegie Mellon University in Pennsylvania has shown that seemingly harmless apps like Angry Birds and Dictionary.com have gathered some surprising types of information about their users, like their location and device ID.
At Rugers, the researchers wanted to learn how disclosures about location affected users’ attitudes towards apps. They tested the app on several Android devices, using a variety of apps including Firefox and Tunein Radio.
Participants said they were surprised at some of the apps that accessed their location, and that some apps accessed their location more frequently than they would have expected.
Lindqvist hopes to make Android users more aware of location tracking so they can make better decisions about their privacy. He would also like Google to provide better privacy controls and notices in Android.
He said he focused on Android rather than Apple’s iOS partly because the process of publishing an app in the Google Play Store is simpler, he said.
The official Angry Birds website was defaced by hackers after reports surfaced that U.S. and U.K. intelligence agencies have been collecting user information from the game and other popular mobile apps.
Some users trying to access the www.angrybirds.com website earlier this week were greeted by an image depicting the Angry Birds game characters accompanied by the text “Spying Birds.” The U.S. National Security Agency’s logo was also visible in the image.
The NSA and Britain’s Government Communications Headquarters (GCHQ) have been working together to collect geolocation data, address books, buddy lists, telephone logs and other pieces of information from “leaky” mobile apps, The New York Times reported Monday based on documents provided by former NSA contractor Edward Snowden.
Mobile apps commonly collect data about their users and share it with advertising networks, which then use the information to build user profiles for targeted advertising.
A secret 20-page GCHQ report from 2012 contained code needed to extract the profiles generated when Android users play Angry Birds, The New York Times reported. It’s not clear if and how this data collection happens, but the reports were apparently enough to anger some hackers.
The defacement of the Angry Birds website seems to have been the result of a DNS (Domain Name System) attack where the site’s name servers were swapped with others under the attackers’ control.
”The defacement was caught in minutes and corrected immediately,” said Saara Bergstrom, vice president of marketing communications at Rovio Entertainment, the Finnish company that develops Angry Birds. “The end user data was in no risk at any point.”
Bergstrom said the attack was similar to the one against The New York Times last year, referring to an incident where attackers pointed the nytimes.com domain to a server they controlled by changing its DNS settings.
Because of how DNS changes propagate on the Internet, the incident was only visible to some users.
In many areas the attack was not visible at all, but in some affected areas it might take time for the correct information to be updated, Bergstrom said.
This delay is caused by how DNS resolvers — servers that resolve domain names to IP (Internet Protocol) addresses — cache records. Some servers might cache the information for a particular domain for a longer time than others, in which case changes won’t be visible to users that rely on those servers until the cached record expires.
A copy of the angrybirds.com defacement can be viewed on Zone-H, a website defacement archive. It is attributed to a hacker using the handle Anti-NSA.
The Samsung Gamepad is compatible with all Android phones running Android 4.1 Jelly Bean and above, though Samsung said that it is specifically optimized for Android 4.3 Jelly Bean and above. It features an eight-way D-Pad, two analogue sticks, four action buttons, two trigger buttons, a Select button and a Play button.
The Play button is a link to the Samsung App Store selling console optimized games at “reasonable prices”. The Gamepad uses Bluetooth 3.0, but can also pair via NFC and even cast gaming onto the big screen using Samsung Allshare. Although there are a number of Chinese imports available, this is the first time a major player has brought an Android game controller to the table.
Samsung said 35 games are available through the Play button at launch with more to come in 2014. Launch titles include Need for Speed: Most Wanted, Asphalt 8, Modern Combat 4, Virtua Tennis Challenge, and Prince of Persia. These are in addition to existing games from Google Play.
Samsung is keen to tout this new device as an alternative to buying a more expensive console such as an Xbox One or Playstation 4 (PS4), and while we’re not really sure if it can match them, we can certainly see the advantages of a device like this over Android game consoles such as the Ouya or Gamestick.
The device is already available for pre-order at Expansys for $125.99. At present there is no date attached to it, and Samsung is only committing to “the coming weeks” as the time-frame for availability.
As it’s a device with a steel casing, Samsung clearly is not aiming this at the budget market, and if its functionality matches its specifications, it could be one to watch in 2014.
The independent gaming scene has been growing by leaps of bounds, so it makes sense that the events designed to celebrate it are keeping step. This weekend’s IndieCade Festival in Culver City, California (on the West side of Los Angeles) is the largest in the event’s seven-year history. IndieCade founder and CEO Stephanie Barish said the event is expecting to draw more than 5,000 people to Culver City, which has a population around 39,000.
Much like the indie scene it promotes, the show has also been getting increased attention from the mainstream gaming industry of late. Sony has been a primary sponsor of the event for years, but the 2013 show sees Nintendo chip in for the first time, with Microsoft returning to the list after taking 2012 off. Activision is also on the list of sponsors, as well as Epic Games (for the Unreal Engine), Unity, and 20 more companies. Barish said some of the event’s more recent sponsors saw how Sony benefitted from its overtures to independent developers and have been following suit.
“[Sony has] put four or five years of effort now into the indie development sector and it’s really paid off for them,” Barish said. “Developers are really interested in meeting with them. They see there are possibilities, that Sony has proven [indies] can do well and are treated well. More and more the fact that independent games are interesting to a broader public is becoming apparent to the larger publishers. As well, there’s a huge creative energy and force and momentum coming out of the independent sector, and they don’t want to not be part of the future.”
That future is a big part of the attraction for IndieCade. Attendees to this year’s show will be able to try out a handful of games on upcoming hardware like the Oculus Rift and PlayStation 4. In all, IndieCade 2013 features 36 “official selections” for the festival, with dozens more games on show. Barish expects that crop of games to not only produce some of the next big hits, but also draw attention to the next crop of important developers. In the past, she said IndieCade has served as a coming out party for indie hits like Braid and Everyday Shooter, or developers like Telltale Games (who would go on to create the multiple Game of the Year award-winning The Walking Dead series). It’s also been a place to debut games that think outside the set-top box, like Johann Sebastian Joust, a six-player game that uses music and PlayStation Move controllers, but no screen.
“It’s really important for the mainstream to see what’s at the cutting edge, and we just continue to bring things in that are more cutting edge, that are more different than publishers or other mainstream things would even think to look at yet,” Barish said. “We’re really a window into what’s going to happen.”
Among this year’s selections are That Dragon, Cancer (a narrative-driven game set in a children’s hospital over three years), Perfect Woman (a “strategic dancing game” for the Kinect), and [code] (a PC game in which players delve into ersatz programming code to solve puzzles). While some of the IndieCade games will almost certainly prove to be lucrative for their creators, Barish stressed that isn't the only way to measure their success.
"There's definitely a desire for the Cinderella story, but having seen so many of the games, they're really good," Barish said. "So even if they're not commercially successful, they're impacting the way mainstream games are designed, the directions and the trends for those."
The trend for IndieCade looks to be continued growth. This year saw the event spawn an IndieCade East sister show in New York City, a second installment of which is confirmed for February 14-16, 2014 at the Museum of the Moving Image. Beyond that, Barish said there has been talk about expanding the festival even further with a European event.
Fans of traditional, “core” games are often extremely hostile towards the new wave of casual and mobile titles, and even towards the people who play them. They’re keen to draw a line in the sand between these titles and “real” games and quick to portray players of Farmville, Candy Crush Saga or Puzzle & Dragons as mindless consumers of low-grade, repetitive entertainment that’s utterly disconnected from and disrespectful of gaming culture and the medium’s development as a form of art and entertainment.
There are good discussions to be had around those topics – not Internet flame-wars, but some interesting if slightly dry academic discussions defining the form and shape of “gaming” as a pastime, a medium and an artform. If we’re very lucky, some of those discussions could even avoid becoming tedious tug-of-war sessions between the “narrative has no place in games!” crowd and the rest of the world. None of them, however, will gain anything from employing “casuals” as a vicious epithet, or deciding to sideline millions of game players as insignificant because they’re “fake” gamers who play the wrong kinds of game.
Why does this kind of knee-jerk unpleasantness get so consistently applied to new, more casual audiences? There are uncharitable explanations which often point to uncomfortable truths – self-styled “gamers” have built something of a boys’ treehouse over the years, and dislike the invasion of new demographics which can include such unwelcome treehouse guests as women, homosexuals, trans people, ethnic and religious minorities, and even – gasp! – their own mothers and relatives. Is nothing sacred?! There’s also a broader sense in which this is not specific to games at all – there’s a more universal knee-jerk reaction which sees adherents of any niche pastime resenting and rejecting the arrival of a mass-market audience and products tailored to them. (“Ugh, you listen to chart music? Are your ears broken?” “You actually like JJ Abrams movies? What’s wrong with you?”)
At the root of much of the dislike of casual games and their players, however, lies a more basic concern – a fear that the rise of this kind of game is going to replace and erase the sorts of games which existing gamers actually enjoy. Watching Clash of Clans or Candy Crush Saga roll in countless millions in cash is a deeply uncomfortable feeling for the kind of gamer who trekked for tens of hours across Skyrim, who can utterly lose themselves in the flooded corridors of Rapture or the dingy streets of Dunwall, or whose adrenaline pours out when they’re ambushed by the Covenant or surrounded by the Combine. If Candy Crush Saga can make so much money, is that the future? Is that all we’re going to be left with – if not thematically, then as a business model or a creative approach?
That’s the fear that drives the aggression. There’s a hobby which we love, and a wealth of creative works which have given us unforgettable experiences – gamers fear that the new business reality represented by F2P and casual games is an outright threat to that experience and that hobby. In the chase after the new casual audience, game companies will be forced to abandon the pursuit of the kind of experiences which enrapture and delight the existing audience – or at the very least, to turn them all into tawdry fairground toys which demand that you pump coins into them to keep on playing, robbing them utterly of the atmosphere and immersion which is so much of their appeal.
I wonder, then, if the atmosphere of discussion and debate around games might become a little more civil (on this topic, at least) in the wake of two fairly important events in the past week. Firstly, you can’t have failed to notice that GTA V came out and smashed through sales records not only for games, but for just about every entertainment media imaginable. Of course, week-one sales of games surpassed the revenue of blockbuster movies long ago, but GTA V cements games as the dominant entertainment medium of our era by finally silencing the last bastion of naysaying – not only did it make more money in a single weekend than the biggest films in the world make in their entire lifetime, it was also purchased and played by more people in one weekend than the number who bought tickets for any recent movie. Revenue or volume; count it how you like, GTA V is the biggest entertainment property on earth.
Meanwhile, in Japan, another entertainment property went on sale – Monster Hunter 4, Capcom’s latest release. Its figures don’t rival GTA’s, but in the supposedly “declining” Japanese games market, it sold over two million units in its first week and helped to drive hundreds of thousands of sales of the 3DS – a console that’s meant to be a miserable flop thanks to the unstoppable advance of smartphones and tablets. That can’t rival Apple’s 9 million unit sales of the iPhone 5S and 5C, of course, but then again, that’s not a remotely useful comparison, no matter how often blowhard mobile evangelists trot it out – the 3DS purchasers are all confirmed gamers who will go on to spend heavily on expensive game software, while only a certain portion of mobile phone owners play games, a much smaller portion pay any money for them, and the amount of money they pay can be quite small (or quite large, of course, but certainly rarely exceeding the spend of a console owner).
GTA V and Monster Hunter 4; two games which are absolutely squarely aimed at the core gamer who is presently so terrified of being squeezed out by the flood of mobile, casual and social software. Two games which, completely uncoincidentally, have just become the biggest entertainment properties in the world and in Japan over the past few weeks.
There is no threat here. There’s a small and dwindling clique of hardcore evangelists who will try to characterise GTA’s success in particular as an outlier, an erratic piece of data that doesn’t change the overall context of the industry, but they’re absolutely wrong. GTA’s enormous release is actually a perfectly logical and predictable continuation of a curve which has seen the top-rated properties in traditional gaming ranked higher and higher in sales terms over the past decade or two. GTA V is not a last gasp of sales success for a doomed industry; it was inevitable that eventually, a core videogame would achieve this level of sales success, and it is also inevitable that a future franchise will surpass this (although perhaps not for a few years, as the new console generation and the other systems which will play host to the next giant release need to establish themselves first).
Social, mobile and F2P gaming isn’t going anywhere. Developers are going to get better and better at creating and honing those experiences, targeting specific audiences and even creating experiences in those categories that appeal to core gamers – no question. But this isn’t the only way to make a game or to make money from games. There will still be a huge audience who want 8 to 12 hour long amazing narrative-driven interactive experiences. There will still be a core audience for combative multiplayer. Hardcore FPS, long-form RPG, exploration of vast worlds; all of these things have huge audiences which, far from being drawn away by the lure of Hay Day or Bubble Witch Saga, are continuing to grow and expand. Yes, the really impressive expansion right now is at the casual end of the market – but that doesn’t stop core games from selling even more than they used to, as this month’s success stories prove.
This isn’t a zero sum game, and everyone needs to stop talking and acting as though it is. As long as there’s an audience that wants and is willing to pay for core game experiences, there will be companies that provide for that need. Mums playing Candy Crush Saga outside the school gates do not in any way detract from the value of the market that wants a new GTA, a new Monster Hunter or any other core experience. This expansion is not be aimed at core gamers, and a big mistake being made by lots of companies now is trying to apply rational choice models to a fundamentally irrational consumer behaviour and deciding that core gamers actually SHOULD want this kind of business model or game experience. However, that mistake aside (and it’ll stop once a few companies get badly burned for their foolishness), this expansion also does not harm core gamers. Once they realise that, perhaps we can all tone down the rhetoric and instead enjoy the hegemony of videogames as, quite remarkably, this generation’s truly dominant entertainment medium.
The mobile and tablet market has grown tremendously in the last several years. The number of apps on Apple’s App Store and Google Play is downright mind boggling, and if you’re an app developer… well, best of luck to you. As the new survey from App Developer Conference organizers revealed this week, piracy and discoverability are making it incredibly hard to succeed. Nearly half of the app developers surveyed made no profit at all.
So the question has to be asked: after years of flocking to mobile, are developers actually retreating to the PC and console space? “I speak with lots of mobile devs regularly and most are moving away or at least thinking of it, either to other platforms or out of the trade completely,” Paul Johnson, managing director and co-founder of Rubicon, told us. “Having to give your game away for 69 cents a throw (after Apple’s and Google’s cut) and then competing with 1000 new apps each day is hardly a draw for anybody. We’ve reached a point now where even those slow on the uptake have realized the goldrush is over. It’s actually been over for a few years.”
Jeffrey Lim, producer, Wicked Dog Games, agreed: “The mobile space offers certain advantages, like having the largest customer base and relatively low development costs. However, there’s no doubt it is getting harder to be profitable with the ongoing piracy and discoverability issues.”
“So yes, we do think developers (especially indies) are considering going back to develop for the PC – and even game consoles. The cost of self-publishing on these platforms has dropped significantly, and console makers are also making their platforms more indie-friendly now,” he added, alluding to efforts on next-gen systems like Sony’s PS4.
Chillingo COO Ed Rumley isn’t quite of the same mind as Johnson and Lim, but as a publisher, Chillingo has noticed that too many developers simply are failing to make high quality games, so it’s no wonder that their titles are being ignored.
“The number of games being submitted is growing, as is the number of developers contacting us. I’m not sure if some are being scared away, but we know from experience that some developers underestimate the time and quality it takes to make it in mobile now. Consumers are a savvy bunch and spot second rate games a mile off. You can’t just knock something together in your spare time, upload it and wait for the money to roll in anymore,” he warned.
Michael Schade, CEO, Fishlabs Entertainment, acknowledged the big challenge in mobile, but he doesn’t think developers are going to have to look elsewhere.
“Sure, mobile’s not an easy market to breach into, but then again, which market really is? No matter what business you’re in or what product you’re trying to sell, you’ll always have to work hard to gain your ground and make a name for yourself,” he noted. “So that alone shouldn’t scare you away from mobile, especially when you keep in mind that no other platform in the history of digital entertainment has ever evolved faster and born more potential than mobile! With more than a billion smart connected devices in use and hardware capabilities on par with current-gen gaming consoles, today’s smartphones and tablets constitute by far the most widespread, frequently used and innovative gaming platform the world has ever seen.”
Schade also remarked that the last few years of veteran developers getting into the mobile scene has made things more difficult. “The fact that more and more established PC and console veterans open new mobile gaming studios and more and more traditional publishers port their titles to iOS and Android, doesn’t make it easier for one particular company or product to stick out. But that’s not necessarily a bad thing, as it clearly shows that the trend goes towards mobile, rather than away from it,” he said.
For every developer we spoke with, the discoverability issue reared its ugly head. There’s no doubt that this is a major concern. While building a high quality game can help, it’s simply not enough. In the world of apps, you cannot let the game do the talking for you.
“I think many developers have the misconception that it’s simply enough to release the game and let it speak for itself. They underestimate the importance of a marketing/PR campaign leading up to the game’s launch,” Lim stressed. “As a result their games fail commercially; not because of the quality, but due to lack of visibility. Hence the marketing/PR campaign should be seen as an integral part of the game’s development. An appropriate portion of the overall budget and effort should be allocated to increasing the game’s visibility, and if developers do not have the experience or time in marketing/PR they should consider hiring professionals in this area to lend a hand.”
Gree vice president of marketing Sho Masuda concurred that marketing is becoming crucial to mobile success. “They have to spend more time thinking about marketing and post-launch efforts in addition to building the the games. Fortunately, there are a lot of tools and services available for devs of all sizes to ensure that they can get the direction and support they need in these areas. Additionally, the mobile dev community is a very, very tight knit community and there is an amazing level of information sharing and support,” he said. “We encourage mobile devs of all sizes to talk to their peers, take advantage of all the meet-ups and events, and get to know all the services available to help get eyeballs on their games.”
A number of devs also believe that platform holders have a larger responsibility that they’ve been shirking so far. “For platform holders (e.g. Apple’s App Store), they can start to curate apps released on their store because there are too many clones of existing games that are taking up the traffic. They could attempt something like Steam Greenlight; although it is still an imperfect system, it’s better than not having any curation at all,” Lim commented.
Paul Johnson agreed, telling us that he’d really like platform holders to have a much more active role, as the discoverability issue has “about reached terminal” for unknown devs.
“If Apple don’t pick your game out for a feature, and you can’t drum up enough interest before launch yourself, then I’d say you’re pretty much screwed. It doesn’t matter how good your game is if nobody ever sees it and downloads it. They can’t tell their friends about something they themselves don’t know about!” he stated.
“The only thing I think the platform holders could do to help is stop allowing crap to be released. There’s only so much space for features and the end users only have so much effort in them to look under all the categories all the time, so I really don’t think adding more of them would help much. Maybe more apps for shorter times, but this is all a drop in the ocean really.”
“The one thing I’ve come up with that would make a real difference is for the platform owners to charge five grand for a developer license. All the utter crap would disappear and there’d be less apps fighting for space,” he continued. “And the end-users wouldn’t have to waste time downloading the crap as nobody who makes stuff they don’t believe in would dream of fronting that license fee. It’s Draconian but it’s really the only thing I can see having any noticeable effect. Anything else is just lip service.”
Discoverability issues aside, another major – and possibly growing – problem for devs to contend with is piracy. The App Developer Conference survey showed that 26 percent of devs had their apps pirated and a similar amount even had in-app purchases stolen.
James Vaughan told us, “Plague Inc. has a piracy rate of about 30-35 percent, which equals millions and millions of copies, but I don’t consider piracy to be a problem; it is simply a fact of life and I don’t get too worked up about it. Piracy is a byproduct of success and I choose to focus on the success which has resulted in piracy rather than the piracy itself. (The best way to stop your game from being pirated is to make a crap game!) I focus on continually improving and updating Plague Inc. which makes the game even more valuable to the people who have brought it (and encourages pirates to buy it as well).”
For those devs who actually do lose sleep over piracy, there are some ways to combat it, Lim said.
“There’s no question that piracy is prevalent, and I think it will continue to be so for a long time to come. In fact, with high-speed Internet access and the wide spread use of file-sharing software nowadays I think this problem is going to get worse,” he observed.
“The first way to deal with piracy is to implement the appropriate business model, and I think free-to-download with micro-transactions is the right way to go. Making the game free for download can work to our advantage; it allows us to reach out a larger customer base. And if players are hooked by the game, they can be enticed to buy additional high-quality content for a minimal price.”
“The second way would be to build a strong rapport with our customers – e.g. through frequent interactions on social media, events or even email. Developers of notable games (e.g. Hotline Miami and Game Dev Tycoon) have addressed piracy in this manner. By having a loyal customer base which is appreciative of our efforts in delivering quality content, they would empathize with us and be more willing to pay for the games in support of our development efforts.”
The good news for iOS devs, at least according to Schade, is that Apple’s store is less prone to piracy. “Having lived through the ‘dark ages’ of Java and made it out of there with two black eyes rather than one, piracy has been a very delicate topic for us at Fishlabs ever since. Based on our own experience, however, it is not as much of an issue on the App Store as it is on other platforms,” he noted. “I guess that’s mostly because Apple still has a lot of ‘premium’ customers willing to pay for high-quality content. Of course, we’re well aware of the fact that neither the closed iOS environment nor the Free-2-Play model will ever be able to eradicate software piracy entirely, but at least they are doing a comparatively good job at containing it as good as possible.”
If developers can effectively navigate the problems of discoverability and piracy, there’s no doubt that the potential is massive. One look at the overwhelming success of Angry Birds, Temple Run, Clash of Clans and others proves what’s possible. But for the vast, vast majority of devs, that’s a pipe dream.
“From the consumer angle, it’s a golden age. The amount of good quality games that can be bought for laughable prices is fantastic and there’s a ton of money being spent on this platform as a result. The problem for developers is that each individual cut is tiny. This isn’t even remotely sustainable and I don’t know what the future is going to look like. If I was starting again now from a blank slate, without an existing fan base, I wouldn’t touch mobile with a ten foot pole,” said Johnson.
Rovio is packing up Angry Birds and taking it to China where it will be used as a teaching aid.
The game, which involves throwing birds at pigs in revenge for egg theft, sees people sacrificing a bird at a porcine alter. The best players will only sacrifice one of two of their feathered clique.
The game is already in China, but what Rovio is taking over is a learning concept that is based around playgrounds. The firm reckons that it has some expertise, as it says its export is “built on the highly respected Finnish educational expertise”.
“The concept allows children to experience learning in a fun way. It has been scientifically studied and proven in cooperation with the University of Helsinki, Cicero Learning Network – making education both engaging and inspiring”, said Sanna Lukander, VP of Learning and Book Publishing at Rovio.
The idea is that learning should be fun. Angry Birds has fun nailed, but the educational system can be lacking in fun. Rovio wants to change this.
“What if learning was fun? That was the question we asked ourselves when we started to develop this exciting new concept. Having seen the enthusiasm when children and parents spend time with Angry Birds, we wanted to create fun new learning activities for them”, added Peter Vesterbacka, the so-called Mighty Eagle and chief marketing officer at Rovio.
The first playground will open at the 123 Early Childhood Learning Centre in Shanghai. Children will be provided with books, toys, physical games, posters, reference books, card games and a five stringed instrument.
In a “fireside chat” at Casual Connect, ex-EA CEO John Riccitiello sat down with journalist John Gaudiosi to talk about the state of the business.
Gaudiosi asked what Riccitiello thinks of the state of the industry today and who the winners are in mobile. “It’s shocking how long titles stay in the Top Fifty,” Riccitiello said. He also noted that there’s no publisher with broad, long-term success on mobile. “Most publishers have only one or two titles in the Top Fifty,” said RIccitiello. “Almost no one has a title with more than a year in the Top Fifty, and there’s never been a successful sequel.”
Riccitiello’s solution? “Mobile needs to build brands,” he said. “Madden is in its 25th year. So far there’s precious little to indicate mobile is building long-term brands.” The touchstone for Riccitiello is how well people do version 2.0 of a successful mobile game. Can publishers create brands that will last for multiple years? He feels that is going to be a key towards creating a valuable mobile publisher for the long term.
Gaudiosi asked what the role of a publisher is in mobile games, and Riccitiello said that’s still developing. Classically, he explained, publishers do three things: Provide capital, turn content into money (transactions), and provide editorial service. Mobile developers still need capital (especially as budgets increase), and help improving a game (both technical and design help) is always useful. What’s not clear, according to Riccitiello, is how helpful publishers can be in handling transactions when the platforms provide much of that mechanical assistance. The conversion of content into money is a mix of technology, marketing, and design, and mobile games are showing themselves to be different in many ways than games on other platforms.
What needs to change, according to Riccitiello, is the balance of revenue between the distribution platforms and the content providers. “For Apple and Google over the last five years, perhaps half or two thirds of their increase in shareholder value is directly from mobile products. That’s about $300 billion of capital created by the distribution platform,” said Riccitiello. On the other side is content. “Games are about 75 percent of all mobile app monetization; perhaps $25 billion of shareholder value has been created by content. That’s ten times more value created by the platform creator. That wasn’t the case in console.” Riccitiello feels that there’s great potential for game creators to change that equation and generate a lot more value from the content than from the platform.
Gaudiosi then asked Riccitiello what mobile can learn from console. “I’ve visited with many developers since I left EA,” Riccitiello said. “Many have told me they want to bring console level graphics to mobile, and that will make them better. I tell them investing in better graphics without a better game is a road to ruin.” Riccitiello feels that while mobile power is increasing, the rewards will go to developers that generate more satisfying games, not just better-looking games. “One bit of advice as you’re looking at more powerful mobile,” said Riccitiello. “Think about how that allows you to create an experience you haven’t seen before. What game mechanic wasn’t possible before?” Developers that find good answers to that question will do well.
Finally, Gaudiosi asked if Riccitello had any thoughts on how second screen gaming is impacting the business. “No one really knows the answer,” said Riccitiello. “I sit on my couch looking at my email, playing a game on console, and playing Candy Crush on my tablet. I’m using mobile screens all the time. I have seen some absolutely stupendous dual screen experiences with console and mobile. I don’t think we’re scratching the surface so much as we’re waving our hand above a surface that we’re yet to scratch.”
Riccitiello said that some of us would argue that all you need is a tablet or a phone and wireless HDMI out, but he disagrees. “TV is going be used for mobile games and dual screen will be a really big idea when you figure out a gameplay experience that is better.”
It appears that the Ouya is going to be a bit delayed.
This is good news though, as it is being delayed because the console developers have more cash to spend on it, $15m more to be precise.
Ouya already raised around $7m on Kickstarter, and now, when it should be taking its last steps towards completion, it has had almost twice as much more injected into it by lovely venture capitalists.
We were expecting the console in early June, but that has slid back to 25 June. The time and money will in part be used to solve an issue with sticky buttons, something that usually only happens once consumers have taken some hardware home with them.
The money comes from venture capital firms and other companies including Kleiner Perkins Caufield & Byers (KPCB), Nvidia, Shasta Ventures, and Occam Partners. KPCB’s general partner Bing Gordon will join the Ouya board of directors as a result.
“We want Ouya to be here for a long time to come,” said Julie Uhrman, Ouya founder and CEO.
“The message is clear: people want Ouya. We first heard this from Kickstarter backers who provided more than $8 million to help us build Ouya, then from over 12,000 developers who have registered to make an Ouya game, next from retailers who are carrying Ouya online and soon on store shelves, and now from top pioneering investors.”
Gordon is in charge of digital investments at KPCB and is a veteran of the games industry, having started at Electronic Arts in 1982.
“Ouya’s open source platform creates a new world of opportunity for established and emerging independent game creators and gamers alike,” he said.
“There are some types of games that can only be experienced on a TV, and Ouya is squarely focused on bringing back the living room gaming experience. Ouya will allow game developers to unleash their most creative ideas and satisfy gamers craving a new kind of experience.”
Ouya consoles should start arriving in living rooms on 25 June. If you want one, you are going to have to come up with around $100 dollars, plus another $50 dollars if you want two controllers.
As Chief Executive Mark Pincus, 47, leads the online games developer he founded in 2007 through perhaps the most crucial year of his tenure, he is pushing to restore revenues by doubling down on “FarmVille,” the franchise that took Facebook users by storm four years ago and launched Zynga to stardom.
Though some industry observers had declared farm simulation games a fad and predicted FarmVille 2′s early demise, the sequel to Zynga’s best-known title has defied expectations at its San Francisco headquarters, Pincus said in an interview. FarmVille 2 has clung to its perch near the top of Facebook charts and the number of people who play the game each day still hovers near all-time highs of 8 million, even six months after launch.
Given a glaring weakness in mobile games, however, one of Zynga’s current priorities is porting FarmVille 2 to mobile devices so players can move from PCs to smartphones and back without losing their data. That presented technical challenges that the company is ironing out, Pincus said.
“The ideal is to make that one seamless experience between Web and mobile so you can take your farming experience from work to home,” Pincus said. “We’re having to retool and reinvent around our process and technology.”
Pincus badly needs a reliable hit franchise. In the past nine months, Zynga has shuttered 20 titles and closed offices in Baltimore, Boston and Tokyo. It has trimmed 5 percent of its workforce, though its headcount of nearly 3,000 still dwarfs that of fierce rivals like Supercell, a Finnish company with 100 people that claims an equivalent amount of revenue, or the 600-strong Rovio, the publisher behind the “Angry Birds” games.
Gone is the swagger that defined the early years, when Zynga’s army of developers flooded the market with dozens of new titles from cooking games to bingo variations, its deal makers splashed money to snap up smaller rivals, and its managers opened studios in cities around the world.
Wall Street is viewing Pincus’ shift with cautious approval, having been burned by Zynga’s abysmal stock performance — an 80 percent decline over the past year that began around the time it invested $180 million in then-promising game studio OMGPOP.
Investors place much stock on Zynga’s future prospects in Internet gambling, because of its massive poker-playing community and existing game software. But with meaningful income from real-money casino efforts likely to be months, if not years, away.