2014 insight in Mobile Games - Video Games Intelligence

2014 insight in Mobile Games

Unlocking the Formula to Mobile Success Introduction The mobile games industry is a multi-billion dollar industry - mobile gaming is big business and is set to continue growing at an alarming rate. Smart phone and tablet market penetration is increasing exponentially, with over one billion units sold worldwide in 2013 alone. The power of mobile gaming devices is increasing just as fast: mobile processing power has developed to the extent that smartphones and tablets can produce near console-quality graphics. At the same time, digital marketplaces have become crowded, and the cost of raising your head above the parapet through user acquisition has never been higher. The mobile games industry is under increasing pressure to perform, targeted at a market with more choice, and lower barriers to entry than ever before. The ability to innovate and to learn from each other’s creative thinking will set the successful apart as the mobile sector continues to grow. Three industry experts, representing some of the most innovative minds from across the industry from investment house Initial Capital and developer/publishers Kabam and SGN offer their insights into the mobile games industry in this report. These industry leaders, along with a number of their peers, will also be giving their insights at Mobile Gaming USA, hosted in San Francisco, 5-6, May 2014.

Mobile Gaming USA May 5-6, 2014 | San Francisco

All the contributors to this whitepaper will be speaking at Mobile Gaming USA. Visit: http://www.videogamesintelligen ce.com/mobile-gaming-usa for more details on this landmark event.

Unlocking the Formula to Mobile Success Kristian Segerstrale Kristian Segerstrale is an entrepreneur and investor in games, consumer internet and technology companies. He was also the CEO and co-founder of Playfish, who were acquired by EA for $400 million in 2009. Kristian invests with Initial Capital. To find out more visit www.initialcapital.com

1) What is the biggest opportunity in mobile gaming today? I actually don’t think there’s been a time in mobile games where you’ve had an almost guaranteed growth over the next five years. You have a set of technologies in iOS and Android that are here to stay. You have a set of stores that are getting increasingly better at recommending the right content for users. You also have a set of marketing technologies in advertising networks and acquisition technologies that makes it increasingly better to reach consumers. Most importantly you have consumers that are buying more smartphones all the time. More than a billion smartphones were bought in 2013 alone. The markets are getting far more international and consolidated. Previously for a western developer and publishers it was extremely difficult to get into markets like Japan, China and Korea because of differing technologies and marketplaces – differing approaches to everything. Now, although the markets are still unique, the technologies – in terms of Android and iOS in particular – are becoming these giant equalisers between markets. So if you have a great product, as has been amply demonstrated by King, Rovio and Supercell, you can actually create global hits. For all those reasons, I think the next three to five years present an incredible opportunity for game developers. In terms of specific opportunities within that industry growth, which is extremely

Mobile Gaming USA

promising, is innovation. We continue to have a massive amount of

May 5-6, 2014 | San Francisco

games, MOBAs (Massively Online Battle Arenas), RPGs (Role Playing Games) –

under-served categories in mobile in particular. If you look at genres like Sports they all feel like under-served segments on mobile right now. Also there are


segments within those genres where you struggle to find quality games. Many developers are lured by the success of specific titles and create derivative works or games that are heavily influenced by those successful products. The biggest opportunity out there is to serve unmet needs and to innovate rather than imitate.

Unlocking the Formula to Mobile Success 2) Discoverability is a huge issue and the mobile marketplace is extremely crowded, what steps can developers and publishers take to get their games into the hands of more players? The product is by far the most important form of marketing, but especially in a marketplace with as low friction, with as low barriers to entry, as mobile gaming. So the most important thing is to not only create a product that is wonderful and great to play – a great experience – but also one that has great character and is memorable. Most developers today would still say that the majority of their distribution is still word of mouth. I can’t emphasise enough how important it is to create memorable experiences to begin with. It is true that the marketplace is crowded, but the majority of that crowd are actually forgettable experiences. There are also fairly well understood mechanisms to test out what segment and type of consumer you product appeals to. Once you have a good sense of who your product is for, it is actually fairly straightforward to augment your user acquisition efforts with channel marketing that reaches the right communities. I think the marketplace is not nearly as sophisticated at doing this as it should be. So today it’s entirely possible to quite accurately understand who your consumer is and at the same time the ability to target using tools is increasing. You can also advertise with much richer content, like video, that can be more compelling – I think channels like YouTube are actually quite underused today. Right now we’re going through this shift of marketing for apps which for the past few years has been developed as this quantitative discipline of acquiring users through ad networks almost like a trading desk – where one company might be willing to sell a user for a price. I think we’ve entered an era where you have to be far more sophisticated about building brands and creating a closer,



more emotional relationship with consumers.

3) Some of the biggest success stories have come from new entrants, while some traditional publishers have struggled to gain traction. Why do you think this is? From my experience games are really all about talent. The top 1% of talent will have by far the best chance of creating the top 0.1% of games that are out there. Putting anything less than the best development team on a game will have a devastating impact on its ability to have the potential to break out. Part of that is the innovation the team is capable of, part of it is the quality of the execution. At the end of the day these are crafted experiences and as a consumer you can see

Unlocking the Formula to Mobile Success

all of that – whether it’s a game you can clearly see that someone really cares about or not. Part of the challenge with the existing companies is that their focus – where they’re placing their very best talent – is where their existing dollars are coming from. So if you think about an EA or an Activision, the dilemma is that they’re making billions of dollars from existing franchises. It would take an incredibly brave company to move their talent from these massive franchises and put them onto a new platform. The other thing is that the development methodologies that smaller teams employ are more suited to mobile. Big companies tend to employ heavy approval processes to protect them from big mistakes. That type of process doesn't lend itself well to creative risk or creating games in a fast moving environment . You need to be able to trust top talent to make gut decisions. Companies like Supercell are very vocal about the fact that they don’t have a green light process of any kind, and I think that’s something that has hamstrung some of the bigger companies when it comes to mobile development.

4) What is the formula for a successful free-to-play title? Games are fundamentally an art, and I don’t know that there’s a formula for art. There are approaches that tend to be more successful than others. One that I would advocate would be to firstly make something that you love to play yourself. Don’t try make something because you think the market is big and there are a lot of consumers that want something in that area. Start with what you love to play and how you make something that you would love to play. You can tell when you play a game whether it has been made by someone that genuinely loves it. Obviously it needs to be something that you think the market will also love to play, but if you don’t love it, the chances are that nobody else will love it also.


You also need to understand who you’re making the game for and profoundly respecting the player. There are a lot of games being made right now that either simply imitate existing games. There is also still a "San Francisco school" of game design out there that advocate "design by the numbers' - create games to get

All the contributors to this whitepaper will be speaking at Mobile Gaming USA. Visit:

people to pay as quickly as possible, as many times as possible, in as many different ways as possible to maximise the funnel of people paying. I think that’s a dangerous route of design. I can see that today the most successful games are

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the ones that respect the players for what they are and creating an engaging

for more details on this landmark event.

attachment to the game. Then build in reasonable monetisation that comes in

experience. Design for engagement. Design for fun. Design for the emotional way down the road.


My own gold standard of design of engagement is League of Legends. For the first 20 or 30 hours you can’t understand what you would ever pay money for. The cool thing about it is that the game is incredibly successful off the back of almost trying not to monetise players. They’ve built a phenomenon off the back of an incredible game and not worrying too much about monetisation at all. I think that’s a great design principle that developers need to work towards as consumers get smarter. Are they leaving money on the table? Likely yes - but they are building an incredibly successful, long lasting and valuable franchise.



Unlocking the Formula to Mobile Success Andrew Sheppard Andrew Sheppard is the President of Kabam Studios, a developer and publisher of social games. In each of the last two years Kabam revenues have grown by 80 percent or more and will total more than $325 million in 2013

1) What is the biggest opportunity in mobile gaming today? As consumer demand for gameplay experiences at little to no cost increases, more publishers will come to recognize the value of the free-to-play business model. In this context the onus is on all publishers (both existing and new) to deliver high quality gameplay experiences that players value and ultimately are willing to purchase. Thanks to the growing device market and constantly improving device capabilities, publishers’ ability to deliver compelling gameplay experiences has never been greater.

2) Discoverability is a huge issue and the mobile marketplace is extremely crowded, what steps can developers and publishers take to get their games into the hands of more players? First, make a great game that is innovative, engaging and fun. This is required to unlock tremendous organic opportunity. Then pull on all the strategic levers of traditional marketing and distribution: business development, brand marketing, public relations, performance advertising, consumer events, etc. Nail the execution on both fronts, than get ready to watch your game soar up the charts!



3) Some of the biggest success stories have come from new entrants, while some traditional publishers have struggled to gain traction. Why do you think this is? For traditional publishers and developers, it’s been a slow start. This is largely because free-to-play mobile game development is an entirely different beast that draws on both art and science to build mass market global hits. It is fair to say the traditional game developers are beginning to figure out this exciting new medium of gaming, but that their progress is still rate limited by the best practices that made them successful in the first place.

Unlocking the Formula to Mobile Success 4) What is the formula for a successful free-to-play title? Excellent teams, great product vision and a deep understanding of how to balance the art and science of free-to-play game development. Hard work helps too.



Unlocking the Formula to Mobile Success Chris DeWolfe Chris DeWolfe is the CEO of SGN (Social Gaming Network), a top cross-platform developer and publisher of games on Facebook, iOS, and Android. To date well over 300 Million SGN games have been installed on leading mobile and social platforms, making SGN one of the largest cross-platform gaming companies in the world.

1) What is the biggest opportunity in mobile gaming today? A massive number of people are playing games today, and as a result, the market has become much larger than it was several years ago. It will continue to get larger as people continue purchasing multiple devices. The fact that there are now multiple platforms on which to play games expands the market even more. Currently there is a big opportunity for developers to build their games for all platforms, both social and mobile. The opportunity lies in developing games for people to play at work, perhaps on a PC or laptop, and for users that are travelling home from work, so they can continue to play the same game seamlessly on a mobile device. Free-to-play in-game purchasing has become frictionless, especially in the iOS operating system. Apple has over a billion credit cards on file, so all you have to do is type in your password to make a purchase. This makes it very easy to purchase and provides a huge potential audience. On top of that, barriers to entry have been substantially reduced, so that the cost and time it takes to create a great game in the mobile space has decreased as the tools available have matured. This has allowed smaller companies to make the biggest mobile games. The other significant opportunity is leveraging the sheer amount of data that

Mobile Gaming USA

exists. If done right, you have the ability to look at the fail rates of a user at a


them to lose. With connected devices you have the ability to refine these

granular level, almost down to the exact feature of a particular stage that caused components so that you can prevent users from becoming frustrated and


leaving the game, and at the same time, ensure that there are enough challenges to keep them playing.

Unlocking the Formula to Mobile Success 2) Discoverability is a huge issue and the mobile marketplace is extremely crowded, what steps can developers and publishers take to get their games into the hands of more players? It starts with the design of the game. If you have a broad market it is important to ensure that your game has a proven mechanic and that the game is fun to play. Starting very early with a playable prototype of the game is necessary to determine if the game will have fun gameplay mechanics and if it will stand out from the crowd. If it does not meet those requirements, then you either have to go back to the drawing board or fail quickly and pivot. It is not the best idea to spend a year and a half developing a game that is never going to gain traction. You also want to ensure that there are certain viral elements in the game. From our perspective, Facebook remains the social glue in the mobile web and apps space. It is helpful to encourage your users to log into Facebook to invite their friends into the game, and reward them for doing so. There are many ways to do that from the way you set up the game, to notifying users when one of their friends joins. For example, in our game Panda Pop, anytime your friend joins, you are sent a notification so that you can share progress with each other. We encourage users to return to the game and compete on the levels where their friends have beaten them. It is always helpful if you can build a game that is interesting enough from an editorial perspective that Apple, Google Play, Amazon and/or Facebook will feature it. This featured placement will get you hundreds of thousands if not millions of downloads. From a discoverability perspective, this can be a great boon to the launch of your game, but it is not something you can rely on. For us, we have a very specific focus on our games. We make puzzle games that

Mobile Gaming USA

have a deep narrative, great animations and fun gameplay. Most of our entire


when we get a hit with game A, we can cross-promote games B, C and D to

All the contributors to this whitepaper will be speaking at Mobile Gaming USA. Visit:

back catalogue appeals to a similar type of demographic. We do that because those users. From a success perspective, we are looking at the lifetime value of a user rather than the lifetime value of a single game. Some companies will make a game specifically targeted at men, then attempt a casino game targeted at women and then a puzzle game targeted to everyone,

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and try to cross-promote all of the games. However, it is unlikely that there is

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suitable.

interest by that demographic in the new games, so this strategy may not be

With advertising, the picture was quite different a year ago. In the early days, companies would target across the board and hope that the average lifetime value of a user would come out to more than the cost per user to acquire. Now


– at least for the companies that are doing it right – you have to get much more granular with how and where you spend your advertising dollars or you may lose a significant amount of money with very little gain.

3) Some of the biggest success stories have come from new entrants, while some traditional publishers have struggled to gain traction. Why do you think this is? The secret is agility. If you look at companies like Supercell, who make Clash of Clans, and King, who of course developed Candy Crush Saga, they do not have massive, bloated teams. They quickly make games and quickly iterate. Mobile games are not software like they were in the past. We are creating a game as a service. A game can last an extremely long time rather than a boxed product that has a finite lifespan. You can release a game, collect great data, and continue to improve the game with regular changes and new content. There is a new way of thinking when developing games for mobile and social. It is the notion of developing a prototype and failing fast – by that I mean using data to decide very early on if your prototype is a viable game. At the same time the concept now is to build a game as a service – optimizing the revenue and user retention for years to come by continuously injecting new content. It is a very different way of thinking compared to the earlier days, where some companies set a budget and development time for a game and then began work. Every company that has a big hit game, has also had failed games that they killed after a month or two. If you spoke with the teams at Supercell or Kabam, it is very likely that they have had game ideas that they thought would be interesting, but ultimately did not succeed. Games are unique in that way.


If you take TV for example – it costs possibly a million dollars to create a pilot, with the hope that you will get picked up for maybe six episodes and the goal is to not get cancelled. With mobile game development, the investment is far lower before the point at which you start to get feedback, so you can tell much earlier on if a project is not working or how to steer it so that it begins to work


for you. This kind of thinking is naturally ingrained into newer companies.

4) What is the formula for a successful free-to-play title? As a company we are super focused on one genre of games. We have dabbled in other areas, but we settled on this space because – like the issue you brought up with discoverability – we start to solve the discoverability issue ourselves simply by creating new products that cross-promote very well with each other.


The notion that you create a game with a proven game mechanic is also very important. We have a website called mindjolt.com, which has hundreds of very simple games that cover almost every game mechanic you can think of. Those games are not advanced enough and do not have enough polish to be hits in their own right, but what we can do is determine which games people are playing and which mechanics people are enjoying. From there we can build a prototype with a bigger narrative around that initial idea. If that prototype is a success we can move along to formally assign a team to the game and head into full development. From that point, we will continually iterate on the game through a soft launch and then a full release. Additionally, we set KPIs and stick to them. For example, for a particular title, we might set a day-one retention target of 55%, which is quite a healthy number. Our seven-day retention target might be 26%. If those numbers are not where we need them to be we will take prescriptive measures – and analyze our data – to determine where players are dropping off and what is causing the retention to be lower than what we want it to be. This is just one indicator among many that we use to measure success and figure out how to make the most successful product. Finally, investing in your team is crucial. To make the best games, you must hire the most creative people you can afford. This year we invested heavily in our artists, animators, game designers and engineering teams to ensure we have the imagination and the talent to make the best products. Unfortunately that is not enough, you must also have the analytics infrastructure to back it all up. All of these elements are crucial to creating a successful games business.

