What the Apple/Samsung jury verdict means to social game companies

The recent jury verdict recommending Samsung pay Apple $1 billion in damages for violating patents is likely to have a significant effect in the social game space. Although the Apple/Samsung legal battle is likely to continue for years, the jury’s decision shifts the playing field. In my experience, once there is a decision of this magnitude, the loser (in this case Samsung) is so on the defensive it ends up settling much to the favor of the original victor (Apple). The decision will not put Samsung out of business (though a billion dollars is a lot of money for anyone, and theoretically it can suffer a penalty three times that amount) and it really does not matter if Apple has more cash in the bank.

The decision will affect social game companies in how it impacts the evolution of the Android ecosystem. Here is what I expect:

• There will be more differentiation between devices. Samsung and other Android manufacturers will make their devices (phones and tablets) more clearly different than both Apple’s devices and other Android devices. We will probably see more variance in screen size, resolution, user interface (the modifications manufacturers make to the UI), input devices, etc. This will increase the challenge for game companies to make their games work across all devices.
• There will be fewer manufacturers of Android devices. Apple simply went after the biggest target; with its win over Samsung, it will use that decision to impose its will on other companies. While Samsung can afford the verdict, smaller companies cannot afford the risk. Given the already challenging environment for creating Android devices, particularly tablets, many firms are just going to give up. This will give the remaining manufacturers more leverage with game developers and also potentially lead to stronger app stores controlled by the manufacturer.
• Some devices may disappear. The jury’s decision in the Apple case did not ban the sale of Samsung’s products but Apple has requested and the change is considering such action. Apple (and Samsung) have won similar lawsuits in other markets including Germany, Australia and South Korea. Moreover, the threat of a high fine or royalty payment could prompt some companies to pull products already on the market. Thus, if you are counting on sales from particular Android devices, those sales could go to zero if the device(s) are pulled or banned from the market.
•  Windows 8 may get more traction.  With the specter of legal action against any manufacturer who developers a device for Android, more companies will probably create Win8 devices.  Microsoft is not likely to face significant issues for multiple reasons so some manufacturers may take the safer route of creating tablets and mobile phones using the Windows 8 operating system, though market acceptance of these devices is still highly uncertain.  For social game companies, it means you probably should watch whether these devices gain traction (you should have been watching anyway, but that is another post).

Although the jury’s decision will have a much bigger impact outside the game industry, it clearly will also affect all of us. It will be important to monitor how the situation evolves and how the key players (e.g., Apple, Samsung, Google) react.