Over the Summer, Amazon made three moves that when looked at individually are interesting but when reviewed holistically show their plan to dominate the mobile space, which includes social gaming. First, Amazon released Living Classics, a Facebook social game. Then, it announced it had added Epix and NBC Universal content to Amazon prime. Last week, Amazon released details of its new Kindle Fire models. Taken together, these moves suggest Amazon could be as important a partner to social game companies as Apple and Facebook (and more important than Google). Continue reading “The Amazon Maneuver”
Jimmy Lee was nice enough to translate and post my post on Tuesday about the jury verdict against Samsung into Korean. Please click here if you would like to read the Korean version.
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 big news this week in the tech world is Microsoft’s unveiling of its Surface line of tablets. For those who missed it, Microsoft had a major press event on Monday in which where it unveiled the 10-inch Surface tablets. The first tablet will launch this fall with an ARM-based processor and featuring Windows RT. It will be followed, about 90 days later, with a third-generation Intel Core processor running Windows 8. I am not the person to be reviewing new gadgets so if you are looking for more details on the Surface, please just Google Microsoft Surface and you will have great options.
I read a great interview on CNN.com with Rovio’s VP Bus Dev, Ville Heijari. Rather than repeat the interview, I strongly recommend you read it yourself.
My big takeaways from it were:
- Rovio started in 2003 and did not have a success until Angry Birds (2009). Before Angry Birds launched, they had to cut their staff from 55-60 to 12. If Angry Birds was not successful, they would have had to decide whether or not to continue operating.
- Until Angry Birds, Rovio normally spent 3-4 months on a mobile title. Angry Birds took about eight months because of additional iterations and polishing (including adding the catapult).
- What the above two points combined say to me is that if they did not spend the additional time on polish, Rovio would not exist today, let alone be worth over $1 billion.
- Rovio is now moving into publishing, having licensed a game called Amazing Alex. It is consistent with Zynga’s strategy to add third party publishing, thus increasing the value of their player base.
- Rovio sees itself as an entertainment company, not a game studio.
Overall, I found the article a very useful insight into one of the key players in the mobile game space.
A few takeaways from the Social Gaming Summit:
- Analytics are evolving. The most exciting trend I saw was how analytics are evolving. While most of the existing analytic packages are excellent at show past behavior, there are several products either recently released or scheduled for later this year that will really improve the effectiveness of social game companies. Some of these tools enable predictive modeling while others are targeted to better understanding consumer behavior, including segmentation and much more detailed analysis of the player lifecycle. These tools can have a great effect on profitability. Continue reading “Takeaways from the Social Gaming Summit”
I have been a huge advocate of developing social games for the Kindle Fire since it launched last year, but the most recent sales data has me thinking twice.
Given the numbers, coupled with Microsoft’s Nook investment and the interesting new tablets coming from Samsung, it probably makes sense to look at the Android tablet market overall rather than just focusing on the Fire.
Microsoft’s $300 million initial investment in Barnes & Noble’s Nook unit is arguably the biggest news to hit the social game industry this year. Just last week, I was saying to some colleagues that there have not been any major developments in our sector recently. That changed yesterday. Over the next five years, Microsoft has committed to a total investment of $605 million in Barnes & Noble’s Nook, making it a bigger deal than Disney’s acquisition of Playdom in 2010.
It seems that the talk of the social gaming space is about Bots and using them to manipulate the iOS charts. It started with rumors that several companies were working with a “marketing” firm that actually just used bots to create fake downloads to move games up the free charts, to more rumors that this manipulation was being done by low-wage labor to even more rumors that it was Chinese slave labor. My guess is the truth is somewhere in between but what I find humorous is the high and mighty attitude some in the industry have taken. There may be some companies that knew what was going and decided not to partake, though why they did not report it to Apple or the press confounds me (and is bad business, as it put them at a competitive disadvantage). There are probably more companies that just did not know how to move up the charts in this manner. For the record, fiveonenine’s first iOS title will come out a few weeks so we do not have to make this “choice.”
What I actually find more interesting is that Apple did not stop this practice sooner. Given how widespread everyone in the industry knows it is and more importantly how even basic analysis of the traffic (i.e. tons of downloads with zero retention), Apple had to have known what was going on. Thus, they apparently decided not to stop it until the press made an issue of the manipulation. Furthermore, given how beautifully Amazon polices its customer ratings (they very diligent about eliminating fraudulent comments or those made by people even remotely tied to a product), Apple could stop the manipulation of its charts anytime it wants to.
All that said, what really matters to mobile social game companies is that this development reinforces the need to have a robust marketing strategy (and yes, insert here the trite comment that they just need to make good games that will naturally go high in the charts). Those companies (even if they are tiny) that relied on this “marketing tool” for their installs are now left dry, they need to find quickly a way to replace the installs generated by being artificially moved to the top of the charts. Companies, however, that have multiple marketing channels (performance marketing, web advertising, PR, social media marketing, etc.) can now just alter their marketing mix and maintain their business. This latest little controversy is just the most recent piece of evidence why it is necessary for social game companies to create full and robust marketing strategies for their games rather than rely on one tool.
A few recent personal experiences prompted me to realize that the effects of tablets on social gaming may be understated. You cannot go far without reading the projections/hype for the tablet computing market and most people consider it a given that it will be a very significant platform in the near future. I definitely would not disagree with these projections and also think that the emergence of tablets will have a much more profound effect on social gaming than just adding another platform.
A Real Threat to Facebook Gaming
I think tablets are the biggest threat to Facebook gaming. I took two trips recently, one for business, one for a family vacation and did not take my laptop on either. I wanted to see if my iPad and wireless keyboard could replace my laptop, at least for relatively short trips. I never regretted taking only the tablet, I used it seamlessly for meeting notes, email and playing games during down time. With Dropbox and Pages on the iPad, I could edit documents people sent to me and even review a contract.
For me, the biggest challenge was that I would not be able to play the three Facebook games that I play regularly, thus missing out on some daily bonuses and in one case causing distress to my fish (yes, I still play Fishville). But the tradeoff of not playing these games versus getting through security so much easier (boy, was it a pleasure) and cutting the weight of my carry-on in half made the tablet the clear winner and in the future I will probably travel sans laptop.
This anecdote would not be a big deal if I came back and just picked up the Facebook games where I left off. I found, however, that by not playing for a few days my engagement with the games fell and I am less compelled to play them regularly (in fact, I have not gone back to one of the games). I am, however, playing more iPad games than I had before. Given the importance of retention and engagement to the LTV of a Facebook game, as more people have experiences similar to mine, I think it could have a significantly negative impact on the long-term profitability of Facebook gaming (maybe the world changes if these games move to HTML5 soon and are playable on tablets, but I am not holding my breath).
An Even Greater Threat to iPhone Games
The other thing I have noticed is that I rarely play games on my smartphones anymore as I always have my iPad with me and the gaming experience is so much better. Maybe I am somewhat atypical as I am older than the core smartphone gaming demographic and may not have the same quality eye sight, but I do not know anyone who would prefer a phone’s screen to a tablet’s. I have not seen data yet on whether tablet gaming is replacing iPhone gaming but I feel it has to at some point. As there are more tablet options at different price points, they will become ubiquitous soon. At that point, people will begin reverting to using their phones as phones primarily.
Unlike my observation about tablet gaming displacing Facebook gaming, the evolution of playing “mobile” games on your phone versus tablet will not have as deep an impact on the social gaming industry. Most (though not all) new games are optimized for both iPhones and iPads, so it is just a shift of where the consumer plays . It may impact the market share of the various mobile operating systems, people may want to use a tablet and phone with different operating systems to increase the variety of apps available or may even go to less complex phones since the “smart” features are already on their tablets.
This paragraph is a little off topic, but since we are talking about tablets I just wanted to comment on the Nook Tablet. I recently picked up one to evaluate as I expect it to become the #3 tablet in the US this year (if it isn’t already). I have not had extensive time with it yet but I have so far been very impressed with the form factor and look-and-feel. Unlike the other 7-inch tablets I have tried (the Kindle Fire and 7” Samsung Galaxy Tab), the Nook Tablet is thinner and feels lighter. Before trying any of them, I expected them to be significantly smaller than the iPad and was disappointed (after all, it is a smaller screen). If the Nook Tablet performs at least as well as the Fire (which according to most reviews it does), I think it will have a major impact and thus be a big opportunity for social game companies.
Good For Us
Overall, though, for the social gaming industry the shift to tablets is great. With good portability, beautiful screens and an intuitive interface, tablets greatly enhance the game playing experience. As users will have them everywhere, it gives us the opportunity to become closer to our customers than ever before and will make it increasingly difficult for other forms of entertainment to get in between that bond.