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The New York Games Conference is focused very heavily on the business aspects of mobile and social game development. Given the prevalence of techniques from mobile and social migrating to console gaming, it is useful for game developers of all interests to learn the terms and acronyms common in this space, such as MAU, DAU, ARPU, K-factor and many more, as well as learn how game developers are shaping ongoing relationships with their players in social and mobile games.
To summarize several of the main points discussed during the day: the sector is maturing and there is less room for small start-ups, major industry players have staked out territory in social and mobile game development, there is a large difference between the skillset needed to make the game initially and to manage the ongoing game design tasks and metric analysis after launch, the task of having potential players discover your game is difficult given the state of the app stores and recent limitations of viral promotion of games, and the choice of which platform for which to develop your game needs to be driven by factors deeper than a summary statistic such as adoption rate.
Acronyms and terms
Metrics – data collected to inform the effectiveness of design decisions and to drive ongoing feature development of games deployed on social networks
MAU – monthly active users - a measure of how popular a game is. At its peak Zynga’sCityville had over 100 million MAU as compared to World of Warcraft’s11.4 million active subscribers in May 2011
DAU – Daily active users – a measure of the ‘stickiness’ of the game play, drawing players back to the game repeatedly as well as a way to examine the effectiveness of viral touch points and marketing campaigns
ARPU – Average revenue per user – a measure of how well the company is monetizing the game play across the user base. ARPUs in the range of 4 to 8 cents are commonplace
K-factor–A measure of a game’s success at viral marketing as a means of expanding its userbase. A K-factor of 1 designates that each register user will bring 1 new registered user in to the game (who will in turn bring in another user and so on.) For more details see http://www.stateofse...xt-web-economy/
Touch points–These are areas in your game design that utilize the interaction between the player, your game implementation and the social features allowed by the underlying platform API to help drive notifications about the player’s achievements out to her social graph
Discovery–The process by which a potential player learns of, searches for and finds your game. Current app stores are very bad at this.
Virality–A measure of how well the attracts new users by the game play either causes the player to advertise the existence of the game to her friends or how well the game utilizes the platform API to advertise the existence of the game to its friends
Cloud gaming–A new game distribution paradigm where the game runs completely on servers, including video frame rendering, and the client is used simply to handle input reads and displaying video streams
Mid-core–A game genre emerging on social network platforms that utilizes the social media platform but incorporates higher strategic demands upon its players
UDID – Unique Device Identifier. Deprecated by Apple for future iOS game development, leading mobile developers to seek new methods of tracking players for metrics collection..
Notes from the sessions
The State of the Games Industry - View From The Top
The first session attended was titled “A View from the Top” and was designed to let mobile and social game company executives discuss what the perceived as the direction the industry was headed. The panel was made up of Matt Hulett, GameHouse (Real Networks); OwaisFarooqui, Atari; Julie Shumaker, RockYou; Sean Spector, GameFly; Omar Abdelwahed, Ubisoft Entertainment and was moderated by Eric Goldberg, Crossover Technologies.
The discussion was lively as Goldberg kept the panelists on their toes. He started by asking if there was still room for start-ups to be successful in the social network games space. The panel advised that the bar has been raised quite high for a game entering this market. They thought there is still room for small developers to find a niche market and serve it well, but that the gold rush years were behind us. The panelists mentioned that there are still under-served markets in the social network games space, and that oddly enough, it is the market of 18-34 year old males that is so well served in other sectors of the industry. The game company, Kabam!, has emerged as a leader in the newly emerging mid-core game space by building games on Facebook that require more strategic decisions of their players.
Goldberg also asked the panel about the choice of mobile platform development and whether there was more opportunity in the emerging Android market. Across the board the panel agreed that no matter which mobile device you choose to develop for, the prime hurdle to overcome is discovery, getting players to find your game. The game stores serve developers quite poorly in this regard. Short of being in the top ten for the category that your game is in, it is very difficult to build awareness of your masterpiece with potential buyers. Farooqui drew a comparison with traditional game retail saying that in this environment there is no way to buy prime locations. There are no aisle ‘end-caps’ in a virtual store, just a single very long shelf. The volume of products available makes it extremely difficult for any game to rise up to become an industry standard. And once one does, such as Angry Birds, it tends to stay at the top, reducing the likelihood of other games drawing players.
When asked to compare the development opportunities on iOS versus Android, the panel was surprisingly cautious about Google’s platform. Everyone acknowledged that Android has momentum, but the challenge from a development perspective is the lack of a unified hardware platform and single store. From a development perspective, these leaders see the Android platform as bringing back the ‘bad old days’ of mobile development with developers needing to cut deals with multiple distribution channels and to support a multitude of hardware specifications.
They acknowledged that Google’s handling of Android was what the platform needed at this time, an openness that allows content to easily be developed, but predicted that it is likely that the search giant will need to shift gears in the future to a more curated market place. However, the panel was also interested to see how Google would act as a publisher. Both Facebook and Apple take a portion of every sale. Shumaker bemoaned the fact that this was the only business model those companies were set up to do. The idea of Google potentially offering a greater share of income to developers by leveraging its impressive ad serving capabilities clearly is keeping these executives from discounting a future with Android.
When Goldberg asked about the apparent lack of innovation in the space Abdelwahed (Ubisoft) was unapologetic. For these leaders the perceived future in the social network space is going to be traditional industry players bringing their IP over from consoles and PC gaming. Shumaker was quick to point out that the innovation is taking place after launch, not necessarily in the initial development. While it is important to have a solid game, she stated that the skillsets needed before launch and after launch, where the game is running as a persistent service, are significantly different. Before launch there are all of the needs for designing game play and infrastructure but once the game is in the players’ hands, there is a greater need to focus on how users are playing the game and to tune the game play and to introduce features to increase retention and to monetize the player experience.
If the perceived closing of the space is discouraging, there is a silver lining for developers looking to carve out a business for themselves. The market is still young and the infrastructure to make these products easy to implement and manage is yet to be built. There is tremendous opportunity for those looking to build the core technologies for this market segment. All of the panelists were interested in seeing greater use of HTML5 to drive discovery and if someone can create a better virtual store-front, there will a huge market for your product.
Finally, it is useful to remember that Social and Mobile game production techniques are moving in to other game segments as publishers and developers outside of this space look to capitalize on the monetization models that have proven successful and produced industry juggernauts over the past three years.
Debate Club: Is there a need for portable consoles like PS Vita or Nintendo 3DS after the meteoric rise of iOS and Android smartphones?
The next session pitted Gene Hoffman, CEO, Vindicia and Alex. St. John, CEO, Hi5 supporting the need for portables against Andrew Schneider, President, Live Game rand Teemu Huuhtanen, EVP, Sulake Corporation (Habbo) who argued the supremacy of the smartphone and eventual demise of the dedicated portable. An informal poll was taken before the session with half of the respondents supporting the pro console side and half coming down on the smartphone side of the debate.
Arguing for the pro side Hoffman and St. John scored points by playing to parents’ fears, stating that as long as they are used as digital babysitters, there will be a market for devices that are a safe sand box. They asked “Do you want your child to possess a device that is constantly connected to everything the internet has to offer?” Furthermore, they posited, “aren’t there some things on your phone you would rather your children not see.”
Gaining momentum and seriousness, they also argued that some games shouldn’t be controlled via a touch interface. Dedicated control buttons and sticks still have a place in the world of 3D navigation and shooter style gameplay. They then returned to the reality of the business of game development and pointed out that targeting a known hardware specification was much easier than dealing with the severe fragmentation in the Android market and that there was not a clear path to successfully earning a living on the smartphone platforms for the majority of developers.
They closed their time by turning their attention to the difference between the focus of a dedicated device versus the multiple purposes of a smartphone. St. John was adamant that a notification from other apps interrupting game play was as bad as game notifications interrupting his other uses of his smartphone.
Speaking in favor of the position, Schneider and Huuhtanen pointed out that smartphones are near ubiquitous. The adoption graphs of the two technologies show a definite decline in the purchase of dedicated portable consoles that is directly offset by the rise of in smartphones. Furthermore, the technical advantage of the dedicated consoles is being reduced by high quality graphics chips and fast processors being released for mobile devices. As more games are made for mobile with engines like Unreal, gamers will come to expect the same experience from mobile as console.
With regards to the question of whether children should have cell phones, Schneider pointed to the ‘pass-back’ effect where a parent will pass the phone to a child in the back seat to keep them amused while traveling. The argument is that with the parents having the device on them at all times, it will inevitably become to be seen as a game console. Furthermore, the diversity, quality, convenience and cost of games will be a major driver for adoption of the technology within families.
Huuhtanen rounded out the argument by pointing out that Sony has been relatively unsuccessful with its portable devices and that Nintendo, while successful in the past, has stumbled with the release of the 3DS. The physical fatigue of 3D for some users limits its appeal, and he further pointed out Nintendo’s over reliance on re-purposing its catalog of intellectual property.
In the end, both sides managed to convince some of the supporters from their opponents. The debate ended, and the moderator swears he didn’t rig the results, in a tie.
Sifteo – Special presentation by David Merrill, President and co-founder of Sifteo
For me, the quote of the day was made in this session: “Bad interface design violates the Human Spec Sheet”
Merrill is an MIT interface guru/entrepreneur who has commercialized his research and started a company named Sifteo. The focus of his company is leveraging new user interface mechanisms to get computers to work more in the way that we work as humans. The Sifteo cube set is interesting in that it allows us to interact with physical objects that have a digital core.
The reason this should be interesting to you is because Sifteo is a new platform for game development. It is made up of blocks with a processor, display and sensors that can detect which blocks are next to each other. The platform was just released to the public and there is an SDK based on C# and the MonoDevelop platform for interested developers.
The next panel in the track I attended was with panelists David Wilson, GameStop;Tom DuBois, OnLive; Sean Kane, Counsel, Pillsbury Winthrop Shaw Pittman LLP; Eric Anderson, Samsung Electronics; Chris Lee, Publishing VP, En Masse Entertainment and moderated by Michael Cai, Vice President of Video Games, Interpret.
We already do a lot of our work in the cloud, email, document production, video sharing with friends, keeping up with one another’s lives. How about playing games? You could claim we are already there through matchmaking services like Xbox live and digital distribution platforms like Steam. But this session was about moving the game processing and rendering in to the cloud as well and the production and legal implications for this shift.
Wilson stated the central thesis for this panel, “It is important to keep in mind that cloud is a tool, not the tool. It is good for some things and not for others.” As such, it will end up as a part of a larger corporate strategy for distribution of games.
From a developer’s standpoint, one advantage of cloud processing is that it places PC gaming on an even footing with console development. It will allow programmers to target a single spec on the server side and know that the system is consistent. Lee stated that it’s important to maintain a flexible stance from a development and a publishing end. While there is no guarantee the cloud will be successful for every developer of in distributing for every platform, there will be some combinations that will be profitable. He concluded that there are advantages to targeting that single hardware specification because “right now developing for the PC is like developing for Android. It’s hard to be successful.”
Anderson stated that Samsung is investing in cloud infrastructure because the projected growth of smart TVs is high. This might provide a development and distribution path for a percentage of the market segment that do not want to purchase a console, but still want to play a wide array of games in the living room. The path is yet to be blazed in this regard, but electronics manufacturers are forming strategic partnerships based on cloud distribution of casual games.
Cai asked the panel “Is cloud gaming a way to render existing games or is it a way to change the way games get designed?” The panelists initially agreed that the focus is distribution rather than new game play possibilities. There are hurdles to overcome first such as multiple input devices within a single binary. But upon further prompting one proposed extension of Cloud computing is the ability to take a single game and play across the same game across multiple devices. You could start playing a game on your TV, leave the home and the same game is being played, appropriately scaled back for mobile device/tablet, or even showing up on the embedded screen in your refrigerator. It sounds pie in the sky, and I don’t know that I want to play a game in my kitchen, but it’s interesting in theory.
A major limitation to adopting this method as the sole means of distribution is broadband policy in the United States. In order to stream the video for a HD data stream the client needs 3Mbps download, but there is still a significant percentage of households at less than 2Mbps. In this emerging sector the question is market timing. Finally, the logical place to experiment with this is game trials with digital distribution to consoles, PCs for full game, or episodic content in the cloud.
Smart phones and handhelds – latest in games for portable devices
The next session was with panelists Sean Vanderdasson, SVP, Wildtangent; Volker Hirsch, Research In Motion (RIM); Charles Yim, Google; Stanley Kwon, CBS Interactive; Nathan Camarillo, Freeverse and moderated by Billy Pidgeon, Senior Analyst, M2 Research
The session opened with the panelists mentioning the rise of mid-core gaming and marveling at the ARPU being generated by Kabam!which was significantly higher than other players in the social space. The major point raised here is the migration of console style game play to both social and mobile, markets that are traditionally dominated by more casual game mechanics.
When asked if introducing new people to gaming led to higher revenues, the panelists skirted the issue, instead focusing on platform growth and usage patterns. Kwon was quite optimistic about tablets as an emerging media entertainment device and predicted significant growth in the larger format.Echoing comments made in the portable console/smartphone debate from earlier in the day, Vanderdasson was adamant that game play on smart phones needs to be easily interruptable; arguing that developers should not assume their game is the primary application being used. Tablets, though, have a different usage pattern. The greater screen size and the ability to focus on a single task on a tablet for a longer period of time allows for deeper experiences to be created. The business side note is that the price point for these products could conceivably stabilize at a $20-$30 price point instead of the unsustainable for creators$2.99 – free price point.Finally returning to the question, Hirsch noted that except for Angry Birds, there are no huge franchises that started on this platform. The conclusion he drew is that in this area it is quite difficult to make money.
An interesting side comment bubbled up through the panelists with regard to UI in touch games. The panelists agreed that a very large challenge facing developers is the creation of new user interface paradigms. There was general disapproval for the virtual joystick interaction on screen. It is likely that a creative developer who finds a new interaction paradigm on touch will have an advantage in the near term.
Pidgeon asked if ads were going to help developers monetize more players. Yim drew an interesting parallel of the current state of the games industry to the early days of cable television. The fracturing of the media space into multiple channels allows for there to be more niche content, but that getting the content to the player does not equate with successfully getting them to pay for the game.Yim went on to state that the challenges facing developers in this area continue to grow as more potential revenue channels emerge. For example in 2008/09 the main drivers of revenue for iOS platform offerings was paid download and advertisements. Now the main driver is in app purchases. He wouldn’t hazard a guess as to what might be the next revenue model. The warning is that developers need to be nimble in thinking how they are going to keep the revenue stream flowing so that they can keep creating new games. He concluded that “Being a game developer is much more complex than it was just two or three years ago.”
The moderator then set his sights on the opportunities in the android market, and asked “is it just numbers?”
This brought up a lively discussion. The overall feeling in the room was that right now, Android is too fragmented a platform to develop for if you are serious about surviving as a developer.Yim began by arguing that the question comes down to distribution and monetization. Just because you acquire a user does not mean you can monetize the user. He offered that the most attractive deployment option might be the Barnes & Noble app store for the Nook. Hirsch followed on with the question every publisher needs to be asking , “Is Google going to go Apple route?” and develop a single Android store. Google has been a hands off partner, allowing for many different stores to exists from different providers. But the flip side is that this makes some industry players remember the “bad old days” of an unfavorable development environment of different platforms, different handsets and most importantly different publishing and distribution deals.
Viral gaming – trends in discovery and promotion
Closing the day out was a panel with Jeff Anderson, Majesco Entertainment; Mihir Shah, Tapjoy; Douglas Yellin, Large Animal Games; Daniel Cheng, Greystripe; and moderated by Brad Hargreaves, General Assembly.
The panel started by examining what had happened with recent changes in patterns of discovery of new games after Facebook changed the manner that developers could push notifications to users’ walls. Facebook users loved that they stopped getting new notification from games, but for developers a major viral channel for discovery had been removed.
Anderson noted that games are driving revenue for Facebook.Accordingly, Facebook will be likely be adding back in some features that developers can use to attract customers through either the ticker of possibly sponsored stories.
With the changes on the Facebook platform, developers have had to innovate to overcome the limitations imposed upon virality. Yellin argued that as a result developers have needed to up the quality of the game to allow the developer to ‘own’ the customer, to make them willing to share their accomplishments in the game with their friends rather than push the notifications out to their news feed from the game directly.The panel agreed that they had witnessed ‘notification fatigue’ with players willing to pay directly rather than spam friends for in game benefits. Yellin went on to give the example of an in game ‘re-mix’ station that Large Animal created which allows their players to generate new content and then to share that with their social network. He stated that this one viral touch-point accounted for 57% of their new traffic generation.
As a group, all panel members agree that there has been a shift away from incentivized campaigns. They wondered if there are certain ads that it makes sense for a player to interact with to unlock content? The general feeling of the panel was that using ads to drive player acquisition was a losing proposition. However, this panel also acknowledged the great difficulty relying on users finding your product in the infinite shelves of an online store. At present they suggested that the best hope for the future is to use ‘vertically striped’ HTML 5 sites to drive traffic toward your game. This could leave companies like Facebook, Apple and other hub owners starving for revenue as stores diminish in importance as the place new products are discovered.
The panel concluded with a final question – is there room for small developers in the social games space? There was agreement across the panel that the land grab days of social game development are over. The bar for content is set too high and the likelihood of gaining an 50 million MAU level is low. Given that USA Today recently reported that Zynga’s next title, Castleville, boasts movie quality production and a soundtrack recorded with a 75 piece orchestra and a choir, I am inclined to agree with the panel. But the panelists also stressed that there are still plenty of opportunities in mobile development. Developers wading in to those waters will need to keep in mind that the development cycles are brutally short, with development complete in one to two weeks and patches delivered in a single day.
Written by Bill Crosbie, photos and editing by Drew Sikora