Mobile Gaming Enemies
GDC Mobile kicked off today with an introduction on the state of the mobile gaming industry by GDC Mobile founding chairman Robert Tercek, followed by Mitch Lasky's (Senior VP, EA Mobile) keynote The Future of Mobile Gaming and its Enemies.State of the industryTercek highlighted several problems associated with mobile gaming today. Consumption has been flat in the U.S. for several months, there's been price erosion in Europe, and carriers want a bigger cut of revenues. All of this paints a "grim scenario" for the market, Tercek said. Currently, 50 percent of the U.S. plays games in some form, but fewer than 4 percent of U.S. subscribers actually pay to download games. Tercek said the market is "stuck in the early adopter phase." Furthermore, the market is failing to give consumers incentive to make repeat purchases and the best billing systems are wedded to the worst merchandising mechanisms. Tercek described a "cycle of stagnation" in which carriers rely on content providers, who rely on proven brands, but the audience fails to get excited by derivative properties. Ultimately, 2005 was a year for safe bets, little innovation and continued consolidation in the mobile gaming industry.EA Mobile to grow the industryWhile Tercek's introduction spoke of a "grim scenario" Mitch Lasky seemed more optimistic. He believes that there is a huge opportunity for the mobile market; it could be a "golden moment" for mobile gaming if the industry can successfully bring games to the non-gamer. Lasky talked a bit about why the EA/Jamdat merger is so important and what he believes the new EA Mobile can do for the industry. When EA purchased Jamdat for $684 million, it was the largest deal EA's ever done in its corporate history—five times larger than the Maxis deal. Lasky stated that EA paid for 6 years of unchallenged leadership and management continuity. Jamdat also won't be a drag on EA's earnings as the mobile publisher has had 9 consecutive profitable quarters. Lasky proudly announced that EA and Jamdat are now pretty much done integrating the two companies and they are ready to move forward as one. Lasky is certain that the merger is exactly what the mobile market needs to realize its potential. The global reach of a company like EA combined with Jamdat's extensive distribution can take the mobile gaming business to the next level. Right now, Lasky likened the mobile game industry to the film business of the 20s and 30s; it's only just begun.EA Mobile will focus heavily on content. Lasky showcased the three main areas that comprise most content: casual, core, and sports. Much of EA/Jamdat's content will make use of recognizable brands—interestingly, Will Wright's Spore was on the content list, suggesting a possible upcoming mobile version. The company also intends, however, to invest heavily in bringing new IP to mobile and EA Mobile will double its already aggressive R&D budget. The plan is to release 58,000 SKUs worldwide in the next 12 months. It's this type of global reach that just wasn't possible for Jamdat alone. Lasky said it will be fun to "play with EA's $2 billion in cash." The only other mobile publisher capable of growing the category in this way, Lasky believes, is Gameloft.Other companies will find it difficult, however, competing with the new EA Mobile, he said. The market is now more competitive, more complicated and more expensive. It may be too late for mid-sized publishers that are just figuring the market out now. On the other hand, Lasky said there could be "infinite opportunity" for developers with original, unique properties.The EnemiesAs the keynote title implies, Lasky then shifted his presentation to talk about the main enemies to growth in the mobile games market. Unpredictable business models, dynamism, and the fact that carriers are trying to squeeze publishers by asking for a bigger cut of revenues will "strangle the business." In addition, Lasky highlighted the importance of a good shopping experience. While there's been some innovation in content, there's been none in the shopping model. Most people characterize the shopping experience for mobile games as an unpleasant one when compared to buying a ringtone, song, or movie. The problem is that most people have to wade through tons of mobile content. There are way too many games and a lot of them aren't very good. The vast majority are still sold through carrier decks (which Lasky said he has no problem with), but the buying experience is boring and non-intuitive and it's turning people away. Lasky said that the overflow of mediocre and bad content hints at the "real danger of an Atari 2600 episode" where consumers may abandon the platform. To counter this Lasky said there ought to be a European football-type "promotion & relegation" where the proven games aren't lumped together in the same folder with a "whack a mole" generic title. The top 200 games generate 93 percent of revenue and yet it takes as much effort for a carrier to put game #350 on the deck as it does Tetris.Lasky also made a plea for connectivity. Phones are fundamentally communications platforms, but the connected games have been few and far between. Part of the problem, though, is that networked titles are hard to make money on. Multiplayer and community features make the development process complex and expensive. That said, Lasky believes that eventually a mobile game similar to World of Warcraft will come along and "blow the lid off the industry." So in summary, Lasky said that stable business models are needed, friendly and easy-to-use commerce needs to be implemented, quality control and merchandising needs to be incorporated so consumers aren't turned off, and connectivity will be key as it allows gamers to form an emotional connection with other gamers.
