Facebook: The Next Generation Game Publisher

Upon the eve of Casual Connect one of the big announcements was Facebook becoming a mobile games publisher. Much like how the launch of Facebook’s mobile ad network went largely unnoticed only to become a huge deal later, I suspect we may see this move in a similar light in the near future.

View from the podium before my Casual Connect event.

View from the podium before my Casual Connect event.

A social network like Facebook directly publishing apps isn’t without precedent. Facebook took their lead from Asian mobile social networks like Japan’s LINE and Korea’s Kakao Talk. Both extended their messaging services to include mobile games that use their respective social network for viral reach in ways similar to the bad old days of Farmville spam.

Both LINE and Kakao Talk have been able to send games to the top of the charts in their native countries netting big revenue. With increasing adoption of messaging applications in the West, this trend may continue here.

In the boxed software era you had few options other than to go through a publisher for distribution. Publishers had guaranteed shelf space at national retailers. Now that software doesn’t exist in boxes, there’s no need for shelves. As we’ve discussed before, users are the new shelf space.

Mobile publishers like GREE and DeNA pride themselves on having a huge audience to advertise games to. This usually involves blowing lots of money buying users through ads–many of which show up on Facebook. Pretty much this is the only service mobile publishers provide.

If user acquisition is all a mobile game publisher does, why not cut out the middleman?

Facebook can acquire users much cheaper than GREE or DeNA–they own the network. In fact, this is a major reason why GREE and DeNA make so much money in Japan. Especially in the feature phone era, they operated mobile social networks they also published their own games on.

Perhaps Facebook did the math and figured out that a cut of an app’s revenue in exchange for premium placement of ads is a profitable exchange. Instead of having an audience of 30-40 million users as DeNA’s mobage network does, Facebook has over 800 million mobile users.

In the past, Facebook has proven they can make a game popular–at least for a short time. It’s up for the game developer to create a game that lasts. Given the Chaotic Evil alignment of modern game publishers, I’d much rather make this deal with Facebook* than with one of them.

* Oh, I’d take this deal with Twitter too. They’ve been able to get Vine to the top of the App Store charts all year. Imagine what they could do if they published mobile games!

Paymium: Walking Away From Free2Play

Many small mobile game developers I talk with are considering abandoning pure Free2Play in favor of paid apps with in-app-purchases–AKA “paymium”. A great example of this is on the latest Walled Garden podcast featuring Plague Inc. creator, James Vaughan.

At first, Plague Inc. was a simple premium app. After quickly building a rabid following, he added purchasable items that can otherwise be earned in-game. This has been an extremely successful business model for Plague, Inc. and many other top games from the likes of Rovio and Halfbrick.

James’ sound reasoning for his use of Paymium is that he dislikes games purely designed around IAP and thus made a game he wanted to play. Making small games is a very personal process. If you don’t like what you’re making it’s not going to be good.

Another reason developers are considering this approach is that the top free download charts on iOS are completely bought and sold. If you look at any game in the top 10 free downloads, it’s safe to assume that spot is paid for with heavy advertising spends along with other somewhat underhanded tactics. The latter may get you bounced from the App Store, but it doesn’t stop most publishers from finding a way.

The paid charts are theoretically more honest. Because you have to tack on the price of the app along with whatever you pay for guaranteed downloads, paid chart manipulation is more expensive. Yet, this may still be common considering how large advertising budgets are for the top mobile games.

A great new paymium example is Contra: Evolution, a clever mobile remake of Konami’s NES classic from PunchBox. The game costs 99 cents on iPhone and $2.99 on iPad. Both versions feature a plethora of in-app-purchases.

Contra has been floating around the top of the paid charts for a while–although still scraping the bottom of the top grossing. This illustrates the depressing reality of premium apps. Even a top 5 paid download barely registers on the grossing charts. Yet, any indie developer would kill for the type of revenue Contra is making.

What did Contra do right? The following is a bunch of hand-wavey, rear-view-mirror driving. It could all be true. Or the game’s success could purely be fictional and entirely paid for by outrageous ad spends and thus this entire article is nonsense. Anyway…

First, there’s the brand. Brands generally aren’t worth much in mobile. If you look at the top apps, the overwhelming majority are original IPs. Yet, Contra has strong awareness among retro gaming enthusiasts. Some brands matter in mobile.

Secondly, the game is good. Over a decade since the last reboot, PunchBox went to the origins of the series with a remake of a classic that is competitive with current mobile games. As we’ve seen in Predictably Irrational, it’s extremely difficult for a paid product to compete against free at any quality level. PunchBox pulled it off

Finally, people who have paid for your app are already invested. Theoretically, they are more likely to spend again. Contra’s unimpressive top grossing rank may not actually prove this out. However, mega-hits like Angry Birds and Jetpack Joyride have used paymium to great success. Contra’s low grossing rank may be due to poor monetization design instead of a flawed model.

A few years ago I would have laughed if you suggested launching a premium app. Now I’m not so sure. The new rule is, there is no rule about monetization. F2P isn’t one size fits all–but, how do you actually find what does fit?

My Week with the Ouya

I’ve been skeptical of the Ouya since the beginning. Who would want to play mobile games scaled up on a TV with a box that’s about as powerful as a mid-range Android phone? Last year’s smashing Kickstarter success and resultant investor stampede was a mystery to me. Criticism of Ouya’s launch has been harsh. For a mere $99, I had to see if this microconsole ‘revolution’ is going to take off.

My Ouya

My Ouya

The console itself is a nice piece of industrial design–except for the fact that the vent is on the bottom. There also are shielding issues forcing some users to lay the box on its side or position it away from cabling to prevent interference with Bluetooth and WiFi. Contrasting Ouya’s sleek form factor is a cheap looking controller with no obvious way to put batteries in. At $99, you have to cut corners somewhere.

Setting up the Ouya is easy. It requires the creation of an Ouya account and a credit card link before playing anything. Some are complaining about this, but there’s no point in getting users on the platform if they aren’t going to pay. Making sure every user is billable and ready to buy stuff is a top priority for Ouya.

Despite having to create user accounts, Ouya appears to have no social network based around them. There aren’t any friends lists, achievements, or leaderboards. This is a glaring omission. Ouya’s somewhat unwieldy catalog is organized by curated arrays of games from celebrity editors and lists sorted by genre. At the very least, I’d like to see what some of my friends are playing.

What about the games? Frankly, they are atrocious. With over 100 launch titles, this is to be expected. Ouya’s games include half-baked ports from mobile (some don’t even bother to change the screen to landscape!), suspect exclusives, and tragically hip indie games about abused children.

As I dove deep into the Ouya catalog, I actually began to enjoy the experience. The diversity of games is charming. Plus, I’m a big connoisseur of b-movies and the Ouya feels like the MST3k of consoles. Blowing up games originally built for a 4-inch screen on my 60-inch TV really magnifies polish issues and sub-par graphics. Seeing just how bad some of these games are can be hilarious. However, I’m not quite sure that’s what Ouya had in mind.

Where Ouya shines is playing mobile game ports that originally had virtual buttons and d-pads. Games like Gunslugs and the unusually polished Ice Rage play MUCH better with physical controls. My current obsession is Ravensword: Shadowlands. Despite having bought it on the iPad last year, I purchased the Ouya version and have been ironically enjoying it as a PS2-looking Roger Corman-esque Z-grade Skyrim. It’s hilariously unpolished, absurdly ambitious, and infinitely more playable with a joypad despite the game being somewhat incompetently designed.

Ouya’s biggest flaw is the business model. All games are a hybrid of premium and f2p with a timed demo period. I learned way back in the feature phone era that demos are death for casual games. With an constant stream of content and bite-sized gameplay, users get their fill of your title for free and move on to the next demo. Forcing this model on developers is a major mistake. It’s the hallmark of a team clueless as to how to build a thriving ecosystem. If your mantra is “free the games,” then free the business model too. Straight f2p and video previews for premium titles is a much better option.

A lot of these early problems are to be expected from a company launching its first consumer electronics product so quickly. Also, people seem to have unrealistic expectations for a $99 box. It remains to be seen if the emerging category of microconsoles will be a market of any significance. Perhaps Ouya can break off some of their war chest for quality exclusive titles, or else they are doomed to drown in a sea of similar devices.

2012 Wrap-Up

It’s that time of year again–the obligatory year-end wrap up post. I figure I’d do some bullet points about stuff that happened that may or may not have been foretold by this here blog…along with some other random musings.

Canaries in the Coal Mine

Two new consoles were launched this year–one handheld and the other is the first traditional console release since the mobile disruption. Fortunes are looking bleak for both. The Vita had 3 quarters of dismal sales figures leaving Sony with junk bond status and totally mystified as to why nobody is supporting the last dinosaur at a mammal convention. Nintendo has been spinning the Wii U launch figures, but it’s too early to tell.

Hey, it’s not all bad. ZombiU was a close call for my game of the year pick! I also really like the Vita–there have been some games of astounding quality on it. Too bad nobody is there to play them.

Social Gambling Supernovas

Social games such as FarmVille and its ilk are frequently criticized as nothing more than compulsion-driven skinner boxes. So, it’s no surprise that in an increasingly desperate quest for hockey sticks, 2012 was the year all subtlety was dropped and social gaming companies built straight up slot machines for mobile and social platforms…as previously predicted by this blog.

Social gambling ARPUs are through the roof, but investors are still waiting for the legal structure to change for real-money-gambling to thrive online. Zynga has been loudly proclaiming their interest in the sector since before their disastrous IPO–perhaps because they realize they are far better at optimizing pure compulsion loops than building fun-based games.

Crowdfunding Explodes

By the end of 2012 famous game developers and studios successfully used Kickstarter to fund large independent projects. Sparked by Double Fine’s wildly popular campaign, the frenzy hit its peak with Chris Roberts’ $6.2 million haul for Star Citizen. Some of this may be due to a crowdfunding bubble that may burst when high profile games show up late, or not at all.

The real story here is that investors have largely abandoned the game sector as ZNGA’s IPO left a blast crater that scattered the herd…as previously predicted by this blog. For many, crowdfunding is the only remaining source of financing. What are you going to do–go back to a publisher?

2013?

Next year will be fascinating as we watch Sony and/or Microsoft (and perhaps others) defend against disruption with the introduction of new consoles. Disruption is a force of nature. Fighting it is like fighting earthquakes.

Also, production values on mobile will continue to rise and tablets will continue their breakout as a unique platform…as previously predicted by this blog.

Oh and while we’re at it…

* Best Album: good kid, m.A.A.d. city / Kendrick Lamar
* Best Game: Dragon’s Dogma / Capcom

In Search of…Rage of Bahamut Players

I recently listened to the excellent Walled Garden Weekly podcast about the massively successful collectible card game, Rage of Bahamut. The brave hosts played the game for a while in an attempt to analyze why it has dominated the top grossing charts on both iOS and Android for so long. In the end, they had no idea why.

I thought this episode was hilarious because I recently had the same experience with a friend of mine. We forced ourselves to play this game to understand why it is so successful. We came away from the experience just as mystified as Walled Garden. Is it a masterpiece of mobile gaming? Are we just too old and can’t comprehend this new genre of greatness? Perhaps it’s a combination of the two.

Rage of Bahamut is a collectible card game with no apparent skill involved. The interface appears to be a series of sloppily constructed UIWebViews displaying what looks like a web page from 1996–complete with blinking text. There’s no sound. The gameplay consists of tapping the screen and watching coins fly out of monsters with Skinnerian glee. PvP card battles are automatic and involve no strategy beyond deck construction. You win or you lose.

It’s also very difficult to find out how to spend money in the game–with the IAPs buried deep in the interface. This thing has towered over the top grossing charts for months on end, yet I’ve never met another person that’s ever played it. When Angry Birds was in a similar position a few years back, I knew lots of people who were fans.

I attended the Collectible Card Game panel at Casual Connect this past July to understand the space more. The takeaway was that since Pokemon will never appear on mobile devices, there is a huge vacuum taken up by the absence of that IP. In its void, a ton of CCGs have appeared on mobile targeting the Pokemon player demographic. It was suggested CCGs have 8-10X the monetization of other social games and are the ultimate core game experience for younger gamers. Maybe I don’t know any Rage of Bahamut players because I’m not 14?

Still, where are these people? I never see any coverage of this game on the web other than articles talking about how much money it’s making. It seems that the reason why you might not see a lot of chatter about these games on social networks is because the users are too young to be on Facebook. Instead, they use YouTube to display their lavish card collections. Most of the other social interactions are contained inside the game or DeNA’s social network, Mobage.

Rage of Bahamut appears to be a pure compulsion loop. It’s more like a slot machine than an actual game. The main drive is to collect rare cards and “evolve” them to advanced levels featuring character portraits with increasingly fewer articles of clothing on. Packs of cards in Rage of Bahamut can cost over twice as much as real paper cards for Magic the Gathering or other physical card games. This game is very simliar to Mafia Wars, so perhaps its success shouldn’t be unexpected. However, could something else be afoot?

Noting strange patterns in customer review score distribution and other clues, the Walled Garden podcast seemed to suggest maybe some chart manipulation is involved. I can’t say that thought hadn’t crossed my mind. DeNA made $609 million in revenue last quarter. The top grossing game in the App Store usually brings in about $10-15 million a month. Let’s double that to include Android (which probably is generous). Is it conceivable that in addition to the usual tactic of spending $50,000 a day or more in user acquisition, that DeNA is spending $20+ million a month on buying its own virtual goods to dominate the top grossing charts? With $1.82 billion in sales last year, it doesn’t seem like DeNA would need to do this.

Considering there are tons of other CCGs that are very popular, there’s a large and lucrative market for these games. There are different sub-genres as well. Some require skill similar to Magic or Yu-Gi-Oh instead of being a mere slot machine. I’ve read plenty of enthusiastic Rage of Bahamut reviews from people who are genuinely excited about it. Just watch this video–this guy really gets amped when he’s about to evolve his card to a new level of disrobement. Real people who play this game must exist somewhere. Leave a comment–let me know why you play it.

Oh, and while I’m at it, my referral code is mhk64683 if you want to start playing.