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Don’t throw the baby out with the bathwater – has Bigpoint just made a big mistake?

By on July 19, 2012

UPDATE: Heiko Hubertz asked me to clarify that Bigpoint still believes in mobile. “We still believe in mobile and will continue working on mobile projects. We are still working with external studios and continuing publishing 3rd party mobile games. We just don’t develop mobile games internally anymore.” Clarified.

 

Bigpoint today took a a broom to its management and its business. Out are Bigpoint veterans Nils Holger-Henning and brothers Philip and Tobias Reiseberger. Out too is the entire mobile business with the loss of 29 jobs.

Everyone is at pains to state the the departures of the senior management is amicable. CEO Heiko Hubertz is even going to invest in Nils’ new startup. But I can’t help thinking that the move away from mobile is very risky for Bigpoint.

It’s not because Bigpoint doesn’t believe in mobile. Heiko said:

“I’m a big believer in mobile, it’s going to change many things in the games industry.”

He then continued:

“But I also think it’s not the right time at the moment to be in this market because to generate revenues in this market is very tough.”

That means that Bigpoint is going to double down on its browser-based strategy. I am nervous that this the wrong decision. Mobile, and particularly tablets, are going to be the dominant platform for consuming online entertainment over the next decade. Bigpoint got a head start by being ahead of the curve in browser-based gaming. It now risks being permanently behind the curve as smartphones and tablets disrupt the desktop Internet.

This seems to me to be the consequences of Bigpoint maturing and encountering the same (dangerous) pressures that make it difficult for established businesses to adapt to new threats. It seems likely, based on these actions, that the company is facing shareholder pressure to focus its resources and start driving profitability.

So it has decided to stick to the platform of the noughties, not the platform of the tens. It can say “all of our games are available on a tablet in the browser”, but that is not the same as a “tablet-first” design. The use case is different. The input device is different. The design requirements are different.

Bigpoint has effectively said “we are betting on the browser”. My instinct is that this is the wrong bet. I hope, for Heiko’s sake, and all the people he works with, that my instinct is wrong.

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: thecurveonline.com
  • Harry

    It’ a surprising move, but you can understand the logic.  Although I think mobile/tablet does have the bigger future, there’s a broken economy sprung up on the back of massive amounts of VC (and Asian) money being pushed into user acquisition.  Perhaps the smart path for a company already doing well in  the browser space, with a good and profitable audience, is to sit back and let others spend too much for a year or so, coming back in once things settle down.  I’d argue, until the current bubble bursts and the user acquisition costs become sensible again (as dotcom advertising did 10-12 years ago) it’s not a bad plan to sit and wait, unless you have limitless funds, which very few companies do.

  • http://en-gb.facebook.com/people/Nic-Brisbourne/608641437 Nic Brisbourne

    I agree Nicholas. Stepping away from mobile because there is little money in it today seems short sighted.

  • http://www.gamesbrief.com Nicholas Lovell

     Yes-ish. Presumably Bigpoint’s plan is an exit (it has a lot of private equity money behind it). I fear that a company without a smartphone/tablet strategy will find it hard to find a buyer.
    I would have kept involved at some level. But maybe that’s what the external publishing strategy is all about.

  • http://www.gunderia.com Sunil Gunderia

    I completely agree with you Nicholas. The writing is on the wall in terms of where you need to be to future proof your gaming business and it’s all about mobile. Surprising also as there are example of companies like Kabam that have made the successful transition from FB to mobile with titles like Kingdom of Camelot. I don’t know what Kabam is making on mobile but they have been in the top 5 of paid apps for awhile which if they maintain could result in 10s of millions in revenues.

    So for Bigpoint I would have thought that this would have been a good data point that a company with solid game design/monetization capabilities on PC platforms can leverage their skills to move into mobile. Given previous investments Bigpoint must be looking at an exit north of $1B valuation and I am not sure they get there without mobile. Will be interesting to see how this plays out.

  • Darren Cockburn

    I have to agree as well.  At the moment I would be putting tablet/smartphone development at the core of the strategy – this is where casual gaming in particular is moving to. I’m not convinced you can be an expert at this if you only publish 3rd party games. 

  • Harry

    You’d think the strategy would have been to build a lead in mobile by developing cross-platform titles which transition some of their users over, which would have given them a strong position without having to get into the silly acquisition spends.  It does feel like a complete pull-out is a move too far.  That said, _everyone_ who’s ever made a game now seems to be talking freemium mobile as the future, which suggests the smart money’s looking beyond that.

  • http://twitter.com/TravianAndre André Bernhardt

    As you mentionend in the update – it is important to say that Heiko didn´t say that there is no future in mobile. He just said that he does not believe in its internal mobile development team. If you take a look at the Bigpoint apps within the Itunes store you can see that both are of average quality. 
    If you want to be successfull within the mobile market – especially if you want to cross-sell your players from browser to mobile – you will have to deliver a state-of-the-art user experience. If the internal team wasn´t capable of doing this it could be a smart move to work together with experienced external teams.

  • Chris Johnson

    Mobile games require very different skills to develop than browser games. Zynga struggled at first with this and still haven’t really mastered mobile. Their IP have failed to take hold outside FB. It’s chalk and cheese. The only way forward for BP is through outsourcing or acquisition. It was correct to shut-down internal development if the products were not looking viable – nip it in the bud before it becomes expensive and embarrassing, otherwise that would screw their share price.   
    It is of course true however that browser game companies will be facing diminishing returns, but if their IP doesn’t translate that well on mobile, they’re caught between a rock and a hard place, especially if they are late to the party like BP. 

  • http://twitter.com/davidphan1978 David Phan

     Well summed up Chris! I think you hit the nail on the head.

  • FraserMacInnes

    I think it’s clear that Bigpoint will continue to be involved in mobile as a vertical (chiefly via publishing it seems), but it fluffed the PR message with this by making such a sudden move. A more gradual winding down (rather than slicing out the whole mobile department), perhaps alongside some publishing wins would have kept Bigpoint on the mobile map as a company. As it is, I think it will really struggle to attract talent and games for it’s proposed mobile publishing business.