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[Gamesbriefers] Will 2013 be the year of disillusionment for mobile?
In 2012, both F2P and mobile gaming did amazingly well, until pretty well everyone would admit that they have their upsides and are here to stay. Legions of ex-console developers have dived into mobile.
How much of a problem is that? Will 2013 be a year of further success, or will it be the year of bankruptcies as new businesses fail to take off and their disillusioned founders quit. In short, are we going to hit the trough of disillusionment for mobile in 2013?
I’ve worked with a few ex-console developers moving over to free to play and what I’d say so far is that they know how to make very fun games, but aren’t always oriented well towards things like retention and monetization. The result in some cases is a tremendously fun experience that has a hard time making money or building an audience.
Some devs have been able to turn the corner and generate a successful title, but for others things are looking a bit more grim, especially after such a large investment. One of the advantages of live games is that they can be modified and tweaked to improve metrics, so it’s certainly not the end of the world to have a bad launch. But I think it’s important for console developers to understand that their expertise and skills are in many cases not entirely sufficient for creating a successful free to play game. I do expect that we will see a few massive failures coming out of former console developers – hopefully some can be saved through a re-design, much like Lord of the Rings Online was.
More optimistically though, this is hopefully an indicator of increased quality coming to the free to play browser and mobile markets. The cheap look of Facebook games 3 – 5 years ago has already become obsolete, with even new farming games like Hey Day and Farmville 2sporting 3D graphics and smooth animation. The bar is rising, and the talent and experience of console developers, combined with improving technology from Flash 11, Unity, Unreal, etc. will help set new standards on these platforms.
There will likely be a some hard lessons learned in the process, and we will see more consolidation and increased difficulty for small and indie studios in the mobile space, but for the consumer this will hopefully result in better, higher-quality content across the industry.
I think in 2013 we are going to hit the bottom of the trough of disillusionment with a bump, but also get some interesting bounce backs.
The failure of Eurocom, the console developer’s developer, was a major shock to many. However, a lot of console teams are in total denial about the changes in the industry and will unfortunately pay the ultimate price.
However, out of the ashes you’ll get smaller, leaner, more iterative start-ups capable of taking advantage of the opportunities that escaped their parents…
The pessimist in me thinks we’ll see lots of really good games that don’t make money in 2012, and lots of really shitty cynical games that make a lot of cash. But, happily, in between there’ll be some really good games that make lots of money and push things on.
But back to the pessimist, I am genuinely unsettled about the F2P and social games industry’s dash towards real-money gambling in 2013. Not because I think gambling is evil, as such, more that the boundaries between gaming and gambling seem sensible – different industries, different regulation, different relationship with players…
And compared to the earlier days of social gaming, when the talk was all about how these games were exciting because they were the channel for more communication with your friends – play as social agent etc. – it just feels so grubby. Are Zynga etc. so keen on doing real-money gambling because they think that will strengthen our social connections? Or because they think it will make them a shedload of money?
My thinking is a bit fuzzy and possibly naive in this area, but ‘unsettled’ is the most accurate word: I get that gambling has often been social for its entire history – poker nights, sweepstakes etc – but the rush of some elements of the F2P industry to marry social gaming with real-money gambling feels grubby to me.
When we formed AppyNation in June 2011 and started in earnest in Nov 2011, we formed it on the basis of 6 games development teams wanting to take control of their own publishing and not rely on established traditional publishers. We naturally steered towards mobile and have learned so many lessons it has been both inspiring and invigorating as well as challenging.
Since we started, most mobile has gone F2P and content is relentless and improving all the time. Lessons are being learned, but had we continued in the console space, well we would not be here now. Business models, distribution and consumers have all changed and will continue to change at an unforgiving pace. Size is key. Big means you can deliver bigger games, theoretically, but it also means bigger costs. Small can mean agile and iterative but the mindset has to be right and I am not convinced all console developers have truly grasped what has and continues to happen.
This year will see more console developers and publishers who stick to the old ways go bust. Some will make the transition to mobile, but the learning curve is steep and you need some money and plenty of time to learn. Some developers can still make a good living working on the PC and going direct via Steam, GOG, Green Man, Get Games and all of those digital services. The PC like the mobile platforms are constantly evolving which presents challenges of course, but keeps them vibrant.
What is heartening to see is so many ex console games developers in the UK make the change and get success. I think there will be some more examples for sure.
You can never have enough great games, although one cannot play them all! With the market growing via connected devices selling by the millions each quarter you just have to bite the bullet and make that change or face the inevitable truth. Once you go mobile you never go back.
I think the implicit acknowledgement of the “science of freemium” that was just below the surface in the media coverage of CSR Racing and Clash of Clans will prevent console developers from jumping haphazardly into the mobile free-to-play market without a cogent product strategy. I don’t think any competent studio director could have participated in or observed that discourse without becoming cognizant of the sophistication of the F2P model. If anything, media coverage of these successful titles may have convinced console developers to avoid the free-to-play model and go the Square Enix route of releasing console-quality games on iOS at a high price point.
Similar question to this week’s Mobile Mavens [post at Pocketgamer], which in itself suggests that everyone thinks the party is over.
Mobile will continue to grow: More devices, more players, more money. Just the money won’t be as evenly distributed. Every year naysayers have told me it’s the year indies hit the wall and every year I’ve disagreed. This year I find that harder to do.
Those that don’t have success (either a niche or a community) now will find it continually difficult. Production quality and, in turn budgets, are rising. Studios are turning to work for hire, of which there’s continually fewer, but increasingly bigger, projects. Those studios that do client work well will flourish, but others flounder, and it is the opportunity for the console devs used to big budgets and being beholden to publishers.
Echoing Stuart’s point: I don’t like the idea of gambling and gaming mixing. Firstly it’s a personal (and entirely subjective) moral view, not a business one, but secondly I think existing gambling companies will just do gambling as pure gambling better. But that’s not based on very sound logic.
2013’s going to be the toughest year the industry’s seen since the crash in the 80s. It’s also going to be the starting point for an incredibly exciting future. I bet that, in five years’ time, at least a third of the top ten game producers will be companies that don’t even exist yet.
The downward price spiral that digital distribution facilitates has now got us to the point where games are ‘freer than free’ (in that it costs money to get someone to play your free game). Vast amounts of VC and IPO money poured first into Facebook and then, once that started looking rocky, into mobile. This has pushed user acquisition costs sky high, as bigger companies try to brute force their way to success. At the same time, tens of thousands of small developers have started making their own mobile titles – the very best will succeed, but the vast majority will fail. These two things (too many games competing to buy users) will combine to make for an extremely rocky year. By the end of the year, I hope things will have calmed down a bit, and those who are still able to make games will be doing so in a more stable market. But there will probably be a lot less people working in games in a year’s time than there are today.
The number of people playing games will continue to rise. We have to hope that western games can find audiences in new markets – because that’s where most of the growth will come from. I think the expertise western companies have in making tactile, polished products still sets them apart from those elsewhere, and those that capitalise on that while opening up new audiences can enjoy huge success. The fact that some of the biggest new games in games – DeNA, Tencent, GREE, Wargaming.net are from territories that we may have ignored in the past is a valuable lesson in where the industry (and wider world) economic strength is heading.
We’ll see thousands of games trying to copy 2012’s successes and mostly missing the point that following conference advice and looking at historic sales data is a great way to work out what you should have done last year, but less useful in determining what you should do next.
We’ll also see both consumer fatigue and increased enthusiasm for F2P. Fatigue for yet more me-too games using 2011 F2P skinner boxes, but increased enthusiasm from the hardcore gamer, as games like League of Legends warm them up to the idea that maybe it is for them, after all.
I think (well, hope) that we’ll see more games that monetize well without following a virtual currency model – not that there’s anything wrong with one, but it doesn’t suit all the types of games that everyone wants to play. The Walking Dead is a great example of a premium priced game, with very high ARPU and conversion rate (if you started at the free episode, which I did). The very existence of Kickstarter demonstrates that people are willing to pay premium prices, in advance, for products they really want – even if they don’t exist yet.
2013 is already shaping up to be the year of the new platform. Whether a software platform or a new console, it seems everyone’s got one up their sleeve. The fact that success of any games platform depends on the games will be forgotten by many until it’s too late and their ‘build it and they will come’ strategy falls down.
Finally – the smart players, I think, will increasingly be looking cross-platform to reduce risk. We’ll all cross our fingers that someone doesn’t acquire Unity and completely break the model, like EA did with Renderware last decade.
I don’t think that mobile has topped out, but I reckon it’s increasingly the developers who think tablet first that see success. Tablet is now at the point where everybody knows that it’s a real platform in its own right, and there’s more room to manoeuvre within it. I also fancy that Android’s time has come at last (particularly when you consider the emerging category of micro-consoles like the Ouya), so there’s likely room for growth there too.
However I also think that the current line of f2p/social games are going to fall into the same stagnant pattern as it did on Facebook. Discoverability solutions will also start to show their worth (or lack thereof), and I’m mildly concerned that Apple in particular might move against them.
I agree with many of the points raised.
I don’t believe mobile has topped out either but I do think that 2013 will be the year that the event horizon for mobile and online studio start-ups begins to close: if you are developing new IP then you are now competing with a dramatically rising quality bar, which means more money needed in the beginning; if you are trying to pitch for work-for-hire then you are now competing against companies who are no longer start-ups and have a better track record and more market presence.
If I look at the processes, people and experiences in our studio today there is no way that the Remode of three years ago/the two man start-up of today would be able to compete in terms of multi-discipline horsepower. I’m not saying we are infallible, more that I think you are going to (increasingly) need a proposition that is quite compelling to warrant the risk. In many ways it is history repeating itself with a new generation.
I do believe Tadhg is right that Tablet may be such a proposition that is not yet as matured. I recently bought an iPad mini and I think it is a brilliant gaming device (multiple uses, doesn’t waste phone battery, immersive screen size, more storage) that opens up a new mid-core market segment, where mobile is more casual and consoles are hardcore.
I am expecting this to be a watershed year.
2012 was a fascinating year and its hard to think of a time where Mobile has had so much success and hype. Its easy to forget that whilst there are an increasing number of success stories; there are still just as many failures.
Stuart’s concern about the triumph of the cynical F2P game is still very valid and its something which I hope will die out from Darwinian causes – but the risk is that these developers will spoil the well for the better games.
The reasons I think these aggressive F2P games will die out is linked before they kill off the model is partly due to the influx of old-skool Console trained developer teams entering mobile. Its not a new phenomena but its happening on a scale that we haven’t seen before because the indie trail-blazers have demonstrated that there is a market to be won.
What these teams bring is an understanding of quality of delivery and a love of play.
However, they have a lot to learn.
Many still seem to reject the F2P model – yes even still think its evil. Until their first major failure with a Premium game. Even then many will experience a failure in F2P because they will fail to understand that the game (including levels) itself is a retention strategy – instead we sell things that make the playing more fun. They also often fail to understand that F2P games are a service which requires maintenance and that players have a lifecycle. This isn’t an easy thing to adapt to if you are used to multi-year projects leading to a single gold-master release. Its going to take both the Indie-Agile mindset and the console expertise to create content worth featuring.
There will be a lot of failures and I suspect this will herald a new era of consolidation and perhaps even the rise of a new Publishing model rather than just a reliance on VC money; but I suspect with new players and very different terms. Of course they will also need the expertise of great F2P consultants like Tadhg, Nicholas, Will and myself ;0)
As usual I don’t quite agree with Tadhg’s perspective on ‘Tablet First’ but its not a bad strategy for now. By the end of the year as we approach the warm up to next gen consoles I’m convinced the focus will be looking at how the ‘Personal’ screen interacts with the ‘Shared’ screen and this will need a ‘Server-First’ approach before we deliver the best experience separately on each device mode we have; Mobile, 7” Tablet, 10” Table, PC, Console even Smart TV.
Finally, Gambling… don’t get me started… Not only isn’t this a social experience (again as Stuart says) its a very different model with different regulation and moderation issues as well as a very different psychology of play. Its going to be very profitable for some, but the scale is greatly exaggerated with many people misunderstanding the numbers… a user spending $100 with a 98% payout slot machine and reinvesting all their winnings can look on paper to have spent over $4700.
As a tiny company built around new IP, I’m terrified. But f*** worrying, frankly.
I see tablets as a unique market getting stronger this year, while mobile in general will kill off more studios than it supports. That’s just to be expected in any market that changes at such a rapid pace, though.
I’m keen to focus on tablet & PC (in other words, core/midcore gamers) and building a fanbase for my products in a way that larger companies can’t. The endlessly frustrating thing about tablet/mobile is that there’s always a layer of friction or obfuscation between me and my fans, something which the PC doesn’t experience, for myriad reasons. I can only compete through being nimble, and having a 1-1 relationship with customers. In every other area bigger companies will easily push me out of the market.
That said, I’m a firm believer that a lot of companies go out of business because they aim for the market domination. When you realise you can make a really successful business out of smaller returns, as long as you’re sensible, then things become a lot less stressful, and a lot less about competitiors.
I think we’ll see a lot of already-successful mobile/free-to-play companies doing even better, maybe two or three new companies reach amazing heights, and the rest will suffer.
As I’ve come from a ‘gambling, but not in the legal sense’ background, Ive thought for years that there are great possibilities for gambling/gaming crossover products. I’d say the main problem with their coming into existence is that there are so few people with experience of both.
Largely, gambling companies know bugger all about social gaming and social gaming companies know bugger all about gambling. There are exceptions (Zynga being the obvious nearest case) but true hybrids are interesting. Money is one hell of an extrinsic motivator.
Social gambling products are not generally of this sort though, and are just not very interesting, money bearing or not, being rehashes of well understood mechanics, endlessly refined.
As to F2P, well the oil tankers are pretty much going to be completing their turns during this year and we’ll see a lot more heavy players in the area, not just on mobile either. F2P is a bit of distraction, perhaps, from the real issue , which is Games as Service. F2P is a great way of monetising Games as Service, but – fro a creative and production (and thus business) perspective – it’s the creation of a compelling game service which is the nut that needs cracking. If yo can do that, you can almost certainly monetise it. That bit is almost a science now.
And, indeed, that may well be the biggest problem. As F2P monetisation techniques are pretty damn precise already, and only getting more accurate, naturally margins get squeezed tighter and tighter, and this may well be one of the bigger problems for the bigger boys.
The indies can always roll the dice on something unexpected and, through sheer weight of numbers, come up with some great new success.
And, obviously enough, I agree with Tahdg re: local multiplayer. As was aid, we play games, not hardware, and local games, where the people, not the screen, is the focus of the thing, can create stories that are about people, which gives them a leg-up in terms of how they can be discussed in the media (stories about people!) that they could well end up being the real break-out success of the next few years, let alone this one.