In the first session at the Future of Television Conference, held at the Roosevelt Hotel in Hollywood, California, was full of stats and data from analysts at SmithGeiger, Parks Associates and Magid Associates.

The bottom line – the internet has caught up with TV for entertainment use. TV viewing is down by about 2 hours from last year, with most of the increase being in watching online video.

The interesting thing is that there is lots of data to suggest that TV and Internet media reinforce each other. Much of the online activity revolves around catching up with what’s going on with TV shows. Watching shows you missed is a highly popular use of online video.

There appears to be a future for TV, but one quite different from that of the past. TV won’t be the single dominant entertainment channel. It’s going to have to share prime time with the Internet.

You can follow what’s going on via Twitter search.  Just search for #FOTV.

UPDATE:

# Mike Vorhaus (Magid Advisors) Presentation:
Nielsen versus Consumers – They Say Canabilization Happening
# Seth Geiger (SmithGeiger) Presentation:
Digital Media Trends and the Future of Television

I spent yesterday at NATPE’s LATV Festival enjoying some interesting discussions and presentations from the Digital Day. This report is a synopsis of one of those sessions. This session focused on social media and how digital media executives are using it to their advantage.

Ben Grossman, Editor in Chief, for Broadcasting & Cable led this panel discussion.

Danny Kastner is founder of Fan Rocket. Fan Rocket provides services to media companies that help promote media via viral videos.

Stephen Andrade is General Manager of NBC.com with a mission to promote TV shows, provide online advertising opportunities and create content for NBC.com. He shows a clip of what he calls creative social media that shows how The Office’s Dunder Mifflin Infinity website provides tools for fans to build content. The goal was to create a really deep community for fans of the show. The site presents creative tasks to “branches”( user groups) each week.

David Glover is CEO of Or Die Networks. The company is a online creative company that partners with celebrities to build new shows, such as Funny Or Die, and combines that with user generated content and social network tools to build community. He views it as a pyramid of content with the celebrity partner at the top, advanced users producing high quality content and then the mass user generated content.

EriK Flannigan, EVP of Digital Media at MTV Networks, runs Comedy Central and a few other sites. He says that consumers will form groups with or without you, so you need to decide if you want to participate. MTV is trying to embrace the social web using things like the Facebook activity feed.

How does an aspiring producer play in this? Stephen says that it’s important to understand the economics first. He says there are no barriers to entry so it doesn’t make a great area for investment. It doesn’t work to make things with TV type budgets. TV is a hit business where 1 hit can pay for 10 failures. On the web, there is a much lower cost of failure and therefore many more people trying.

Erik says that the industry has come a long way in the past few years understanding how users want to and will mash up content. The biggest stumbling block is letting go and letting users make their own choices. You don’t really have much choice because you can’t control what happens. He says you occasionally get into trouble with copyright issues, but you keep on going.

Dick says he met last week with one of the premier writer producers in comedy television. They were working on a concept and the writer said it would only work if there were no comments allowed. Dick says they walked away. You can’t fight reality.

Dick says they have less issue with copyright problems because their content is short and some what self contained.

Danny says this is really an area of opportunity as TV shows start hiring people dedicated to making extra content and making it viral. Stephen calls it a writer producer in training role, where when they go on to write/produce TV shows they will get the online side of this. Erik and Dick concur saying that new jobs are being created to re-purpose existing content for the digital space and new marketing jobs are requiring digital experience.

Does every new show need a social component as well as a digital component? Stephen says he’s not sure what “digital” means. He says it probably means both, but it really depends on the content.

Erik says that the social component depends upon the show. He describes the difference between The Daily Show and The Colbert Show. One is about presenting content, the other is really social.

The panel had some interesting advice to people in the audience who are interested in the space. In short, think beyond video. Erik pointed to an example on the Huffington Post that was an interactive view of how a conservative views the NY Times. Stephen concurred saying they want interactive ideas beyond video because they can really drive page views. Dick closes by saying think about what the technology can do, and video is just one of the things the technology can do.

I spent yesterday at NATPE’s LATV Festival enjoying some interesting discussions and presentations from the Digital Day.  This report is a synopsis of one of those sessions.  This session focused on how audiences and content are interacting like never before.

Moderator: Wayne Karfalt – Editor, Cynopsis: Digital

Panelists:
Eyal Hertzog Founder and Chief Creative Officer for Metacafe
Melanie Hall – COO Quarterlife
Kevin Chou – CEO Watercooler
Justin Cooper – Chief Innovation officer for Passenger

Crowdsourcing has it origins in things like WikiPedia where people can collaborate and develop content together.  How can crowdsourcing sourcing techniques be applied to entertainment?

Melanie discussed the social networking site for creative people and online show.  She says they have many opportunities for crowdsourcing at Quarterlife.  They use the audience to discuss characters and story lines.  The principles of the show were used to build out a social network so that the show and the site can play off each other.  They launched the show on Myspace, Youtube, Bebo and other sites which then referred people to the site resulting in a fast growing online community.

Eyal described how Metacafe now serves up over 300 million videos each month to over 35 million people.  He says the internet is introducing a new low cost of failure which means many more experiments and allowed many more people to participate in the creative process.  They have recently allowed people to edit the metadata about the videos. The members can edit the tags, titles, descriptions etc connected with the videos.

Kevin introduced Watercooler, a company that makes widgets for social networking sites.  Watercooler’s mission is to bring fans together online.  People have allows gone online to discuss entertainment.  They started online forums to discuss TV shows.  They launched in 2007, growing to 25 million registered users in 12 months.

Kevin says that their users are using the site to find out what others are thinking about when they watch a show. The communities can be very different.  Lost, for example has a community of 600,000 with very different involvement, while the online community for Jericho is 10,000, but very passionate about the show.

Justin described Passenger, a company that provides a crowdsourcing application for large corporations and media companies.  Major networks like ABC and Fox use the application for collaborate with their most passionate users.  These super fans can drive storylines and changes in shows using Passenger.  These audiences are built from either web sign ups or email lists that the clients have built up over the years.  Filtering tools are really important to allow people find the content they want and for the clients to sift through all the information provided by the users.  Justin says that Lost has been an active user of crowdsourcing to steer the show and for what content should be submitted for Emmys consideration.

The panel discussed the future of pilots.  Eyal says that the whole model for pilots is changing.  It used to be that because of distribution constraints there was a filter, then publish model for testing new content. The change of the distribution method has changed the model. We are moving from filter, then publish model to a publish, then filter model.

Eyal says that about 50% of videos are found via search for the first video you watch.  The second video is more likely to be the exploration of the related video.

In another example of crowdsourcing, Wayne described how Digg is building a recommendation engine based up your Diggs.  This will makes for more active recommendations based upon the collective input from the crowd.

A question from the audience – how to use input from the community when it conflicts with the creative direction of the show?  Melanie says that in any successful relationship there is compromise.  Justin describes how the creative commons process where other can build upon existing content and generate fresh content.

If you follow digital media, you’ve heard a lot about the importance of creating and measuring audience engagement (Forrester’s recent marketing conference centered on engagement – see our posts). After all, the difference between broadcast media and interactive media is the interaction part. But most engagement conversations focus on audience interaction with linear content – viewing, commenting, and sharing.

Imagine instead that as a member of the audience you were part of the action – you enter the video, talk to the characters, and they talk back to you. Or that the story was about you and your family members. Or that the characters in commercials cared about what you have to say instead of just shouting at you.

We’re not as far as you might think from this kind of convergence between media, video gaming, and artificial intelligence. At the most recent Digital Hollywood conference, Andrew interviewed Jonathan Strietzel, Founder of BigStage and Peter Hodge, CEO of Virsona, whose companies offer intriguing components of this future that have the potential to create big value for brands and media companies today.

BigStage’s technology allows users to create and integrate life-like 3-D avatars of themselves into movies, videogames, commercials, and other digital video content, using just three digital face photos. Virsona offers artificial intelligence technology that can recreate and automate any personality after just a couple of weeks of training – allowing characters to personally interact with an unlimited number of audience members.

If you are part of a brand, media, or other company with the vision to imagine what moving from linear to interactive content could do for your business, these interviews with BigStage and Virsona are must-listen conversations.

[tags]Interactive Media, Big Stage, Virsona, Advertising[/tags]

In Digital Podcast 52, Andrew interviews Jonathan Strietzel, Co-founder and Chief Creative Officer of Big Stage, whose breakthrough technology allows users to create and integrate life-like 3-D avatars of themselves into movies, videogames, commercials and other digital video content using just three digital face photos.

Imagine if you and your friends could star in a music video, famous movie clip, or commercial as realistically as if you were around for the shoot. Jonathan describes the company and the potential that its technology has to transform advertising and the audience relationship with movies, television and videogames.

 

 Digital Podcast 52 [23:00m]: Play Now | Play in Popup | Download

In the interview, Jonathan describes his early start as a wunderkind discovered by SoCal VCs (0:00), his insight into the coming importance of personalization as he discovered the technology behind Big Stage (2:45), and how he helped move the technology to become consumer internet capable and fundable (7:05).

He talks about the current business, his monetization model through brands and content partners based on the technology’s dramatic impact on advertising effectiveness (11:35), and what the big media networks are seeing in terms of monetization and CPM rates (16:12). He also describes privacy considerations (17:40) and the other cool non-advertising stuff, like videogaming and short internet adventures, that Big Stage will be making possible (19:05).

Jonathan Strietzel is co-founder and chief creative officer of Big Stage. He brings 10 years of experience as an entrepreneur in the entertainment and technology industries, including founding Stritz Studios, a boutique special effects studio. He has also invented multiple systems for delivering digital advertising and currently holds a U.S. patent for his work in particle-based advertising. In addition, Jonathan has worked with numerous TV studios and Fortune 500 companies, including developing the highly publicized online clue delivery system for NBC’s “Treasure Hunters.” Jonathan graduated from Chapman University with a Bachelor of Science degree.

[tags]Digital Hollywood, Big Stage, Jonathan Strietzel, Virtual Reality, Avatar, 3D[/tags]

In Digital Podcast 51, Andrew interviews Peter Hodge, CEO of Virsona, about Virsona’s new artificial intelligence technology that can bring any personality to life.

Imagine if anyone could have a personal conversation with Iron Man, the Michelin Man, or their great-great-great-great grandfather. Peter describes his new company and technology that is about to make these ‘holodeck’ scenarios a reality – at least the conversation part.

 

 Digital Podcast 51 [24:45m]: Play Now | Play in Popup | Download

In the interview, Peter shares how he founded Virsona after being inspired by his desire to continue conversing with a recently deceased friend (1:21), and why the internet will accelerate the development of artificial intelligence based on his meeting with David Levy, a foremost AI expert (4:10).

He describes how we’ll be able to interact with Virsona’s technology shortly (6:00), including re-creating our own personalities (11:05). Here are some screen shots of the site:

Perhaps most importantly, Peter describes how Virsona’s platform can be leveraged by Hollywood, brands, and others to deepen relationships with consumers and audience (11:55). He even gets into some of the complexity and norms that may evolve with virtual personalities, especially the need to keep some information and aspects of our personalities more private, as well as the future capabilities we might see from virsonas (19:05).

Peter Hodge is CEO of Virsona Inc. Peter has worked with and for some of the biggest names in the Technology, Telecoms and Media industries over the last 20 years both in the US as well as globally. He brings significant experience to Virsona with over 20 years in technology including development, sales and management experience. Peter holds a BSc in Computer Science from the University of Greenwich, London and lives in Boca Raton, FL.

[tags]Digital Hollywood, Peter Hodge, Virsona, Interactive Media, Artificial Intelligence[/tags]

One of the key factors in turning podcasting into a real business is effective execution of best practices in content creation, marketing, distribution, monetization and user experience. Many publishers are not following best practices in these areas. The result often looks more like someone’s hobby than a real business endeavor.

Developing content, building audience and getting advertisers to buy in will take serious effort. Publishers who understand the huge opportunity for subscribable media and its capacity to shape the media industry’s winners and losers will step up and make the investment required.

Putting these elements into a framework allows for systematic evaluation of operating practices across publishers and for the identification of best practices for new media publishing.

The framework links the three key elements of Audience, Content and Advertisers with the critical activities of creative/production, marketing, distribution, monetization and user experience.

In each of these functional areas, there are best practices that need to be deployed to make the most of a new media business. Some of these factors are observable from the outside looking in and others require examining how things work from the inside out.

Creative and production encompass the all important aspects of conceiving the concept, translating it into a show and producing high quality content on a regular schedule.

Marketing involves many factors including the key factors like search engine optimization, iTunes/media directory optimization, syndication via RSS feeds and sharable players. Evidence of best practice marketing can be found in how well things like ID3 tags are populated, the quality of feeds, file naming practices and quality album art. These are all factors that impact how findable the media is.

Monetization can take many forms and best practice players will find the right mix that works for them. While we can’t determine how much a show makes from the outside, we can examine the presence of monetization mechanisms like advertising, premium content, sponsorships, commerce/merchandise and paid syndication.

Distribution is an important component. In this area we are specifically looking for cost effective high quality content delivery. New media files are quite large and how well the distribution infrastructure works can have a significant impact on the user experience. In many cases we can determine whether a content delivery network is being utilized and we can also observe the use of advanced file sharing technologies like BitTorrent.

Perhaps the most important and observable element of the best practice framework is the user experience. How well are the shows presented? Is the content available in a format compatible with the devices consumers want to use? Is it easy for the audience to interact with the show? What’s the online viewing experience like? The answers to these questions and the inputs of the other four elements of the framework all go into determining how effective the user experience is.

By examining these factors in detail, we can begin to identify specific changes that will improve business performance and help publishers get serious about building new media businesses.

In the weeks ahead, we will dive into each of these areas to examine best practices and to review how well different publishers are employing best practices.

[tags]podcasting, best practices, new media[/tags]

There’s a love-hate relationship between Hollywood and gaming, and tremendous friction around licensed properties and what they mean for the gaming industry. In this panel, the experts explore where the relationship is symbiotic, where it is destructive, the underlying sources of friction, and how the relationship is now evolving. This is a continuation of our live blogging at the eighth panel from Digital Media Wire’s LA Games Conference 2008.

Bill Kispert, VP, Interactive, NBC Interactive
Sandi Isaacs, SVP, Interactive & Mobile, Paramount Digital Entertainment
Daniel Offner, Partner, Nixon Peabody LLP
Mike Breslin, VP, Global Marketing, I-play
Moderator: Andrew Wallenstein, Deputy Editor, The Hollywood Reporter

Where are we now in 2008 where things seem divisive in the Hollywood and games dynamics?

Mike – There are a few ways to look at it. You need collaboration between the production and the game developers, sets, and so forth; you can’t just hand over a style guide anymore. It also comes down to finding teams who share the creative vision. So collaboration is improving but it comes down to finding fit early in the process.

Keith – There are only three factors in the film license – time between film and game release, marketing budget, and likelihood of franchise to the film.

Sandi – I feel like everyone’s missing the point. It’s never been a more exciting time for film makers to collaborate with game makers. Now we have a great opportunity to start prototyping early in the process and explore business models, not just stay in the licensing box. At Paramount we’re putting together a team of game industry veterans to help make that happen. It’s also not just about the new release, but also the classics like The Godfather. It’s about the game, making a great experience and making it profitable for the studio.

Daniel – I’m slightly amused by the question, is Hollywood killing the game industry. We’ve worked with THQ for many years, and they make their bread and butter selling licensed games. There are some interesting changes now, though. The convergence of casual games, community and the web, and the access of content through broadband connectivity. The ability to tap the digital distribution platform opens up all kinds of interesting things. The other thing is having great content coming out of the studios and pairing that up with really great talent. I don’t think retail is going away – Wal-Mart, Amazon, etc. – but digital distribution is becoming very important.

Mike – I can speak with mobile industry perspective. One reason there has been consolidation in mobile is the cost of licenses with the peak of interest in mobile. Of course the studios are trying to maximize their license revenue, but from the side of the team investing in these licenses and putting together teams, you overextend on the licenses and can kill your business.

Sandi – Obviously we’re investing heavily in these properties which drives the mobile licensing terms. It’s a tricky fragmented business but the players know the challenge. It’s not the cost of the IP but the economics of the mobile game business overall.

What does the mobile game business look like, all license or some original IP too?

Mike – We’ve had success with some of our own IP. But on the license side, I think that Hollywood can help the game industry with the co-marketing and opportunity to leverage a brand where the studios are spending millions of dollars.

Keith – That’s a key point, you have to work with the license holder, because if you don’t, you’ll lose the value of the marketing, events, co-marketing if you don’t check in regularly and see what they are doing with the IP.

Sandi – Another factor is the broadening of the game demographic overall, expanding the scope of movies that work for games.

Keith – And now for the first time you have gamers making movies; the producer or director says from day one ‘where’s my game’, and wants to be involved on a creative level and ensure quality. They are also not demanding large up front payments as part of the deals.

Bill – You could argue that Hollywood can drive the game industry going forward – places, characters and worlds, with game play layered on top of it. Then there are millions of other promotional touch points, like theme parks, television, fast food, and more.

Keith – The other really important point is that when you talk about these $8 million marketing budgets, you can piggyback on those budgets and have credibility going into Wal-Mart for retail distribution and retail promotion. By paying for the license, you get to piggyback the buy for the sell-in level, let alone the consumer level.

Daniel – My question for the studios is, as what point will you be in my clients’ business and not need them any more.

Sandi – I think we already are and that’s the issue. There are going to be different parts of the value chain where we need the game companies, but other parts of the value chain where we don’t. We’re looking to work with partners based on value-added for both parties, not a single model.

Keith – That’s no different for any other part of the studios’ businesses.

Bill – Our ability to take things on ourselves also depends on the capacity we have available at different points of time. But it’s a very good time for independent developers to have conversations with studios. It used to be that we would go to Vivendi or another publisher and they in term would deal with the independent developers.

Sandi – It’s going to be very similar to the TV and film industry, lots of co-financing, lots of distribution deals.

With all these changing models that are happening, are there any upcoming releases that will put things to the test?

Sandi – On our side it will come from the casual gaming side. We are going to put in the time to develop really great games.

Boesky – There’s one coming up in September called Afro-Samurai from Gonzo. Gonzo committed to making a mini-series, and we invested in it from the creative side. Spike picked it up for a nominal license fee. They only got the right to run it; it was a great five episode commercial for us. We pick up revenue from the DVD, iTunes, action figures, and the action game coming out from Namco. All of the revenue from all of those ancillaries go directly to Gonzo, and Spike made so much money from the advertising without paying for content that they commissioned another run from us.

Bill – The notion is that if you’re really trying to build a franchise, you need content across platforms, and think about how you release them strategically.

Keith – The lie we told in the 90s is now true. We actually can use our game assets across media. Disney, Warner are starting to do it sometimes.

With a show of hands – is there a perception that Hollywood games are bad games? (Many hands are in the air)

… Andrew’s note: My fingers can’t keep up with the debate!

Mike – We all know there’s nothing more discerning than a gamer.

Keith – If it’s a bad deal, don’t buy the game. If you have a desperate publisher who wants something, or who messed up and can’t get it right – they won’t pull the public.

Sandi – We’re talking about hard core gaming reviews coming out and killing Sponge Bob. These mass market games are not targeted at the hard core gamer. It’s about being realistic, what game are you playing and what the audience expects for it.

Keith – If you compare these titles to other games, look at what you’re comparing them too. If I invest $30 million in BioShock, I can only invest $10-15 million in a licensed property because of the spend on the license.

Sandi – And that’s why the studios are developing games ourselves, so we can reinvest in our own IP.

Bill – We’ve introduced a hybrid model where we are co-funding games. Some developers said thank god, we’ve been waiting for the studios and networks to put skin in the game, and other showed no interest.

Daniel – A question for Ubisoft, THQ, and the others is will the studios still be giving out their best AAA properties? Will they be asking for a different economic deal, or will the studios just do it themselves and use publishers for retail distribution?

Sandi – If publishers have internal great teams, they often don’t want to put them on licensed properties.

Bill – We’ve tried to adjust our internal model to get involved early and put our publishers in a position to succeed.

[tags]LA Games Conference 2008, Hollywood, Videogames[/tags]

In this panel, the experts are focusing on advertising challenges and opportunities in games. They discuss what works and what doesn’t for in game advertising. They focus on what brands really want and how game companies need to start speaking a language advertisers understand. This is a continuation of our live blogging at the seventh panel from Digital Media Wire’s LA Games Conference 2008.

Panelists
Christian Batist, SVP Marketing, Sulake Inc. (Habbo Hotel)
Barry Schaffer, President, Promotional Currency
Julie Shumaker, SVP, Sales & Marketing, Double Fusion
Keith Kane, Co-Founder, SVP, Sales & Marketing, Giant Realm
Mark Friedler, Internet Advertising, Media, Games Entrepreneur/Founder, GameDaily
Moderator: Chris Lang, SVP, Research Strategies, SmithGeiger, LLC

Chris: Any case studies to start?

Julie: Sponsorship and engagement is really where there is opportunity right now. It’s like major league sports. Sponsorship are a really important part of the marketing mix. This is one way brands can reach fans. The combination of engagement and interactive experiences is allowing brands to participate in long play experiences. TMobile spent $60 million on their NBA sponsorship and mobile was the most important part of the campaign.

Chris: Will gamers put up with advertising?

Christian: It works well if you treat the gamers with respect. Logo slapping isn’t the way to go. You need to make it part of the experience. Have them find the ad and they win something and give them ways to wear your brand in the game.

Barry: We will work with the new release to promote it through specific brands or retail outlets. If you think about it like promotional items, but done digitally. Games, music, video can all be used promotional items.

Mark: Games are compelling as media. There is very high engagement. Attention to the game is very different to information around the game. The way to market to gamers is by working marketing around content about the game. CPM models don’t work in this kind of environment. You’re buying time, not really impressions. If you think of games as media, you start thinking about it differently. Free MMO games can monetize via digital goods. You can get very good revenue per user.

Julie: It’s no different than TV. Brands expect to get product placement to go with their impression buys.

Mark: The web is going micro. Everything is splintering. Players like EA want to spend $50 million. If everyone becomes their own media company, how does EA buy advertising?

Keith: These micro environments can be really scary to brands. There’s lots of things going on that brands don’t want to be part of. The marketing needs to be very relevant to the community. He describes a HP campaign for high performance machines that they ran in Machinima communities.

Q from Andrew via Mozes: How does the need for immersive placement impact scalability of in game advertising.

Julie: Without aggregation across lots of games you can’t scale. It takes a network of games to create audiences big enough.

Keith: Brand advertisers need to start thinking differently. Brands think they need a separate budget for game advertising. They should be thinking about how to reach audiences.

Julie: The game industry creates this problem by talking about PSP, Wii, DS etc. Brands should not have to care. They want to buy advertising and engagement.

Mark: We should be talking about engagement. If people want scale, they should go to Google and buy tonnage. There is going to be downward pressure on advertising because there is unlimited supply. You need to be able to offer media buyers engaging programs that are really simple for them to understand. He describes how this one MMO was able to offer virtual currency to members for signing up for credit card applications. The credit card company called them up and told them to stop after one week. The credit card company had a 12 month backlog after one week running the campaign.

Will there be single measure of engagement

Christian: It would be nice, but I don’t think so. The thing is to agree with your advertisers.

Julie: Advertising nomenclature is reach and frequency and CPM. Engagement is measured by ROI.

Mark: It’s also up to the industry to not take stupid ideas. We should segment it into different segments. Google allows you to buy clicks and measure results. If you’re trying to get a lifestyle product marketed, the product needs to look cool.

Barry: Engagement for us product selling, getting a new customer etc. A lot of the programs we run drive trial.

Christian: If people buy Corn Flakes in Brazil, the customer gets Habbo credits. The same type of program is running in Spain and Finland. It’s too early to tell the results, but the Spanish company pulled all their other advertising to focus on the Habbo program.

[tags]LA Games Conference 2008, gaming, in game advertising[/tags]

We continue our live blogging at the sixth panel from Digital Media Wire’s LA Games Conference 2008. The mobile games panel focuses on the question, what’s it going to take for mobile games to go mainstream, exploring differences between the US and international markets, and different business models that are being used to tackle the mobile phenomenon.

Mobile Games: Challenges & Opportunities to Create a Mass Market Phenomenon
Scott Scherer, VP Product Management, Hands-on Mobile
Jill Braff, SVP, Global Publishing, Glu Mobile
Stephen Jackson, CEO, Smashing Ideas
Kay Gruenwoldt, Head of Industry Marketing, Nokia
Erica Chriss, VP of Strategy & Business Development, Greystripe
Moderator: Mark Donovan, CMO & Senior Analyst, M:Metrics

Jill, what have you seen shift in the last year in terms of drivers of your business?

Jill – The increase in people playing mobile games. Back in 2002 with Sprint, we were doing focus groups and couldn’t find anyone playing. Now we can find active players a day after posting an ad in CraigsList. The core audience may be different from the typical mobile user, but that’s what you need to grow a business. Also, we’re trying to see the carriers start to measure RPU (Revenue Per User). As the networks become a commodity, these services become more important.

Scott, HandsOn involves bringing titles like Incredible Hulk to market. How is that doing?

Scott – Guitar Hero 3 has been a tremendous success, the number one title since it’s launch in December. It’s a brand that’s hard to screw up, but also hard to create a long tail and ongoing revenue stream. So we deployed an option where if you buy the game you get three additional songs each month, which drives people maintaining their subscription. People are coming back and trying out the new songs and getting more great experiences each month.

Mark – That underscores the shift to subscription models and evolving content.

Jill – It’s awesome to see this kind of stickiness to content and episodic content. Mobile really should be about this kind of close relationship with consumers.

Steven, you’re a serial entrepreneur with Smashing Ideas, a smaller company. What does this market look like to you?

Steven – The company has been a casual game maker for 12 years, generated 150 million game plays last year. We’re the largest independent Flash developer in the US. Adobe decided they’d spend $900M to address the mobile space with Flash Lite and we jumped on the Adobe bandwagon for the mobile space. We have 30 applications on Verizon and 80 screen savers. We create 60% of our games, and then for the other 40% distribute for other developers. As a small player, we play in the Adobe Flash Lite niche and that’s where we focus.

Kay, tell us what’s happening with Nokia. When nGage was first launched it was laughed at, but you’ve been tenacious and successfully relaunched. How does it fit in?

Kay – We’ve learned a lot over these last 3-4 years. It took quite a while to come up with the new nGage platform, and we’ve accomplished all the points we set out to address: fragmentation, discovery, purchase process. We’re focusing on a premium experience for higher end phones. The average price for games on the platform is from $8-14. People pay for it because they can try the content out first and perceive the value. Now, original IP is leading ahead. The content that our games publishing unit creates is selling very well. That’s great news for smaller game companies and developers, they have a chance to be successful.

Erica, your business model is what Greg just said is way too early, ad supported games. How does that work, and is it cannibalizing the market?

Erica – We see it as a great market, and we know we are not cannibalizing it because our publishers are telling us so. It’s increasing the scale of the entire market, enabling discovery, and providing content for folks who will never pay for content. Instead of having them pirate your content and pay you nothing, why not allow them to create meaningful experiences that you can monetize. We’re seeing 300K downloads per day, and a large percentage surveyed would not pay for games, and are experiencing similar conversion rates as other distribution models.

Are there top tier publishers signing on with Greystripe?

Erica – We do have a number of top tier publishers whom we work with, including Hands On and Vivendi. First, we can be thought of as part of a windowing strategy, like DVD vs. theatrical. Things that are utility based, applications, do very well. We also have content from top tier providers who are experimenting with simultaneous introduction through us and carriers. They are measuring cannibalization careful and finding none – we’re just an addition channel.

What are you seeing as the relative importance of carrier vs. handset vs. direct to consumer distribution?

Scott – For HandsOn most of the revenue comes from the carrier deck. For B2C, it’s less about creating a portal for us, and more about working with larger brands like World Poker Tour where it makes sense – we run a website that offers free play online and then upsell to mobile

Jill – Certainly today, the lion’s share of the business comes from carriers. I’m actually interested in learning more about how much money you’re seeing from advertisers, Erica. There are other channels that are more direct that we are exploring. Over time this will look more like one-to-one marketing. The great thing about mobile is that literally it is always with people.

Mobile as an industry is a real pain, with so much fragmentation and handset standards. Is that getting any better?

Jill – We really like the complicated part. Not only is it a barrier to entry but it’s something that for us is a competitive advantage. We also do localization, day and date launches, event marketing tied in with carrier marketing. It’s similar to any other entertainment business. You can’t let people have a game only on one type of phone. Consumers don’t understand the technical complexity, it has to be seamless for the consumer.

Scott – For us it’s a lot like what Jill said. License partners expect global launches across carriers. We end up doing dozens of unique builds instead of a “high” and a “low”. It ends up creating a lot of extra work that changes the economics of the business.

Kay – What this discussion shows is that if you really want to grow this business you have to look across these issues as a whole. How you distribute. Consumer experience and discovery tools. Billing mechanisms. We are trying to address these as a whole, and those who do will be successful.

What would the panel’s advice be for people making games on other platforms and are eyeing mobile?

Kay – My key advice is do not copy and paste, it will not work. You can ruin great IP and a great brand by copying and pasting. The technology is a lot different from a PC and a console. It has a lot more – cameras, motion sensors, touch screens, wifi, GPS. Don’t just slap what you have onto mobile.

Erica – What’s interesting is that might decrease your chances of getting carrier distribution. But we believe that consumer choice leads to real experimentation, original IP, and reinforce the entire system.

Jill – If I were a strong brand holder I would build a really strong license business given the risks and uncertainties. If I were a developer I’d talk to carriers and publishers. You need to understand the carrier retail environment, and then partner with a publisher as a way of getting in the channel. On the flip side if you were going to develop for nGage, iPhone, etc, you wouldn’t have to deal with the porting issues but do have to deal with the complexity of developing for these platforms. There’s room for innovation. Even the videogame business, which is dominated by large publishers, has room for this kind of innovation (look at Guitar Hero).

Erica – It’s actually a wide open market, and new developers have the opportunity to take share with hit products.

Mark – But most of the volume is through the carrier channel, and that’s a tough channel to crack if you’re two guys in a garage.

Is location a component of games you are developing or see in the market?

Kay – Location is something that needs to develop, especially location based gaming. The only reason it’s not out there bigger is that noone has yet been able to develop a valid business model for it. With GPS in so many devices, it’s something we have to look at. I can’t say more at this point. If anyone here has a great concept, hit me up after the panel!

Erica – We’ll experiment with anything and we have a very cool distributed mostly in Japan that is all location based treasure hunting etc.

Are you seeing things outside the US that foreshadow what we’ll see here?

Stephen – We’re seeing a lot of interest in off-deck distribution models outside the US.

Jill – As an industry we make the mistake of talking about mobile from a US perspective. It’s also not one size fits all outside the US. We’re very successful in China and it’s all very local content that would probably be rejected by Verizon. In Europe networking is just starting to happen in terms of game play. Or in Latin America people are experiencing entertainment the first time through mobile, they don’t have cable or Wiis because of cost.

Mark – Did you just suggest that Verizon is a stronger censor than the Chinese government…

Are mobile games being usurped by casual online games; are these competition for eyeballs, dollars and entertainment?

Kay – Everyone is competing, it’s entertainment as a whole whether movies, mobile, or others. One note is that we are now looking at cross platform gaming across mobile and PCs.

Jill – From the consumer point of view, people are used to being on many screens simultaneously. There’s a lot more gender neutral user base for mobile, so it’s more akin to and complementary with what you see in casual games. That seems to make the brands grow far more than a cannibalization effect.

Stephen – One of our customers is Cartoon Network and we’re taking their online games and immediately bringing them to mobile.

Are we seeing games start on mobile and then go to other platforms?

Jill – That’s where we are trying to go as an industry.

Kay – There are pretty good examples already of that happening, one example from Germany that went from mobile to retail distribution in supermarkets for PCs.

Stephen – The challenge for us is monetization. We are able to sell clicky sticky games for mobile, but not Flash games for online.

Erica – That’s a challenge as games go cross-platform, consumers free expectations transfer to mobile, so advertising is important.

You still haven’t told us how much money publishers can earn through advertising!

Erica – In places like India and China we are seeing advertising with higher CPMs through advertising than through purchase. We’re seeing CPM’s in the US as high as $40, and in India as high as $15.

What do you see for the mobile games market going forward?

Scott – The real innovation will be through multiplayer connected games, which is a way of having a terrific experience, to reach out and add new experiences.

Jill – All these new technologies and devices are not for technology’s sake but to create more immersive, richer experiences.

Stephen – We’ll see much better discovery, the ability to find, share and play content.

Kay – Richer, more immersive experiences. Multiplayer and connected game play going beyond what you can have on your PC because mobile is something you walk around with.

Erica – More UGC, more social viral content now that there is a revenue model that can support free things.

[tags]LA Games Conference 2008, Mobile gaming, International mobile[/tags]