Greg Ballard, CEO & President, Glu Mobile spoke at the LA Games Conference. Greg’s talk is titled Mobile Games 2008: The Right Stuff.

Glu Media is about a $100 million company in the mobile game space. In 2003 the industry was very fragmented. In 2004, Greg thought that an industry consolidation would take place with companies like Verisign, Yahoo, Real buying mobile game companies. It didn’t turn out that way. Now 50% of the market is controlled by 3 publishers: EA(25.6%), Glu (14%) and gameloft (11.8). The rest of the market is made up of huge numbers of publishers. It’s a healthy business for those that are getting big, but not so great for the smaller players.

At what point, does this become a mass market. Greg thinks it already is a mass market. He focuses on the size of the installed base that you’re targeting.

• 56 million next generation game consoles
• 85 million iPods
• 850 million personal computers
• 1.3 billion landline phones
• 1.3 billion internet users
• 1.5 billion television sets
• 3.3 billion cell phone users

There is a huge untapped market to address. Even if only 5% are playing games, that’s 165 million mobile gamers playing every month. While going from 5% to 6% seems small, each percent gained means 33 million new mobile gamers.

Mobile phone game sales are bigger than DS and PSP game purchased combined.

Every minute glu ports 10 games, every second they sell a game. In 2007, glu sold 30 million games.

The business is healthy, the business is mass market. The question is how to grow the pie. The explosion of new players and platforms in the mobile space. We’ve seen the introduction to iPhone, ngage, and android. This is not to take anything away from existing platforms, but Greg thinks its going to change the battlefield because of the companies behind these platforms who are leaders in the digital media world.

These new players are innovating in both hand sets and in business models. We’re seeing direct sales to consumers, bypassing the carriers. This makes it really interesting for content providers. In this kind of battle, content becomes the differentiator.

Flat data plans, better handsets, better merchandising, better games. 44.7 of smart phone users buy games compared to 19.6 on non-smart phones. The difference is related to flat rate data plans.

Greg compares the iPhone to the PSP and DS in terms of capabilities. The iPhone has more memory and more processing power.

If you look at merchandising, it’s about to get a lot better. Just look at ngage. It makes the buying experience much, much better.

If the business is healthy and growing fast, what’s the one thing holding it back. The issue from Greg’s perspective is the way we think about the value we sell games for.
Playstation titles are at $60. PC games are at $50. DS games are at $30. Mobile games sell for $8. The question is what happens to the price point for next gen mobile?

“It may be a small segment of the market today, but this is a puppy with very large paws,” says Greg.

[tags]LA Game Conference 2008, Greg Ballard, Glu Mobile, mobile gaming, gaming[/tags]

Johnathan “Fatal1ty” Wendel is the first gaming superstar. He talks about what it takes to succeed as a gamer – it’s not that different from succeeding as an athlete – and the “Fatal1ty” brand that he wants to build into the Nike of the videogame space. Ken Rutkowski interviews him for Digital Media Wire’s LA Games Conference 2008.

LA Games Conference Featured Interview
Johnathan “Fatal1ty” Wendel
Interviewed by Ken Rutkowski, Host, Ken Radio

Johnathan is the most accomplished professional PC gamer in history. He has joined forces with the Championship Gaming Series, which is owned by DirectTV, as a spokesperson.

Ken starts talking about travelling through Korea with Johnathan, where he is a gaming superstar mobbed by gaming groupies. He’s a spokesperson now, and is no longer playing games at a competitive level, but for the right game, moment, and TV exposure will jump back in.

Succeeding in gaming is about focus, like any professional athlete. For gamers, a lot of skill sets are required: Discipline, timing, psychology, even math (for understanding the odds).

Johnathan believes that as CGS reaches hundreds of millions of homes worldwide, there will be more and more gaming stars in different countries. They already number in the hundreds, and increasingly are getting sponsorship from brands. They will be the new professional athletes.

The “Fatal1ty” business model is to pick the up coming athletes, pay them salaries, and build the revenue behind them. Andrew’s comment — It sounds a lot like the music labels until a few years ago.

Johnathan has moved from trying to split his time between running his business and gaming to just focusing on the business – it takes a substantial investment of time.

The “Fatal1ty” brand is a lifestyle brand for gamers. The keyboard, the mouse, the headset, etc., evolving from Johnathan as a celebrity to a brand for gamers, like Nike is to most physical sports.

What do you think about the Wii Fit? Very exciting. Johnathan is looking forward to using it. He woke after a Wii session sore, realizing that his work out was throwing punches with Wii. He’s a hardcore sports guy, football, tennis, and was a top 50 tennis player in his space.

[tags]LA Games Conference 2008, Videogames, Fatal1ty, Johnathan Wendel, Ken Rutkowski, Championship Gaming Series[/tags]

In this panel at the LA Games Conference, the expert panel talks about innovations in connected games. What does it mean to be connected? What are the big changes and what’s next? This is a continuation of our live blogging at the fifth panel from Digital Media Wire’s LA Games Conference 2008.

Panelists
Keive Huffman, SVP, Business Development & Sales, Championship Gaming Series
Robert Norton, VP, Business Development, King.com
Rob Uhrich, Senior Director, Digital Markets, PaymentOne
Brent Hurley, Strategic Partner Developments, YouTube
Jason Rubinstein, Senior Director, Entertainment, Mobile Devices, Motorola
Moderator: Jay Moore, Head of Special Ops, The Strategery Group

Jay asks What is connected gaming? What’s your perspective on what Connected Gaming is.

Jason: Connected gaming is a better experience. The ability to get it from your friends the ability to get it easily on your phone, and ulitimately how social networks connect with games.

Brent: Game developers can pull in relevant data to make the game better. If it’s raining outside, it could be raining in the game.

Rob: Connected relationships are what it’s all about. Usually my kids fight all the time. Seeing my kids working together on webkins shows the power of connected gaming. Strengthening current relationships and develop new relationships is an important part of connected gaming.

Robert: In all our games you are playing against other people. It’s about people vs. people. Helping them connect. The lobby system is the most important part of our site.

Kieve: We look at connected gaming as a huge part of what Championship Gaming Series is all about. We see a way for connecting a competitive gaming to main stream audience. Television is CGS’s primary distribution channel. The online element introduces a new element of interactivity. CGS just announced a YouTube channel.

Jay: What have been the big breakthroughs in the past year?

Robert: Figuring out pre-roll and post roll advertising has opened up free ad supported games. Another breakthrough is the social network sites that allow game developers to reach very large audiences.

Jason: VMK had to shut itself off due to unexpected success. Scrabulous is great. A couple of guys in India introduced something that ignited a lot of interest in casual gaming and it has a business model.

Kieve: It’s amazing how strong the communities are. Any time we run a tournament it’s a frenzy. Our traffic goes up 10x.

Robert: Scrabulous reinvented turn based games. The game had been around for a year before it went on Facebook. The social network allowed the game to become the marketing tool itself. By building in the right features, the engineering could drive the marketing of the game.

Jay: What’s been driving connectedness in the MMO space?

Kieve: We work with World of Warcraft. It’s been a lot of fun to work with them. They’ve created this immersive environment. The fun has been trying to mainstream this community by publicly broadcasting the game tournaments.

Jason: What’s not happening is MMO expansion into mobile. It doesn’t even have to be the game. There’s tremendous opportunity in mobile for applications like tools, utilities and teaser games.

Jay: Will the iPhone be disruptive?

Jason: The SDK and platform is not really open, so publishers should beware. Apple shattered some ceilings that only they may have been able to shatter. It still needs to achieve volume to be disruptive. Google’s open mobile is more likely to be disruptive.

Jay: What is the future of UGC games and mashups?

Brent: We want to encourage sharing of game video so people can share their in game experiences.

Robert: This is one of the most significant developments. Over the next 18 months, UGC around the game. The combination of community, games and flash skills set this up to grow. It opens gaming up to anyone with the right skills.

Kieve: One of the most popular things is sharing your best victory. Ode to Gamer Girl is one of the most popular videos around. It’s hard to beat this kind of marketing.

Kieve: Counterstrike is one of our most popular games. For the upcoming season, we are using a user generated map.

Jay: How will advertising play out?

Robert: Everyone is experimenting. Micro-transactions are the real revenue now. Advertising is the potential for real growth. Right now we’re experimenting with what works for users and how it impacts user’s interactions with the site and the games.

Jason: I side with the consumer. The consumers want free and they want quality. Diner Dash costs $20 for a download. On the mobile it costs $4-5. Consumers expect that games will be on the handset. Advertising could make this possible.

Rob: Advertising as a part of the business model continues to be a important part of the revenue mix. Game developers just need to be careful about how they integrate into advertising into the games.

Jay: What needs to change in the home?

Kieve: The technology in the US is getting better, but it still is not a great user experience. In Korea and China where they have the bandwidth, particularly in mobile, connected gaming is doing very well.

Rob: It needs to get much simpler.

Brent: Bandwidth into the home is the block for streaming high def into the home. So hitting the mainstream will take some time.

Jay: What categories will be disruptive in the next wave?

Jason: The companies that are positioned to do well are the big companies and the people who spin off from them and really understand the networks. Companies that are thinking about where the real numbers are and how to reach them with proven game mechanics can light up the mass markets.

Jay: What do you see happening next? What would like to see?

Kieve: True connectivity, that’s ubiquitous and that works.

Robert: The games that represent the cutting edge of content are teaching us about new things that work. Seeing these things move to other activities and applications is exciting.

Rob: The gaming market will become much more competitive.

Brent: Excitement about derivative works. It can be exciting to see and interact with the game and game play in different ways.

Jason: Open mobile networks. Fewer mobile operating systems. Super distribution – the ability for people to send media to friends get. Like to see US legalize online gambling.

[tags]LA Games Conference 2008, Connected Games, gaming[/tags]

These gaming industry experts share their perspective on what makes a game great – in terms of game play and financial results – and what new technologies and capabilities will be changing the face of killer games going forward. This is a continuation of our live blogging at the fourth panel from Digital Media Wire’s LA Games Conference 2008.

Matthew Bellows, VP, Consumer Strategy, Vivox
Catherine Herdlick, Dir., Game Production, GameLab/Co-Founder, Come Out & Play
Spencer Hunt, VP, Game Production & Digital Dev., Sony Pictures Television Int’l
Ariella Lehrer, President/CEO, Legacy Interactive
Chris Petrovic, VP, Digital Media, Playboy Media Group
Moderator: Scott Steinberg, Managing Director, Embassy Multimedia Consultants

What does having a successful game mean? Financial return? Set up for follow-up game? Great reviews?

Ariella – Obviously with a small company you have to make money, so number one is generating enough revenue to pay for your marketing and development expenses. Right now we have a number one product, Lost Cases of Sherlock Holmes, so that’s a success.

Spencer – First and foremost it’s about getting deck placement, and it’s about carrier relationships and consumer uptake. We do a lot with licenses, and for us, if the original content creator is excited about the product, that’s a strong indicator for market success. With mobile, if you’re getting 50K downloads a month for a few months, that would be fantastic.

What about retail distribution?

Ariella – For our games retail is now an afterthought. Online with our prentice Los Angeles game we sold 60K online and 20K at retail.

Let’s look at a popular game, Guitar Hero, and discuss what are the common factors that lead to success.

Catherine – Aspirational qualities are important, the desire to be a rock star. The game lets a consumer immediately identify with a role that has broad appeal and gives them the power to be the star.

Matthew – So much of a game developers’ motivation is to make something amazing and exciting, that even if a game is not a success based on revenue but pushes boundaries and finds passionate fans.

Chris – Aspirational is an important element for us (Playboy), on the male side living the good life as Hef does, and on the female side it’s important as well, though we’re still looking for what that element is.

Spencer – Everyone wants to be a rock star, so Guitar Hero nails the aspirational component. Also the core game play mechanic – it’s very easy to play the easy level, but very difficult to master, and it provides encouragement along the way.

Ariella – Also for Guitar Hero, the innovative use of the controller which allows people who have never played games to interact with the content. The interface is a large part of the success.

Matthew – What’s interesting about the controller is that it was not seen as the right thing to do from a business standpoint. It was a financial risk that publishers took, it drove up the SKU price, but it was all about game play.

How important is doing the groundwork, picking a business model?

Spenser – It’s all about following through on a vision. If you are really passionate about a decision, like Nintendo’s controller emphasis rather than graphics, following through is key.

Matthew – Look at Harmonix. They tried for ten years to follow through with the vision of making music accessible, and now they’ve hit the right formula and it’s a big success.

How important is it to be able to turn on a dime when you’re approach isn’t working?

Ariella – Very important. You look at the strengths and weaknesses of your developers to decide how to transform a property into something great. Then the process of refining and developing is a very iterative process. We’ll do the extra month or two at the end of the process to beta test, refine and polish before launching so we get it right. You have to be sure you have enough time to do it right.

How many concepts do you go through and throw out before deciding what to put into production, and whether to design by committee or use one person’s input.

Catherine – We go through dozens of ideas per month, and the decision depends on many factors, what we think will resonate with the market, production capacity, etc. We discuss as a committee but don’t design by a committee, the producer is the filter through which management, developers, etc. can voice their concerns.

How about prototype development?

Catherine – It’s absolutely imperative, you have to put something together almost immediately to have a vision for what the game is. With Fashion Play we iterated for four months, scrapped the product, than started over and created the finished product in five months.

How far into left field should you go with your original concepts?

Spencer – Left field is great for original IP, but for licensed content, you will have a flop if it varies from consumers’ expectations. You can go further out in mechanics, though.

Chris – We’re an evergreen brand so there aren’t a lot of pockets for totally original things. Evergreen is good but it has it’s constraints. Used to be you could reskin existing game engines, but we’re past that now. It’s hard to innovate as an original IP holder without new and different hits to go from.

How important is international?

Chris – For us international is much bigger. Looking at mobile we’re not on deck here but have been from early days globally. Existing and new territories, Asia Pacific and Latin America are very important.

Do review scores actually matter and influence sales?

Ariella – They don’t matter for casual games, but do for hardcore. Casual gamers look at top-sellers. Brands are becoming more important for the casual game market with 20 new games a day. If you as the millennial generation, they don’t believe in experts anymore, they believe in what each other and their friends think. GameRanking.com etc. are important for us when we are looking to find developers and see how they’ve scored with their games; it’s more of a business-to-business use of expert scores versus consumer driven.

Can good marketing sell a bad game?

Matthew – Marketing can definitely get the first launch 50% or 100% above what you ‘should have been’, but good games last. Here reviews do have an influence. I love the consumer reviews of the title, not so much expert reviews but people who have played games, love them, and think of themselves as expert. They set an incredibly important tone.

Let’s learn from common mistakes by players in the game space…

Chris – I’ll use ourselves as an example, though it preceded me. We had an online game aggregator come to us, suggest we slap our brand on an existing arcade, and we had about two consumers come to that URL. The web has a long memory about bad experiences. Reskinning without advancing the brand is disastrous.

Catherine – I’ll add perspective about thinking through the use of the controller. Most of our games use the mouse. We’ve launched games that can hurt your arm if you play too forcefully. In one example, we promised a game that we couldn’t make because it was technically impossible with the control mechanism, and kept bumping against the wall and eventually had to abandon the effort.

If you haven’t played a GameLab game, audience, download one now. They are top notch.

Ariella – We produced a game for a wonderful charity, Starlight / Starbright. We were given a script with celebrity participation. The only game we could come up with that fit the script was a side-scrolling platform game, and this type of game is not very successful as a downloadable PC game. It was actually well reviewed, but it didn’t do well in terms of sales. It was the wrong game for us as a developer and for the audience. Nothing was good about the result.

Spencer – It’s very easy for the team to follow in love with pieces of the game but they can’t pull away from the closeness to see how it relates to the brand or how playable it really is. Pulling away is an emotional rather than technical problem. You always have to build in the time to make adjustments.

Matthew – We had a concept game for MoPets and bring it out for mobile phones. It was original content, we had a great partner (Sony BMG), but it’s so hard to break original IP on mobile versus on downloadable PC where you can get cat, dog, etc. lovers engaged.

Are there any trends improving chances of success across the board?

Catherine – There has been discussion about franchising, licensing, etc. One of the exciting things now is original IP starting with games and moving to other media

Ariella – There are huge opportunities thinking about innovative controllers, look at the Wii Fit and other titles. We’ve really just touched the surface of what’s possible here.

Matthew – I’m so excited right now to be in the video games industry. You can do things so many ways – Flash, browser, mobile, etc. – we’re seeing a lot more creative things being developed.

Spencer – The reality of multiple platforms is finally being realized. Everyone in media is recognizing the power of this.

Chris – Building on that, the concept of synchronous game play through multiple platforms is finally coming to fruition.

Matthew – For example look at PMOG, Justin Hall’s passively multiplayer game. It’s a browser plug-in that tracks you as you go through the web, and you acquire your points, levels, badges, and so forth just as you browse the web.

Catherine – The whole definition of what’s a game is evolving, turning every day activities like buying groceries into a game – it’s pretty amazing.

Audience Questions

There’s a lot of discussion about innovate controllers. How do we do this without having to acquire another set of plastic toys that fill our rooms?

Spencer – Are you talking about the same plastic working across multiple publishers?

Maybe getting rid of the plastic altogether.

Spencer – I’ve wondered why noone has created a Guitar Hero controller that connects to an actual guitar

Catherine – I think we’re actually streamlining it more than we were 15-20 years ago.

What new innovate technology is on your radar screen as the next big thing for gaming – haptic interfaces, 3D, etc.?

Spencer – I’m really interested in location based games, and game design that takes advantage of that information. Use of GPS, photos for scavenger hunt, community, etc.

Catherine – I definitely think that GPS will become huge and change the way we play.

Ariella – I saw a presentation from an Israeli company that has to do with how your body interacts with the PC – there’s some camera that tracks your movement and allows you to physically interact with what you see in the screen

Matthew – I’m very interested in the integration of speech into games, facilitating a much more natural interface

Scott – We also haven’t talked about UGC, such as with the SIMS, which is important.

Chris – Having a tactile interaction with a virtual experience. I’ll leave that to your imagination regarding the implications for our world (Playboy).

What is your development cycle, and how does new technology impact that?

Chris – For Playboy, because games are not a core part of our business, we are strategically opportunistic about pursuing opportunities. We’ll sit back and analyze the financial benefit to us, with the partner taking the majority of the risk. We see a lot of pitches and don’t execute on 99.9% of them because it doesn’t make sense.

With respect to Matthew’s comments about voice in games … I was reading an article that discusses the advantages of using a third party voice provider like Ventrillo is that you can still talk to your guild when the game crashes. What do you think about this?

Matthew – It’s a good point, though there’s not much for the guild to do when the game crashes. But we’re working on a project to make that capability possible, keeping the voice independent of the game.

[tags]LA Games Conference 2008, game design, videogames[/tags]

Cindy Cook, Chief Strategy and Marketing Officer of Vivendi Games is being interviewed by Geoff Keighley, producer of Spike TV’s GTTV at the LA Games Conference.

Geoff asks about the explosion of the music category. How do you work with the music companies?

Cindy says that the music business is actively looking for new outlets for their content. The interest level for music companies to be involved with games has reached a high point. First it was just background, then it became jukebox material, then artists became characters in the game, and then music became the game.

It’s been good to see the growth in sales of these games. We’ve also seen lots of growth of in game music purchases which is very exciting.

Geoff asks about movie games. The view is that movie games are rushed out and hard core gamers don’t really like them. The high mark was the Chronicle of Riddick. It seems that Vivendi is going back into the old movies, for example Scarface and Ghostbusters.

Cindy says they try to coordinate with release dates where they can. These are good opportunities. The problem is that it can take longer to make a good game than make a good movie. They wanted a way around this problem, so they researched the back catalogue. Scarface emerged as one property that could do well. For Ghostbusters, it’s one of the most familiar and popular movies. They were able to unite the original cast and it has unique game play.

For Scarface, they had huge popularity of the character and they were able to weave in contemporary hip hop theme. Ghostbusters was also familiar to the audience.

Geoff asks about The Bourne Conspiracy release. Cindy says they are immersed in a large scale marketing campaign. They see this as a mass market product so they are looking creatively at how to reach people. Two things they are doing that are unique. The first is cinema based ads. The ads are based on showing the motion capture technology and action sequences from the game. They will be shown at the opening of the new Indiana Jones movie. The other thing we did was to have the music composer, Paul Oakenfold, host a music conference and produce a music video for the game.

They will also have outdoor advertising and street teams that will help promote the game.

Geoff asks about how Vivendi approaches a Facebook or Myspace. Cindy says they go where the people are. For Scarface, they had a Myspace contest to determine music for the game. They also have a Scarface page on Myspace which has 400,000 friends.

Cindy also describes How Do I Survive High School. It’s a mobile game that connects to people. It’s episodic. People are attached to the game. 7.5 million packs have been downloaded for the game. They have promoted it in Facebook focusing on how to get the game on your mobile device.

Geoff asks about iPhone games. Will it be disruptive to the mobile market? Will it blow the market wide open? Cindy says that most mobile games have been crappy games. The iPhone has the ability to support much better games. It has the potential to be disruptive when the installed based gets bigger. The key is to get enough people with the phone to make it really big.

Cindy addresses a question about new virtual currency. She says that she wants to clarify that World of Warcraft continues to grow and that Blizzard is really focused on the player experience is.

Question: Will Blizzard allow digital object exchange? Blizzard has made it clear that they have decided not to do this. They are focusing on the player experience.

Question: What about iPhone games? Will Vivendi be delivering more games through the browser? She says the ability to download or access through the web is really exciting to Vivendi. It will be a matter of consumer choice how the get the games.

[tags]LA Games Conference 2008, Cindy Cook, Videndi Games, gaming[/tags]

Chris Early, General Manager, Windows Gaming, Microsoft gave the end of day keynote at the LA Games Conference 2008 talking about Connected Gaming.

Chris describes himself as the Windows guy in the Xbox division. His talk focuses on connected gaming. Connected gaming has evolved from single device to cross platform connected games. That is being able to play Xbox games vs. people on the Windows platform. He points to ShadowRun as an example of this type of game.

It’s not just multi-player, multi-platform, it’s playing with friends. He says that people want to watch their friends play, to talk with friends while they play.

Why can’t all platforms, the phone, the PSP and the other platforms all work together? Why can’t my networks work together? If I have a great reputation on a Windows network, why can’t I have a great reputation on a Sony network?

Why do we want to connect? We want to play, watch, compare, share ,communicate , differentiate, group/belong. Why don’t we have that game? Why hasn’t Microsoft made a game with all these pieces? Chris says its brain melting hard to do this. It’s hard on the order of whether you can make money on putting all this together.

It’s really hard just to make a game that works between the Xbox and the PC. Mice are much better pointing devices the console handsets though are much better at managing movement. How do we make this kind of thing work across all platforms. It’s really hard.

The game companies are islands. The net result is that we all end up with fragmented communities.

Chris says that what the world wants is connected gaming, companion gaming, asynchronous gaming, to make my play valuable and persistent of data and character.

Most of all we want fun. We want to have fun with whatever device we have or platform we use.

[tags]LA Games Conference 2008, Chris Early, Microsoft[/tags]

Find out why there really is no difference between casual and hardcore gamers, and what it will take for the rest of the world to become players of casual games in the third panel from Digital Media Wire’s LA Games Conference 2008.

Casual Games: What’s Next Now that Everyone’s Involved?
Peter Blacklow, Pres., WorldWinner (Liberty Media subsidiary), EVP, Digital, GSN
Kate Connally, Vice President, AddictingGames, MTV Networks
Eric Lavanchy, Director of Gaming, Endemol USA
Matt Turetzky, VP, Non-PC Games, RealNetworks, Inc.
Dave Madden, EVP, Sales, Marketing & Bus. Development, WildTangent
Moderator: Mike Vorhaus, Managing Director, Frank N. Magid Associates

Give a profound or controversial comment with your introductions:

Dave – I think that casual games are generally going free, with monetization inside and and at the back end of the game

Matt – News Flash: Gaming division is about to spin off from RealNetworks as a publicly traded company – and that’s all I can say about it

Eric – I’m convinced that within 5 years there will be no game shows or reality shows without a significant online component that intimately involves and integrates people into the show.

Kate – This is a profound question, not a statement. What will be the successful types of games that are going to spring to life on television?

Peter – Celtics in 4 over Detroit

In such a crowded old space, how do new casual game titles break through?

Dave – It depends on how you define casual, psychographic or demographic. If casual is a game found online, no money spent, no time investment required … in that world, it’s going to be much bigger than the traditional game business is today.

What’s the next new thing in casual games?

Kate – We’re looking at platforms like Facebook and MySpace engaging a much bigger interactive audience daily than ever before who are looking for something to do. You give them an interactive experience while they’re on their web page, and you have a much better chance of engaging with them. There are also some innovative game styles emerging but they are still early stage, like the viral vampire games which are interesting at first but seem to become annoying.

Matt – Obviously there are a lot of interesting things happening on social networks, but in general I don’t think there’s much new. We’re all to blame for focusing on things that have been successful over time, but that sameness will open the door to brands, like Scrabble, Mattel and Hasbro.

Eric – It needs to be remembered that this is a very nascent area; Facebook as a platform has been opened for all of two years now. In the early days of TV they were filming radio plays. We probably haven’t seen the thing that can really get accomplished through social media yet.

Peter – This whole industry – online casual games – is still brand new. Particularly at GSN, we hear a lot from people who enjoy the game shows on TV and who have no idea that they can go online and compete in these games. Wheel of Fortune is the number one syndicated show week after week after week, and while Sony is doing a great job trying to move people online, the viewers and loyal fans are just beginning to move online.

What tools do you use to get viewers on to game sites?

Peter – Back to TV shows, none of these should happen without an online component. Example, Bingo America, GSN was getting 2000 registered users per day, not many. When we launched Bingo America with prizes and contests, that jumped to 22,000 registered users a day.

Is there really a difference between the casual gamer and the hardcore gamer?

Peter – I also work with GamerDNA, a company that I’m on the board yet, which is focused on hardcore gamers. This segmentation around casual, hardcore, etc. games doesn’t work the same way in any other industry – people listen across music genres for example. We’ve all lost sight of the gaming consumer, who don’t define themselves that way.

Kate – We’ve also defined gamers by the way games are delivered, the platform, vs. the games that are differentiated by brands and programming vs. platforms.

Matt – There’s a perception that casual games are for women 35 plus. If you look at the traffic coming to RealNetworks is much more balanced, 50/50. Casual is just about monetizing.

Dave – The credit card is the gating factor for gaming online, who has it and who has access to it in order to buy the game. I load up my iPod at 99 cents a song but I can’t do the same thing in gaming, to break the price down and sample games on a bite-sized basis. It’s dependent on microtransactions and other forms of monetization, the ways people can pay for games.

Kate – Or advertising.

Can Eric talk about mobile vs. internet entries?

Eric – We’re trying to minimize the distinction, and that’s how consumers see it.

How about voting, mobile vs. internet?

Eric – Because of the way we advertise and make money from the calls, it’s 90% mobile vs. 10% internet but that will change over time. If you look at Current.TV, over 40% of the audience is having a two screen experience while they watch.

Are people interested in learning about or improving themselves through gaming? Self-awareness?

Eric – Nintendo has a whole line of such games

Kate – We’ve done research, and the drive for personal achievement and accomplishment is a big part of the motivation. Consumers say it’s the one time they can actually finish something.

Matt – Our research indicates the same thing, that our users play games for relaxation, entertainment and also a sense of achievement. When you want to relax and feel good about yourself, you might want to pop balloons vs. do math problems, because the frustration level gets in the way of the sense of accomplishment.

Peter – When we started to benchmark people’s scores against others in tournaments, we doubled our conversion from free to money.

Are you looking at all at casual gaming as a way of affecting how people engage and connect with each other, and understanding the effect on others?

Mike – The SIMS is the closest to what you are describing.

Kate – The concept of collaborative play is creating awareness that people can accomplish more in groups than they can individually. Collaborative play is an exciting new area where we are seeing a lot of interest from gamers.

How do you determine content synergy with consumer lifestyle?

Collective hmmm… from the panel

For example, in the videogame Crimes of New York, who was creating that lifestyle and how do you create synergy with the games.

Eric – Some Endemol examples – Extreme Makeover Home Edition. We’re aggregating people based on lifestyles and interests, allowing for social interaction.

Kate – We have a whole category called News Games based on things that celebrities and politicians do. We have a whole team of creative developers who make those choices and let fly.

But the kids are playing GTA IV, etc. Who’s keeping this real world?

Kate – It’s the responsibility of the game publisher

Eric – We’re starting to see platforms for user generated gaming content. So the whole question of control won’t matter over time, you’ll control it, the consumer will. A few years ago, that wasn’t possible.

Kate – At Addicting Games, 70% of our games are coming from independent developers who might be teenagers learning Flash. Our most popular game last year was developed by a 14 year old in Sweden.

Dave – The same plumbing being used by Real Time Worlds to launch their games is being structured as a Wiki. Individuals will be able to create their own story lines, story arcs, etc., and a $50 million bet was just made against it.

Who’s the hard core gamer and who’s not?

Dave – If you are an aggregator of games, you don’t need to worry about it. But the payment models is where things get interesting. The number one game played by RuneScape, Habbo’s users, is free. There’s a whole slew coming out like this where you get in for free, and then pay for new capabilities on a microtransaction basis or through advertisers.

Eric – To answer an earlier question, what happened to the paid download model for casual games – it’s not gone yet but there consensus that it’s going away.

But the paid download model is paid and growing, it’s bigger than PC retail!

Matt – We agree with that but the mix is moving toward online and free, ad and microtransaction supported.

Peter – As you know I don’t like the hardcore / casual distinction. At Worldwinner, all of our gamers are hardcore casual gamers. On average, they spend $400 a month on contests. Our commission is 15-25%.

Dave – That’s called gambling addiction and people do it at the horse race all the time.

Peter – The gamblers don’t stick around very long. People know they are going to lose $300 a month but are doing it for the entertainment value not because they think they are going to make money.

What’s going to get the other 250 million people involved in casual games?

Matt – It’s a question of ubiquity. We’re distributing our games through as many portals and locations as possible to drive that reach.

Dave – It’s a huge addressable audience, the way you make money is multi-faceted but it’s going to be a huge market from an advertising perspective.

Kate – We need to make great efforts to diversify the types of people who are making games. To date it’s been an outgrowth of technologists but we need people from artistic and creative backgrounds.

Eric – It’s about taking gaming out of its box and immersing games in other participatory experiences.

Peter – Television. Liberty Media, by buying our small skills based gaming company and merging it with a television network, is saying that they are going to drive people from TV to the internet to play games.

[tags]Casual Games, LA Games Conference 2008[/tags]

We are live blogging from the LA Games Conference. This session of the conference focuses on How to Win the Social Game – Harnessing the Power of Online Communities and Social Networks.

Panelists include:
Craig Alexander, Vice President, Product Development, Turbine
Ranah Edelin, Vice President, Electronic Arts
Mike Goslin, Vice President, Disney Online Studios
Scott VP Creative and User Experience, Gaia Online
Gabe Zichermann, CEO, rmbr.com
Moderator: Eric Goldberg, Managing Director, Crossover Technologies

Eric kicked things off by introducing the panel and asks them to describe their demographics.

Craig: We represent the oldest and most male demographic. Turbine has a number of medieval MMOGs such as Dungeons and Dragons and Lord of the Rings.

Ranah: Sims sold 100 million units last month. The Sims demographic is 60% female and predominantly under 30.

Mike: the primary focus is families and casual games. Ultimately, Disney would like to get the entire theme park audience.

Scott: Gaia demographic is teens with a skew towards girls.

Gabe: We are passionate about games and believe that every application can be made more fun using gaming techniques. The audience is everyone.

Eric: Asks about how social media relates to and promotes games.

Craig: We see social media changing the business a lot. Turbine has introduced a number of high barriers to getting started such as retail channels and big downloadables. By putting up a gaming portal with fee games people can be drawn into a relationship and ultimately up-sold to a subscription.

Ranah: The Sims 2 is the main platform for the core Sims game. There is an online community for Sims 2 which is focused on uploads and downloads of virtual items. It’s not monetized now. It’s treated as a bonus for the consumers. There is a lot of opportunity to grow that audience. EA wants to add to the experience in a controlled way and allow the audience to engage via other channels like YouTube etc.

Scott: Gaia started as a free site. It’s a platform for all these social aspects to be built. It’s designed for people to interact. Gaia has opportunities to monetize the audience by offering things that enhance the experience. Gaia is a hang out by nature with few rules, the opportunity to craft an identity and the forums with a million posts every day are the three social highlights that have made Gaia popular.

Mike: We want to cut down on the “griefers”, the guys who are obnoxious. We want to deliver a fun, friendly time in the space. It’s important that the feel comfortable in the space. As a result, there is a lot of effort to make the space safe.

Gabe: Facebook is the Napster of games. Not in the sense of piracy, but in the sense that socializing is the game. Socializing is the activity that people think is the most fun activity they can have. By stitching social game aspects on a community it’s turned Facebook into a tremendous success.

If you valued Pogo the same way you value Facebook it would be worth $4 billion. What’s going on: Other things are fun are not always games and by making socialization the game Facebook has created a lot of value.

Craig: Bringing lots of people together who have shared interest has great potential. We need more than just social, we need to give people experiences that they enjoy.

Gabe: Facebook is consuming an increasing amount of online time. Games are losing mindshare to Facebook.

Eric: What is the definition of a game to you?

Gabe: A game is whatever you think it is. As soon as you decide something is a game it can be a game. It’s the concept of funware. Game aspects can be built into any application that recognizes gaming interactions and fundamentals.

Scott: Game play is anything where we are challenged and have fun. You need some low barrier ways to participate. This needs to happen before you can get into deeper socializing.

Gabe: As soon as you put a leaderboard in place, it seems to cause a game like action. If you want to make something a game, a leaderboard is the place to start.

Gabe: Look at LinkedIn. There are people who have decided to make it a game by keeping track of how many connections they have. It’s the same dynamics of the hard core MMOG player

Eric: Is it possible that games will allow people to extract more money out of social media.

Ranah: It’s clear that Facebook monetization is low right now. The priority right now is to build an engaged audience. There are ways to monetize that audience once the audience is engaged. He describes an advertising campaign with Ford where they made downloadable virtual Fords that players could use in the game. It made Ford, Sims and the players happy.

Ranah: One word that hasn’t come up is communication. A communication platform like Facebook is really an important aspect of success. It’s needed to compliment the game techniques.

[tags]LA Games Conference 2008, social games[/tags]

If your audience includes teens, you might want to check out what Habbo has learned in their survey of over 50,000 teens worldwide, with insight into how US teenagers are similar to – and different from – teenagers worldwide in this research presentation from Digital Media Wire’s LA Games Conference 2008.

The 2008 Global Habbo Youth Survey
Emmi Kuusikko, Director, User & Market Insight, Sulake Corporation / Habbo Hotel

Habbo is an online entertainment company focused on virtual worlds, with 1300 employees in 15 countries, and over 8 million unique visitors per month globally. Their teen users create avatars, visit different public rooms, and engage in a lot of social interaction. There are active communities in 31 countries. This is the second global survey performed by Habbo.

Here’s what they learned:

US teenagers vs. peers globally.
(US sample size 7,730 respondents, 13-18 year-olds, 46% girls, 54% boys; globally 58,500 responses).

What’s similar:

• Friends and family are valued the most
• Craving for respect

What’s unique

• Having lots of difference experiences in life
• More traditional than Europe, less so than Mexico (religion, marriage)
• With Singapore, most ambitious teenagers – many life goals (education, wealth, influence, career)
• More positive attitudes toward military, very patriotic, but not visible in consumption behavior (don’t prefer domestic products)
• Higher share of “creatives” and “achievers” psychographic segments, fewer “loners”

Media habits

90% globally consider internet important, clear winner.
70% US consider TV important.
56% US consider radio important, significantly higher than global.

Internet habits

IM and Email are till most important web services (68%), but social networking has taken a lot of share (56%), especially compared to the rest of the world. Internet is really all about communicating and socializing.

Favorite web sites and games (outside of Habbo): MySpace (54%), YouTube (25%)

Brands

Drinks: Coca Cola (22%), then Pepsi
Fast Food: McDonald’s (27%), then Burger King and Wendy’s
Clothing: Hollister (8%), then Abercrombie & Fitch. Nike dropped to 9th!
Shoes: Nike (26%), then Vans and Converse
Mobile: Verizon (21%), then all others. US doesn’t distinguish between carriers and handset makers. Biggest growth in this category – listening to music, taking photos, SMS.

Summary

Teens are surprisingly similar worldwide

There are cultural differences, though, and US teens are more ambitious and crave experiences and respect (but note that Japan is even more different than the rest

Internet is important, and US teens lead in social use of internet.

To buy: webstore.sulake.com, marketinginsight@sulake.com

[tags]LA Games Conference 2008, Market Research, Habbo, Teens, Media Behavior, Internet Behavior[/tags]

Will the connected home be a winner-take-all world or one big happily family of interconnected devices? And where do consoles and set-top boxes shake out in these scenarios? Both extremes are represented in this first panel from Digital Media Wire’s LA Games Conference 2008.

Battle for the Digital Home: Is the Console Entertainment Hub of the Future or Fighting to Stay Alive?

Erin Turner, Sr. Director, Web Services & Publishing, Trion World Network
Steven Roberts, VP & GM, Games & Strategic Initiatives, DIRECTV
Mike Yuen, Senior Director, Gaming Group, QUALCOMM Internet Services
Josh Krane, SVP, Interactive & New Media, G4
Moderator: Ted Cohen, TAG Strategic/Chairman, Mobile Entertainment Forum Americas

Does the console die?

Josh – For consumers that would be a good thing, but it’s a question of how you’d get there. It would take a lot for set top box and PC makers to catch up to the consoles, and for consumers, they want the best gaming experience possible, which the consoles deliver.

My 15 year old has gone from Xbox 360 to PS3 to now a Dell XPS, and no longer touches the consoles saying that PC gaming is where it’s at.
Josh – As the big titles come out for the consoles I bet he’ll be back to the consoles. The titles will drive it.

Erin – There isn’t really a hub for the home; broadband has become the platform. Going forward, any device with a monitor, rendering engine and connectivity will be able to play games. That’s why we’ve focused on building server based games, where the intelligence is in the server.

Steve, your company provides set top boxes. Can you compete?

Steve – No. Set top boxes will never achieve a console or XPS experience. Can we do casual gaming with a good experience that 150K people pay for? Yes. The purpose for set top boxes is to provide content, and television content first.

But as you watch Joost, Brightcove and Veoh emerge, is there the potential for DirectTV to become disaggregated?

Steve – I don’t think so. You can’t think about people watching TV just in the context of gamers. Will the consoles be connected to TVs and bring in content, whether a movie or a TV show downloaded? Sure. But in terms of a TV provider, we are the ones who will pay $1 billion for NFL rights.

Mike – I’ll take the contrarian view, premised around emerging markets. We believe that a single hub or box will become dominant in emerging markets, like Russia. These markets may have one TV, no cable, and such a box would be a precursor to broader entertainment. It may not be a wired home, it may be wireless via 3G etc. to deliver content and conquer piracy.

Was the success of Xbox Live a surprise?

Josh – What was surprising was the speed at which they pushed it out. The only thing missing from Xbox now is the cable card slot. It’s one of the areas will Microsoft was able to bully it’s way into. It definitely extends the life and value of the consoles, to download content, communicate and connect with friends.

How do your companies utilize all this?

Erin – Our big focus is on connected games. For us it’s about content being local and intelligence being on the server, so games can evolve over time. With connected games you create enough to get started, build a feedback cycle, and then build out the game over time. It’s a different development model, and it also makes web access much more important. It changes the model from pure software to software plus service, all enabled by connectivity.

Steve – The connected home is critical for all of us. We are seeing more content and games going to broadband connected set top boxes. These components will all work together. Eventually, Xbox will become a client to our set top box within the connected home – not that far away, probably the next generation console. Today you can stream from DVRs to PCs.

How many of the audience have played the Wii Fit already, just release today? (20 or so hands in the air). What does the Wii do for the console market?

Josh – The controller changes the market for consoles, creating experiential physical gaming. The Wii Fit expands it even further, just another interface for using your body and natural motions, and will be another lift for Nintendo and for these experiential types of games.

Mike – The Wii changed the metric for gaming, let’s have fun. From an emerging market perspective, few of them have any exposure to games or have any brand preference. We think there’s a huge opportunity to introduce different types of content in emerging markets with this clean slate.

What is the future of HD in the home and gaming?

Steve – We see HD television growing faster than any other home entertainment element, and I can only believe consumers will want the same in gaming.

Josh – We also see a lot of HD owners with no HD service but with HD consoles.

Erin – The bottom line is that gamers like good graphics, and HD is great for that.

Mike – I just hope we don’t go down the path of increasing production cost and content pricing.

Coming from the music world, interoperability was a critical success element. Does the lack of interoperability hold back the success of the gaming market?

Erin – Absolutely not, if you think of a world where gaming is a service (server based) that can be delivered to any platform, where the server is common across all devices and the platform just renders the graphics.

Audience question, what do you do to keep consumers’ attention when they are multitasking with media?

Steve – That’s just the world we live in, so you build in mechanisms that will allow consumers to have a multi-tasking experience, like interactive TV elements or from a game to keep an eye on ESPN with picture-in-picture. You just have to make it flexible enough that you don’t impose it on the 60 year old woman who just wants to watch her TV programming.

At Qualcomm, how do you look at scaling experience to meet consumer expectations – so the mobile gaming experience is as rewarding as it can be given screen size limitations.

Mike – Though handsets are getting pretty powerful, they’ll never match consoles or PCs. We’ve been evangelizing cross-platform gaming. For example, rather than put a whole MMO on the handheld, you enable certain tasks that you can do on your phone.

Josh – I think that’s a brilliant idea (the approach Mike described). As a content provider, we also try to do something similar, push the use of multiple platforms. We’ve gone toward trying to be sure that we are on as many platforms as possible, enabling the ability to do a certain function for example on mobile that will bring you back to the TV. For example, with Championship Gaming, we’ll take snippets of the TV content and push it out via WAP and via the browser on the PS3, Wii, or Xbox Live, and using the web for interactivity and voting. We’d also want to push out that interactivity to the set top box during broadcast as well.

Erin – The same opportunity we discussed for gaming on mobile – doing a specific task – can apply to TV as well, like checking sports scores.

Steve – Summarizing around the question, interconnectivity across multiple platforms is not holding gaming back, it’s creating opportunities.

From DirectTV’s perspective, is there anything about the Xbox that’s scary?

Steve – No. Like any other competitor, it makes us better, to create a set top box that allows us to bring VOD content via broadband right into our DVR. In the end it helps the consumer get what they want. We just did a research study. We now have a 300 GB DVR. Whether you have a DVR or not, 50% of consumers say no, we need more content.

What do you think about the future of microtransactions in the console world?

Erin – Microsoft is a closed world. Sony is a more open platform, and PC is completely open. If you look at Asia, the majority of PC gaming business models there is microtransactions.

Seems that the carriers are in a good position to manage that?

Mike – From the mobile perspective in the US, some of the operators don’t understand it and are reluctant to adopt and drive a $20 support call for a $0.20 transaction. A question is whether there will be a big currency exchange across Xbox, PS3, etc.

The media center PC has had surprising staying power. Does the media center PC with console capabilities become disruptive to the console business.

Steve – First let’s look at media PCs. The people who own them are not using the media functions that Microsoft intended. In terms of capability, I think you’ll see amazing functionality on these boxes over the next 12 months. Over time, you’re going to see companies embrace one another’s capabilities to allow the consumer to fully utilize those functions across the home. You’re never going to stop advancement, and we feel secure that for our 17 million homes we can deliver a better entertainment experience.

So you don’t have to be in the hardware business, just the service business?

Steve – If we didn’t have to build set top boxes, we wouldn’t. It’s a necessary evil but not a high margin business. We went into the business for the ability to control the consumer’s experience, as well as for economies of scale. For Microsoft and Sony, like us, it’s a loss leader for selling software and content.

Mike – On the issue of the media center PC not taking hold, the limiting factor has been ease of use. The PC still has the stigma on being a PC. Will it take an Apple to get this right? I don’t think they’ll give up after the initial failure of the Apple TV.

We’re on PS3 now. Will there be a PS5 or will there be a death of the console?

Josh – I think there will be a PS5. Sony has been open that they see the platform as a ten-year platform. We’ll see a PS4. The 5 may have many more capabilities than a console today, but I think we’ll see one. All these devices are missing linear TV. I think they’ll work that out and we’ll see a 5, not sure about a 6.

I know Steve will hate me, but again, with an Xbox or a PlayStation, do you need DirectTV?

Steve – We get over 100 million customer service calls a year, “I can’t find channel 202”. If you think about those types of questions and the complexity of using a console to get linear programming in multiple rooms in the house, and extend that over the 120 million TV homes in the US, you are not going to displace DirectTV or Comcast so easily. We’re built for the mass market. And while the consoles evolve, we’ll be evolving as well.

[tag]LA Games Conference 2008, Connected Home, Set Top Box, Game Consoles[/tag]