21 game changing biz trends from GDC 2012 you need to know
Traditionally, I've tried to condense such conferences down into a concise article, breaking out the top 10 topics, but not this year.
Instead, I've had to condense the show down into 21 topics, ranging from small nuggets to extended commentaries on how the industry is changing.
Feel free to add your own take using the comments system below.
1. Fun, not funds
A trend that has been bubbling under for the past 12 months, at GDC 2012 several free-to-play developers pointed out they now test their games without monetisation.
They release game in beta, and laser focus on early retention and churn metrics to ensure they're finding and keeping an audience. Getting players through the tutorial is a key element.
The point - according to companies such as ngmoco - is that if play metrics are good enough; if the game is fun enough, successful monetisation can be easily added.
And, to be honest, this is just what NimbleBit and Imangi have already proved with Tiny Tower and Temple Run, where payment is as much a reward from players for the enjoyment they're getting as a way of progressing faster.
2. Run deep, run long
Free-to-play games have been big on mobile for two years now, so it's no surprise that more developers are openly talking about running titles for multiple years.
It's something that plays into the whole LifeTime Value (LTV) metric.
When you're running a game for over a year, you start to have a good idea about how much you can generate from an active player on an annual basis; a number that feeds back into key indicators such as cash flow and user acquisition.
And for those with a long term take on business, will likely add multiples to your valuation too.
For example, the top grossing iPhone game in the US in 2011 was Pocket Gems' Tap Zoo; initially released in September 2010, while PlayFirst's Diner Dash, which was released in March 2009, had its peak revenue to-date in January 2012.
3. It's a gamble
File it under speculation, but it seems that mobile gambling games - real gambling games - are going to explode in 2012. This is mainly an American issue, given its currently restrictive national rules, but the trend is looking obvious.
Slotomania developer Playtika was fully bought by Caesars late in 2011, Big Fish just bought Card Ace Casino developer Self Aware Games, and Zynga's raring to go into the sector too.
Obviously, the reason is cold, hard cash. You can generate average revenue of $150 per gambler, compared to mobile gaming LTV of around $20.
4. Bad Apple
It's still the largest game in town in terms of generating revenue but developers are finding more things to be annoyed about when it comes to Apple.
From its inactivity over the ongoing Chinese IAP scams (something now hitting US companies, we're hearing), to the whole bot farm issue, its slowness to deal with copyright issues - notably seen in the approval of games such as the fake Pokemon Yellow - and the lack of features in Game Center, its reputation for attention to detail is seen to be slipping.
Also, what are we supposed to call the "all-new iPad"? It's going to boil down to iPad 3 right?
5. iPad breaks continuity
Continuing the iPad 3 riff, it's proving a tipping point for the industry.
Obviously, high end developers such as Epic, Fishlabs, MadFinger, NaturalMotion, Revo Solutions (Namco's iPad 3 highlighted Sky Gamblers game) etc will use all the horsepower they can get. But Retina graphics mean that if you don't optimise, texture sizes are going up four-fold.
This will have a knock-on effect on downloads sizes; some companies are already contemplating 2 GB app installs; and the maximum capacity of the "all-new iPad" is still 64 GB.
Similarly, the original iPad is now seen as being too slow for some high end titles to support. Of course, it's not fragmentation in an Android sense, but it is fragmentation nevertheless.
Seems like you can have too much of a good thing.
6. The network effect
As part of the wider push on user acquisition (of which more later), there are still more cross promotional platforms being developed.
The point is that why the likes of Applifier and Chartboost offer different flavours of commercial services, some developers with large amount of traffic around their games are looking to expand this valuable resource in a more ad hoc basis.
Existing example include the Future Games of London's Future Games Network (25 million users), while RPG publisher Crescent Moon and New Zealand developer PikPok are looking to roll out their own specific networks. UK consultancy Tenshi is also working on its own thing.
Similarly, there are new entrants in the daily app promotional space, with Iddiction's App-o-Day hoping to fill the volume gap that GREE's deal with FreeAppADay will likely create.
7. Got your number
And as with cross promotional networks so with market intelligence and data.
We already have Flurry, App Annie and Distimo. They've now been joined by Metricmine and App Rank. You can't have too much information about apps and app stores.
8. Big beasts battle
There's a lot going on on the surface of the mobile content business that's fairly easy to see. There's also a lot going on that we can't see, but like undersea currents we can get some sort of idea of direction and momentum in terms of how they are moving entities floating on the surface.
This GDC, there have been more people contextualising their opinions in terms of the broader battles between Apple, Google and Facebook; with the likes of Amazon and Microsoft perhaps also influencing events.
Personally, I think in many ways these companies are less influential than many people think.
For example, apparently only 20 percent of Bejeweled Blitz players on iOS use the Facebook Connect option to compare score with their friends, despite it being a social game, and one that's also available cross-platform on Facebook itself.
More specifically, it's not clear that games are a priority for any of these giants yet, and until that's the case, they might remain sleeping giants.
If there was a single headline word from GDC 2012, it was platform.
The problem is that the term 'platform' - effectively any content network with integrated services - is only loosely defined.
There are direct competitors such as GREE and DeNA's Mobage, but GREE uses Facebook's social graph; despite it being a potential competitor.
There's also Apple's iOS-only Game Center, the RIM-owned Scoreloop, plenty of Chinese players such as Papaya, The9's Game Zone (powered by OpenFeint), iDreamSky's Skynet etc, not to mention new platforms such as Sulake's Habbo Hotel and Zynga's eponymous Platform, and EA's Origin.
To some degree, it's a winner-take-all proposition, but equally, any keen mobile gamer is likely to be registered on half a dozen, depending on their age, geography and the type of games they like to play.
But this is only the consumer-facing part of the business.
As previously mentioned, it's a similar deal with cross promotional services such as Chartboost, Applifier and FreeAppADay.
On another level entirely, even chip companies such as Nvidia and Qualcomm are becoming more active in this space; something that feeds into their own content deals, typically for limited period exclusively and consumer marketing support.
And it could also be argued that app stores are platforms, at least in terms of their role as the key user acquisition driver thanks to charts and featured slots.
Looking at the situation in this broad way, the platform play is the entire industry; not a discrete set of competing companies, instead a lasagne-like complexity of meat, cheese, tomatoes, sauce and pasta, all slip-sliding over each other.
Of course, as long as the gamer gets a tasty mouthful, this doesn't matter. Too much of one ingredient breaks the balance, however, and that's something content creators will have to be wary of in terms of how they release their games.
10. The simple way to success
The counter to too much business talk about platforms and monetisation is you need a great game in the first place.
Mobile games are becoming more complex to play and interact with; something that can be overcome with marketing dollars. But as the likes of Tiny Wings and Temple Run demonstrate, a simple idea which catches the imagination of the public doesn't need any fancy campaigns.
And it was great to see at GDC that there are companies - often the smaller ones - who remain laser focused on very pure games.
In particular, there was one that I loved, but - alas - can't yet talk about.
11. Be careful what you wish for
The cynic's response to this is the same phrase that Zynga used to launch its Zynga Platform; something that GREE and DeNA will no doubt also echo.
"It's never been easier to make a game. It's never been harder to distribute it."
Neither are likely to change significantly in terms of making life easier for many developers any time soon.
12. Dragon and bear
It's no surprise given large populations and fast growing mobile and IT sectors but joining the wave of Chinese players such as Tencent, The9, Papaya, CocoaChina, iDreamSky etc, are Russian companies.
The likes of G5 Entertainment and Alawar are already well known in the industry, of course. Joining them as a successful pure play games company (especially on Android) is Game Insight, while internet outfits such as Mail.ru and i-free are also now heavily expanding their activity in terms of mobile gaming.
Significantly, they're not looking to make games for their domestic market, though. They're looking to be successful in Europe and North America.
13. BlackBerry gains traction
GDC 2012 was the first big game developer conference RIM has taken seriously.
With a variety of talks about its games strategy for BB10 and PlayBook, not to mention more device giveaway, BlackBerry is a topic more regularly discussed by developers.
Indeed, one high profile studio told me that it expects to generate more revenue on BlackBerry devices this year than on Android.
Mainly because it focuses on high end premium games (something that piracy has killed on Android), nevertheless, the promise of solid technology, a good app store and promotional system, and higher game prices means it's enthusiastic about supporting the platform; despite the small install base.
That's not something you could have written about six months ago.
14. Storm in a TinyStar Gems?
2011 was all about the rise of mobile social gaming powerhouses such as Storm8, TinyCo, Pocket Gems, Funzio and CrowdStar. They raised a lot of VC money and piled into the iOS market, gaining ten of millions of players in the process.
There was also plenty of talk about mergers, acquisitions and even billion dollar valuations.
But while many of these companies are doing well - notably Pocket Gems getting the #1 and #4 top grossing iPhone games in the US during 2011 - the business bubble has burst.
Partly it's an issue of VC money looking at different sectors in mobile and gaming, and partly an issue that these companies have been burning through cash faster, as user acquisition costs have increased.
They've also swamped the market in terms of similar products, while many of them have yet to get to grips with basic engineering issues such as simultaneously developing and releasing on iOS and Android.
The entrance of really big companies such as Zynga, GREE and DeNA into the mobile gaming space has also make life much more difficult all round, especially in terms of the cost of recruiting good staff.
We expect the talk of mergers and acquisitions to solidify into actual deals during 2012. Valuations won't involve 'b's, but hundreds of millions still seems likely.
15. It's about the time
GDC 2012 was the best conference ever in terms of mobile gaming's presence but don't expect this to be the case in 2013.
With the big console companies keeping their powder dry until E3, mobile filled a news vacuum.
Next year will see the headlines at GDC being shared with all the latest talk of middleware technology, launch titles and super realistic graphics.
16. Right tools
An aside to this is we're seeing all the console middleware companies supporting iPad 2-class hardware as part of their core business.
One example is UK real-time lighting experts Geomerics, which has a tech demo of its Enlighten engine (as used in Battlefield 3) ready for release as a standalone iOS app a la Epic's Epic Citadel.
It's not the only one, although the different business models and opportunities on mobile mean that deployment of such technology is unlikely to follow console patterns.
17. ID the elephant in the room
The single biggest change to the mobile gaming industry in 2012 will be Apple removing use of its hardware Unique Device ID (UDID).
No one knows exactly why it's doing it, and no one is yet prepared to talk in detail about what they're going to do about it, although everyone is working on various solutions.
The bottomline, however, is that removing UDIDs means that all analytics will be less accurate; something that has implications for advertising, cross promotions, incentivised actions and market intelligence.
The issue is so significant it seems there will be an attempt to create a broad industry standard, and there are various middleware providers who also have their own particular custom solutions.
But if this doesn't work out, the value of getting a recognised user to actively sign into a platform will increase tremendously - something not lost on the likes of Zynga, GREE, DeNA, Scoreloop, Sulake etc.
18. Crazy business
I used to think that the adjective "insane" - as used in the phrase "insanely profitable" - was limited to Rovio's Peter Vesterbacka.
The industry is clearly growing so fast that it - and the companion term "hyper growth" - are now being more widely deployed, though.
At least there seems to be some context. Off-the-record many companies in the space - even big ones such as Zynga - say they expect to double their mobile gaming revenues during 2012.
19. Back to core
At Mobile Games Forum, I unsuccessfully tried to invent a new phrase - free-layer-core.
The point was that the term 'paidium' (paid+freemium) was horrible, while free-layer-core attempted to describe the three-layered approach, where core gameplay is free and skill not time-based, additional blocks of content can be unlocked for a price, and in-game currency (available via pay or play) smooths over the cracks.
Since then, however, many more companies have announced they're entering the mobile free-to-play space, specifically to address the needs of hardcore gaming, throwing another angle on the 'core' element of the proposition.
Examples include online companies such as Aeria Mobile, Facebook companies such as Kabam, start ups out of the console space such as Industrial Toys (ex-Bungie), all of which are joining incumbents such as Storm8, Glu Mobile and Z2Live.
Giving additional context to the move was ex-EA Mobile head Mitch Lasky (now a VC at Benchmark).
He pointed to the success of PC online title League of Legends in terms of providing higher monetisation than Facebook games, as well as strong retention and an easier route to gain eyeballs, as long as the game concept and quality match the audience's demand.
20. Go global, think local
A very simple statement. The best mobile game developers and publishers are now releasing their games with support for at least eight languages, and often ten.
Add Japanese, Korea, Chinese, Polish and Russian to the core five European languages.
21. Don't underestimate the value of a user
Of the previously points - both big and small - underlying most of them is user acquisition.
It's sounds a nasty term as if you're dragging people off the street and forcing them to play your game. It doesn't have to be that way, though. Someone using Twitter to post a high score, or telling their friends to download and play Draw Something or Words With Friends are the softest - and best - way to build an audience.
However, for most developers, the days of getting discovered via the App Store, or great reviews are long gone.
App store featuring will always be sort after but is never guaranteed, and as any good marketeer will tell you, it's all about what you can guarantee.
And that's why everyone just calls it user acquisition. It's about spending money to get a volume of eyeballs pointed at your game, and pretty much everyone does it - whether it's FreeAppADay, incentivised installs via Tapjoy, standard mobile advertising or the dark arts of bot farms and similar services.
The problem is that as the industry grows ever more profitable, there are companies with deep enough pockets to buy up much of this traffic, at least for short period of time.
The most recent example was Zynga buying all the available users it could for the launch of Dream Heights. Similarly, it's expected that GREE will be spending much of its promised $50 million GREE Platform marketing budget on user acquisition, something its deal with FreeAppADay underlines.
Not only is this driving up the per user costs to a level some consider to be unsustainable, it's also disrupting the channels even small companies were using to build their businesses.
The good news is that even companies the size of Zynga and GREE can't corner the market, but the bad news is that for the next couple of months, they might try.
As one insider pointed out, while it might look like a short term measure, it's very difficult to accurately estimate the worth of a user in the longterm.
But the success of Zynga on Facebook and GREE and DeNA on their Japanese social networks demonstrates that when it works, it's the fastest way to build a massively profitable company.