If there's an opportunity presented by new mobile gaming platforms like iPhone, Android and N-Gage, then Gameloft is certainly seizing it with both hands.
The publisher has launched 29 apps and games for iPhone so far, and last week announced plans to release 20 Android titles, now that Android Market allows paid apps. It's no wonder the company's Gonzague de Vallois is optimistic.
We had a wonderful Q4 with revenues up 31 per cent, and now we have these new platforms coming through that are really interesting, he told PocketGamer.biz when we sat down for a chat at Mobile World Congress last week.
We see manufacturers that want to play a real part in the game, like Nokia with its Ovi Store, which is much more pragmatic than the N-Gage, which is high-end. And then Android is coming, and in the carrier business we have what we've been waiting for - data plans - which means traffic is growing.
Threats in operator-land
Vallois is keen to stress that the traditional carrier business is just as positive for Gameloft, thanks to those data plans, as well as better devices and the willingness of some operators - including O2 and Vodafone Spain - to allow Gameloft to run its own games store o-portal.
There is one big threat to our carrier business, if the carriers step back and outsource to big aggregators, he says. It's not easy for big publishers to work through those aggregators because of our logistics.
This is a viewpoint he's expressed to PocketGamer.biz before, but he continues to see the trend towards outsourcing as a threat.
Where aggregators manage the operator decks, they have a tendency to push products where they get more margin, he says.
To make their numbers, they'll push low-quality titles where they get big margins, rather than my title where I'm asking for big margins. So they won't push Real Football, but instead will push a low-quality football game from a Ukrainian developer who kicks back 20 per cent [margin].
However, the big buzz at MWC last week was the various new application stores being launched by handset makers (Nokia, BlackBerry) and platform providers (Windows Mobile). Here, at least, Gameloft is encouraged, thanks to its experience with Apple's App Store - although he points out some of its advantages.
The App Store is two devices only, but when Nokia or someone opens their store, it's 40 different devices. The fact that they're open is good, but we'll have to see how they manage that. Plus, we need to be careful about revenue shares. If the promise is that publishers get 70 per cent, we need to check if that is 70 per cent of the end-user price.
App Store bonus
Vallois thinks Apple is doing well to strike a balance between offering developers open access to the App Store, and running an editorial strategy along with user ratings - to ensure the best games get highlighted for users.
We see our top-quality applications selling well and for a long time on the App Store, with good ratings from consumers and some promotion from Apple, he says.
One problem faced by Gameloft is that while its top-end titles like Asphalt and Hero of Sparta can hold their own, the company's more casual games - Platinum Solitaire and Platinum Sudoku for example - face a barrage of competition from much cheaper titles. Can Gameloft justify its investment in these?
The good thing is this really empowers the consumer, says Vallois. If they're ready to pay half a Euro for a solitaire game, then that's the value of solitaire. We're learning from this - there are some very good solitaire games for 59 cents, so can we do well at a similar price? It's a competitive environment.
Vallois thinks Gameloft can certainly maintain higher prices for its premium games, though. Indeed, he's determined not to be sucked into any downwardly-mobile price wars on the App Store.
We think it's important to educate consumers that very good games have a certain value," he says. You will never see Asphalt selling for 29 cents. If we do that, then when we launch the next Asphalt game, players will just think 'If I wait three months...'"
Premium App Store
What about the rumour that Apple is planning a $19.99 premium games section for the App Store, to showcase the highest quality games for the iPhone? Gameloft would surely be one of the key partners in such a category, alongside EA and console firms, but Vallois seems wary.
"The good thing about the App Store is that it reopens the world of gaming to everybody with these kinds of [low] prices," he says.
"If you go up to $19.99, volumes will go down. If I'd sold Hero of Sparta for $19.99, I'd have sold ten times less downloads, and we'd be back with the video game business, which is niche for very hardcore and motivated gamers."
Vallois also thinks that the digital nature of iPhone games should help publishers to keep prices low not just because of lower distribution costs (not to mention the lack of porting costs on iPhone), but also because of consumer perceptions.
Brothers in Arms on iPhone is better than DS," he says. "Yet the DS version is sold for 30 Euros at retail, so maybe we should price it at that on the App Store. But it's digital, so the perceived value from the user is very different.
However, he does acknowledge that the desire for a dedicated $19.99 section on the App Store may be coming from console firms who are used to operating at that price point and higher.
For the biggest video game publishers, there is a threat here," he says. "Their business model is selling games for 30 or 40 Euros, whereas the App Store is 5 to 7 Euros.
Credit Crunch fears
Moving on, Gameloft may be enjoying impressive revenue growth, but it's not immune from the current global economic situation. Formerly one of the most aggressive hirers in the mobile games industry, last year saw the publisher freeze recruitment and even close selected studios.
Is the credit crunch likely to harm Gameloft's business in 2009? Vallois says not necessarily, putting the view increasingly common among mobile games industry execs that while the expected handset sales slowdown isn't good news, the ongoing shift towards smartphones is.
We know that people are more likely to buy games when they buy a new handset, he says. So the fact that they're selling less handsets hurts our sales, because there are less new users. But of those new handsets, more are being sold with unlimited data plans, better screens and touchscreens. So there may be less new users, but they are more motivated to buy games.
On a different note, it's been suggested by Glu most recently that the popularity of app stores, with their 70 per cent (or greater) revenue share for publishers, may have a direct impact on the rev-shares offered by operators. Is that true?
I would not go as far as Greg [Ballard], but the carriers are certainly starting to wonder whether they need to change something, says Vallois. But it is hard for the games managers to get the signature from their cost controller to increase the margin. But the subject is coming up.
Interview
Contributing Editor
Stuart is a freelance journalist and blogger who's been getting paid to write stuff since 1998. In that time, he's focused on topics ranging from Sega's Dreamcast console to robots. That's what you call versatility. (Or a short attention span.)
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