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Five things we learned from Develop and Evolve 2011

#developconf Knowledge from the seaside

Five things we learned from Develop and Evolve 2011
The weather wasn't very good, and there was a strain of summer cold doing the rounds; nevertheless, the sturdy members of the UK and wider European games industry had their fill at the Develop conference on England's south coast.

Kicking off with the Evolve day, covering mobile, social and digital distribution, then expanding into more general fare, there was plenty of gossip, socialising and staying up past our bedtimes.

Here are five things we managed not to forget.

1. The gaming axis has shifted irreconcilably

During the conference, although not at it, EA CEO John Riccitiello announced consoles were now only 40 percent of the games industry, down from 80 percent in 2000. Perhaps more significant is that it's still a shrinking slice.

More broadly, we're seeing the biggest inter-sector shift ever as large numbers of individual console developers move their attentions to iOS and other mobile devices, partly because they have a passion for making games, partly because of the commercial opportunity, and partly because large console teams are being shredded.

Pretty much everyone we met at Develop is making a game for iOS. It won't help the massive issue of over supply, of course, but it's great news for gamers.

2. Do I know you?

Like 'democracy', the word 'social' is now widely banded around by games companies, even though it has many different meanings depending on context.

EA Sport's Andrew Wilson kicked off the Evolve day saying, 'Social is more than Facebook. Everything we build is social'; in part a heads up to the company's forthcoming Origin digital distribution and social service.

Ted Woolsey, who heads up Microsoft's XBLA service took a similar tack, saying the near 35 million-strong Xbox Live users constituted the largest social network for console games.

And it's the same story in mobile, with OpenFeint's Dan Keegan referring to its now 100 million userbase; and we all know Facebook has over 600 million subscribers.

Yet, these numbers themselves are meaningless; it's what you can do with them that really matters, and to-date, few companies, with the exception of Facebook and its symbiotic game arm Zynga, have demonstrated any meaningful control over their so-called audience.

Just as the goal of 'one person, one vote' has yet to realised in much the world, so it is with goal of social gaming - that is playing with, and making, friends.

3. Poker face

If you want to know what's really going down, as they say in The Wire, follow the money.

Recent VC deals include $12 million to engine company Unity, $30 million to mobile ad company Tapjoy, $50 million to Foursquare, and eBay buying mobile payment outfit Zong for $240 million.

Tracking the really big money however, Zynga's planned $1 billion IPO, and the potential $1.35 billion EA might eventually drop on PopCap, shows that social and casual gaming is where it's at.

Yet, in this context, what's more significant are those companies who didn't exist 12 months ago, that you might not have never head of, and that are out of the blocks, massively profitable and massively valued.

Storm8/TeamLava, Pocket Gems, TinyCo, Gameview Studios, The Playforge and Crowdstar, not to mention the indie stars over at NimbleBit, are generating multiple tens of millions of dollars annually, and are now worth hundreds of millions of dollars.

When Zynga combines the billion it raises via IPO with the billion it's already got in the bank, not to mention the likes of GREE and DeNA, expect such companies to be high on its shopping list.

4. 0.1 percent of your audience should be making you very rich

In the same context, it's no surprise the free-to-play model is ripping up the mobile gaming text book, just as Zynga's pre-IPO S-1 document demonstrates it's done on the web, and surely it will eventually do for all digitally distributed content.

Yet, what's really significant about the model is how its audience is constructed. Yes, it's reliant on large audience numbers, but it's also about large amounts of cash from a very small number of people.

As pointed out in his excellent talk 'One price does not fit all' (check out the slides here), Noel Llopis of Snappy Touch claimed 0.1 percent of your players will generate 80-90 percent of your profits.

Referring back to Zynga's S-1, he said its claim that 1 percent of its audience generated 50-60 percent of its revenue seemed skewed low, perhaps via its revenue from advertising.

Of course, these 1 (or 0.1) percent are the much talked about Whales, who are happy to spend upwards of $100 on in-app purchases. Indeed, Llopis said that many freemium games have at least one user spending tens of thousands of dollars on IAP.

Even dealing with less extreme cases, it's clear that human psychology means we're all happy to spend increasing amounts of our money on the experiences we find enjoyable, whether that be on sports equipment, following our favourite bands, holidays, or even farming games.

As even its detractors agree, it's not wrong. It just is.

5. The Android paradox

Nothing gets developers and publishers more vocal than asking them if they're making money from Android. Most are happy to tell you exactly what Google should be doing to create an ecosystem that matches all the things Apple has created since it came up with iTunes.

Yet, there are those voices equally enthusiastic to tell you want a great opportunity Android is and how they can't understand what all the complaints are about.

There are obvious points on both sides of the debate: 550,000 devices activated per day versus terrible privacy rates and very poor penetration of payment options.

Still, each new example of companies making money on Android - ranging from big hitters such as Rovio, Outfit7 and Backflip, to smaller outfits such as Spacetime Studios and Future Games of London - not to forget the unnamed developer doing $150,000 a month with Tapjoy - suggest that while the market might not be maturing as fast as people hoped, it's growing so fast, this really doesn't matter.
Contributing Editor

A Pocket Gamer co-founder, Jon is Contributing Editor at PG.biz which means he acts like a slightly confused uncle who's forgotten where he's left his glasses. As well as letters and cameras, he likes imaginary numbers and legumes.