In recent years, casual and social gaming giants like Zynga have shifted significant resources towards smartphones and tablets, transforming their business strategy into a "mobile-first" model.
There are plenty of reasons why this makes sense. The widespread use of smart devices makes them channels to an unrivalled audience for many games developers but the ongoing domination of leading mobile firms like King and Supercell make it nigh on impossible for any studio to achieve similar levels of success.
With mobile becoming increasingly punishing – particularly for new and smaller developers – we spoke to FlowPlay CEO Derrick Morton about why studios should reconsider which platforms they prioritise:
What are the most common misconceptions about the 'mobile-first' strategy?
With the rise of mobile, a new avenue opened up for indie developers to compete for a share of the global games market. It was this community of small developers that really embraced and innovated on the mobile platform, paving the way for today’s $30 billion share of global game revenues.
This rapid expansion caused developers of all sizes to flock to mobile, which has resulted in an industry-wide 'mobile-first' mentality. But what was once a breeding ground for great games developed by small studios has since been overrun by the same triple-A, multi-million-dollar budgets traditionally reserved for major console titles.
The system is really broken, but many don’t realise it. Because of the razor-thin margins in mobile, the publishing model just doesn’t offer enough pie to split across the many studios entering the market. Outside of the top 200 mobile games, most generate less than $2m per year, and many don’t make any money at all – despite the fact that mobile development is two-to-three times more resource intensive and takes longer than web or PC development.
The fact that eight of the Top 10 grossing games in 2015 were also in the Top 10 in 2014 is a clear demonstration of how tough it is to make it in mobile.
The system is really broken, but many don’t realise it. Because of the razor-thin margins in mobile, the publishing model just doesn’t offer enough pie to split across the many studios entering the market.
What impact have triple-A companies had on the mobile space?
For small development shops, the question of how to compete against their triple-A counterparts has always been a major pain-point. In mobile, the likes of King, Rovio and Supercell are dominating today’s market, together spending an unprecedented $1 billion on marketing to maintain control of half of today’s top grossing apps, and taking 50.2 percent of all mobile game revenue in the U.S. in 2014.
With hundreds of new games submitted to Apple for approval every day, and almost 400,000 active games already available, it’s nearly impossible for new games to get noticed by consumers – unless developers are working with triple-A budgets and spending a lot of money on user acquisition.
Can anything be done to disrupt this?
One way of shifting the balance would be through the rise of smaller, independent storefronts, taking some of the power away from Apple and Google, which are essentially working as intermediaries between consumers and games.
The market needs storefronts that specialise in certain types and genres of games – a mid-core player should be getting games from a different source than the casual player looking for 10 minutes on Candy Crush. Specialists that live and breathe their games will do a much better job presenting games and getting them in front of the right audiences than the one-size-fits-all options we have today.
How is the competition in mobile likely to change over the next five years?
With the current state of the market, not much is likely to change unless developers start taking a different approach, or the market shifts away from the current model of purchases going through Apple and Google alone.
Aside from triple-A game studios, developers that take the approach of launching on mobile after launching on web or PC are going to be positioned for better outcomes, as they will have more insight into their games and consumer response to them, than the small developers that are solely focused on mobile.
That being said, there are people in the industry trying to change the market by offering alternative, specialised storefronts and distribution channels for mobile games. If these efforts gain traction, there will be a lot more opportunity for mobile game developers to launch and market their games in front of a more targeted audience.
Is there anything developers can do to stand out from this competition, and increase their chances of success?
If a developer is taking a 'mobile-last' approach, there is a lot more opportunity to take the product to mobile successfully.
A game can be tested out first on other platforms, and developers can determine consumer response, return rates, ARPU, and understand all of that information about the game before spending a lot of money developing and marketing for a mobile launch. It only takes a couple thousand customers to get this kind of insight before the game goes to mobile, but can make all the difference in ensuring the mobile version can generate revenue.
The promise of mobile was a platform with low barriers to entry. But the barriers are now dauntingly high, and the proportion of winners to losers is skewed.
Is there anything platform holders (i.e. Apple/Google) could or should be doing to help developers?
The App Store and Google Play give consumers only one point of contact for mobile games, but it shouldn’t be this way. There's no reason why the market couldn't support a different system, where everything happens in a browser and developers can freely promote their products through search tools and the web. But with only two powerful companies controlling everything, it becomes really hard.
One solution might be to offer opportunities for independent curators to act as independent tastemakers within the App Store and Google Play. These curators could focus on specific game genres and receive a small percentage of the revenue. This could ultimately result in more revenue to Google and Apple, as players would more easily be able to find games they love and spend more money on them as a result.
What is the alternative to 'mobile-first'? What platforms should developers be targeting instead?
The promise of mobile was a platform with low barriers to entry, which could therefore sustain a larger number of small and independent developers than other markets. But the barriers are now dauntingly high, and the proportion of winners to losers is skewed.
Developers should be looking at PC/web development as the most viable platform to launch games, given the low risk, straightforward development and reasonable user acquisition costs. Shipments of laptop and desktop computers declined between 2011 and 2014, but are expected to level off through at least 2019, and Newzoo estimates that revenue from games on computers will have a compound annual growth rate of nearly seven percent through 2018.
This data supports the theory behind a 'mobile-last' strategy, and illustrates that there is still money to be made from web games. Wild Tangent, Kongregate, Yahoo Games, Facebook and Steam are all examples of places where developers can make a more practical start for launching their game, and leverage the game’s performance on those outlets to build towards a mobile launch, if they choose to launch on mobile at all.
When television became popular, everyone said movies would be history. When new platforms emerge, they don’t necessarily replace the old platforms. In many cases they complement exiting platforms, and often become an additional opportunity for creative content and commerce. The same principle can applied to the hype around mobile.