New Directions

I'll be hanging out here.

I apologize for not posting much in the last week, but I've been busy. I've accepted a position as the West Coast Editor for IndustryGamers.com, where you will see my byline regularly posting on a variety of topics. I'll be continuing this blog, but my focus will shift away from news and analysis (since that will be on IndustryGamers) to marketing tips and items about the book trade.

Look for some new pieces here daily, once I get into the groove... In the meantime, check out some of my latest stuff:

The 3DS vs. the PS Vita: Who Will Win?

How The iPhone 5 Could Reshape Gaming

Japanese Game Marketing

Love the title.

I watched Nintendo's press conference live last night, and it was an interesting experience. It was all in Japanese, so I didn't understand much of what they were saying. At then end of the stage presentation, Nintendo ran a series of commercials, trailers, and interviews for over an hour. (I guess this was their way of getting people to leave the auditorium.) It was an interesting insight into Japanese marketing techniques.

There was a seemingly endless series of cartoons where Gatchaman was busy selling Monster Hunter Tri G. The classic Tatsunoko animation (resembling the worst of Hanna Barbera) was spiced up with 3DS's drawn in, along with a caricature of an American professor (speaking hilariously bad Japanese) and clips from the video game. I tried to imagine if, say, Activision used old Scooby Doo episodes to sell Modern Warfare and included a Japanese caricature speaking broken English... but the film in my head kept breaking. I know that Japanese like kawaii (cute) things, but this was the visual equivalent of fingernails on the blackboard. The Monster Hunter visuals were compelling, but just as I was enjoying those the animation would come back like an annoying sidekick.

I thought that was odd marketing, but then I saw the ad for Loveplus, one of those Japanese dating simulations. This ad featured a couple of young Japanese hipsters and a young Japanese woman playing the dating sim... which featured a Japanese schoolgirl in traditional schoolgirl attire. Very creepy to anyone who's ever watched Law & Order: Special Victims Unit.

Then there was the surreal ad for Tekken 3D Prime Edition, featuring a Japanese businessman in his office who gets attacked and defeated by one of the Tekken characters flying through his window... and at the end we find the Japanese businessman was working for Capcom. OK, it was surreal, but bonus points for taking a shot at a rival.

All in all, it was an interesting exercise revealing just how different Japanese culture is from American culture, and how you can't expect marketing messages to transfer between them. You have to create a brand-new marketing campaign for each country; you may even need to change the name of the product. Like Square Enix's new RPG, Bravely Default: Flying Fairy, which would probably find a new title before coming out over here. And many titles, like Loveplus, aren;t even worth the cost of translating them; they're just so far away from what customers would buy that sales would be miniscule.

Games Sales Down 23% In August

The chart is small, like the overall sales numbers.

The relentless slide of traditional game sales continued in August, as sales dropped 23% over last year. Last year, $873.8 million; this year, $669.9 million. Software sales were even worse, with a 34% drop to $264.8 million. Hardware fell 12% (to $249.4 million), and accessories dropped only 1% (to $134.7 million).

So far this year, overall sales are down 5% from last year. Of course, NPD was quick to point out that there are a lot of good titles lined up for the 4th quarter: Modern Warfare 3, Battlefield 3, SkyRim, SWTOR, and more. NPD's Anita Frazier expects with all of those blockbusters, sales for the year could end up at flat or maybe even a little positive.

I suppose it's good to be optimistic, but I think a more realistic assessment is that the industry would be lucky to see sales end up at even for last year. With all of the big titles coming out around the same time, there's no way customers will have the money or the desire to get all of them. Take one example: Are people really going to buy both Modern Warfare 3 and Battlefield 3? Not when they're coming out within a couple of weeks of one another. Customers will pick one or the other, and then play it for weeks or months until they feel they've gotten their money's worth. Now, if one of these titles came out six months ago... or six months from now... they'd sell a lot more.

More than that, many of the customers for the biggest titles are the type who buy multiple titles... when they can afford them, and when they're not already busy with a new game. Look, if you've been eagerly awaiting Star Wars: The Old Republic, you're going to spend all your gaming time with that once it comes out, at least for a few weeks. Which means you're not going to be picking up Battlefield 3 for a while, even if you plan to eventually. If you have no time to play it, what's the point? So that purchase gets pushed off a month. This scenario will be repeated in many variations. Too many titles at the same time means lower sales for everybody.

It's going to be a very busy holiday season, but don't expect the overall industry tally to be higher than last year. If it is, that's truly reason for celebration... before the sales declines continue in 2012.

Can Free Apps Sell Games?

GetJar is trying a new gambit in an effort to generate more app sales. They've implemented the GetJar Gold store, where they've taken 50 top Android apps and offered them for free. It's "free app of the day" on steroids, and represents a serious effort to draw some attention away from Amazon's app store. The 50 titles available at launch include such hits as Fruit Ninja THD, Pocket Legends, and Age of Zombies.

The developers of these games will get paid by GetJar, so it's not a bad deal for them. GetJar plans to generate revenue from GetJar Gold by offering sponsored listings to other app developers. Developers can bid from 1 cent to $1 or more for each install they get by being listed. Sponsored apps are shown with a different color coding alongside the high-quality free apps.

It's a clever method to entice a horde of buyers in by offering high-quality free apps, and while they're busy downloading some of those, customers will be seeing other apps they might never have found. It will be interesting to see how well the model performs.

These days, though, small developers should be happy to have some new way to try out in order to find more customers.

Who's Spending Money For Freemium Games?

The 18-24 crowd spends more time, but the 25-34 crowd spends 3x the money.

That's a key question for mobile game developers. At least, it should be if you expect to maximize the revenue you get from the freemium game you're developing. (And if you're a mobile developer who's not working on a freemium game, you're missing out on more than half the revenue produced by mobile games.) Mobile analytics firm Flurry has some data for you.

The data was gathered from a sample of iOS and Android freemium games with over 20 million users across more than 1.4 billion sessions, so I think most people would agree that's a statistically significant sample to look at.

From the chart you can see that game usage skews heavily towards the younger audience, which shouldn't surprise anyone. I'd also guess that smartphone usage tends to follow a similar distribution, with the over 55 crowd being the least likely to even have a smartphone, much less play a game on it. However, the money is definitely coming from the older audience; teens don't spend much at all on freemium games even though they play a lot of them. The real pot of gold lies with the 25-34 age range (spending nearly half the money) and with the 35-54 group (spending more than a quarter of the money). If your game targets those older spenders, you could make more money with fewer overall downloads.

This is important data as you consider the design of your game, the style of the artwork, and the marketing. If you're interesting in maximizing your returns, you need to consider the realities of the marketplace.

Market Size For Gaming Platforms

Numbers of console sales thru March of 2011.

One way to look at where to invest development resources is in how rapidly a market is growing. Yes, the installed base is nice, but it's also true that new owners of a platform are more likely to pick up new games... especially ones that show off the power of their platform.

Let's look at the console market, for example. Excluding the holiday season, the Xbox 360 has been selling somewhere around 250K to 300K units a month lately; the PS3 (prior to the price cut to $249) somewhere around 200K units, and the Wii about 175K units. Of course, they all have installed bases in the tens of millions; the Wii is the champ there at around 90 million sold worldwide, the Xbox 360 around 55 million, and the PS3 around 45 million.

Those numbers represent a pretty solid market base to sell games into. Sure, there are many more computers, but consoles are mainly for games, and computers are used for many different things. How does this compare to smartphones? Android smartphones are selling at the rate of about 18 million per month right now, with over 100 million out there already. Apple's iOS devices have an installed base around 200 million, if you include all the iPod Touches and iPads; the phones alone are around 120 million. And iPhones sell at the rate of about 7 million per month. Yes, these are not primarily game devices; at the same time, it's true too that games represent one of the biggest (if not the biggest) types of apps sold on smartphones. So gaming is clearly important to smartphones.

Smartphone worldwide sales in Q2 2011

Yes, Nokia is still selling a lot of Symbian smartphones, but it's not attracting new development as the company has already written its obituary.

Finally, let's look at tablets. Apple has sold about 30 million iPads so far, and they are currently moving out the door at about 3-4 million per month. Android tablets are perhaps half that. Again, games are the largest category of apps sold for these devices, so while gaming is not the primary reason people buy tablets it's clearly important.

How about handheld consoles? Well, the 3DS was selling about 100K per month before the price cut; we'll have to wait awhile before we see what the new level is.

I think you can see why smartphones and tablets are catching the attention of game developers. While it's very hard for most games to get any traction, if you do have a hit you can do very well indeed. Those companies who have figured out how to get their games before a large audience are doing quite well; other companies are busy trying to figure out how to emulate their success.

This also explains why game developers should be paying attention to Amazon's rumored tablet. If Amazon can sell 1-2 million tablets a month, which is not unreasonable to expect, that's a substantial market opportunity, especially for developers who can be there at the beginning.

The Amazon Tablet Vs. iPad 2

No doubt it won't look like this.

We are fast approaching the holiday selling season, and if Amazon is going to launch an Android-based tablet they'll have to act soon if they want to maximize their initial sales. A number of rumors have been making the rounds about these tablets, so I thought I'd round them up and provide my own thoughts.

Why is Amazon's entry into the Android tablet market important? Primarily because nobody has succeeded in creating an Android tablet that comes anywhere near the iPad in terms of sales. The closest is perhaps Samsung's Galaxy Tab, but even that is a distant second. Apple's managed to combine a smooth interface with a solid combination of hardware that other manufacturers are hard-pressed to match at Apple's price points. So there's an opportunity here for Amazon to use its advantages to secure a leading position in the Android market, and provide a credible threat to Apple's dominance. More competition is good for consumers, and tablets are an important market for games and books and other media.

The rumor mill is buzzing that Amazon is aiming at the low end of the market, planning to undercut Apple's prices. I think this is where the opportunity is best for Amazon; analysts think they could sell 3-5 million tablets in Q4 alone.. The trick is to give people the features they desire at a price they can afford. How can Amazon achieve this?

Here's my advice: Minimize the feature set to keep the costs low. Amazon is said to be using only a two-finger-capable multi-touch screen, instead of the ten fingers an iPad or a standard Android tablet can handle. Remove the cameras; this tablet will be for consuming content you buy from Amazon, not taking pictures. No need for a really fast processor, either, or for lots of flash memory. Give it a memory card slot and let users pay for extra storage. The target price should be $299 or less. Perhaps sell a 10 inch tablet for $299 and a 7 inch tablet for $199. Make the interface smooth and responsive, and provide a good selection of apps. The screen needs to be good... maybe one of those hybrid E-Ink and LCD screens, giving you the best of both worlds?

Amazon's goal should be in selling lots of content. They have a clunky interface, but a terrific recommendation engine. They've certainly encountered some problems with their version of the Android market, but here's a chance for them to fix the problems.

The key feature is going to be Amazon's vast array of media and their ability to suggest things to buy. If the price is low enough, millions will take advantage of it. Amazon has its doubters, though. Others see how Amazon could be a huge winner. It all depends on the execution. Amazon will really need to get these tablets out in October or earlier, and have some big TV advertising buys planned. The hardware, if it really is by Samsung, should be high-quality. Amazon has shown they can produce a good piece of hardware with the Kindle. (An interesting question here is whether Amazon stays with the Kindle brand, or creates an entirely new name... I'd bet on a variation of Kindle. Why not build off of the success of the Kindle?)

This tablet (or tablets) could represent an important expansion of the tablet market next year. Amazon could capture the #2 spot behind Apple, and put pressure on other Android tablet makers to step up their quality and pricing. Of course, Apple already has a plan to deal with whatever tablet threat might emerge. I'm sure they plan to introduce the iPad 3 next year, with a Retina display (4x the current resolution), better cameras, and a significantly more powerful processor. At the same time, they'll reduce the price of the iPad 2 to counter   any threat there might be at the lower end of the market. Oh, it's going to be an interesting marketing battle next year...