10 Current Trends in iPhone Gaming

Stuart Dredge
Mobile Entertainment / iPhone Games Bulletin
 Who Am I?
• UK journalist covering mobile, games and digital
entertainment
• Mobile Entertainment / Music Ally
• Also Sunday Times, Recombu, What Mobile
• And my own things...

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 iPhone Games Bulletin
• Launched in June 2009
• Daily free email newsletter offering iPhone games
industry news and analysis
• Sign up at www.iphonegamesbulletin.com

• Also www.islatepicks.com (tablet tech and apps)

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1. THE IPHONE GAMES GOLDRUSH

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 The Big Numbers
• Addressable base of 50m+ devices
– 30m iPhones and 20m iPod touches
• More than 3 billion App Store downloads
• 7.4m iPhones sold in Q3 2009
– 17.8% share of smartphone market (Canalys)
– 2.5% share of ALL global handsets (Strategy Analytics)

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 Developers Striking It Rich
• 10m Paid iPhone games sold by Gameloft since
the launch of the App Store
• $1,687 Revenues per hour of dvpt time for
NimbleBit’s Scoops ($269,929 total)
• 2m Tap Tap Revenge 3 downloads in a week
last Christmas after going free
• 10 days How long it took Playmesh to rack up
1m free downloads of iFarm
• 13.5m Downloads of Backflip Studios games in
seven months ($1.75m of revenue)
• 79,422 Doodle Jump’s sales on Christmas Day alone

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 Analysts’ Big Numbers
• $2.8 billion iPhone games revenues in 2014 –
24% of handheld market (DFC)
• 18.7 billion App downloads in 2014 – of which 20%
will be from Apple devices (Ovum)
• 610 million Paid apps in first 2bn iPhone
downloads – generating $900m of
developer revenues (Pinch Media)
• 36 million Number of iPhones that Apple will sell
in 2010 (Piper Jaffray)

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2. HEAVY USAGE BUT FEROCIOUS
COMPETITION

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 Heavy Usage
• 72% of iPhone users have downloaded 10 or more
apps (Compete)
• Average user has downloaded 65 apps for their
device, spending $80 in total (AppsFire – Sep 09)
• 85% of UK iPhone owners pay for games (UK
National Gamers Survey – Dec 09)
– 51% for Samsung, 38% for Sony Ericsson and Nokia

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Ferocious Competition

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 Ferocious Competition
• 4,491 apps released on 18-Dec-09 (AppShopper)
• 80% of apps are not actively installed (AppsFire)
– 80,000 out of 100,000 at the time of the survey (Nov-09)
• Even those that are can be short-lived
– Flurry data: 72% of games still played after 30 days
– But only 23% after 60 days, and 16% after 90 days

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3. PIRACY AND IP INFRINGEMENT

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 Piracy on the App Store
• $450 million of lost revenues (24/7 Wall St)
– Based on 75% piracy rate and 1.5bn illegal downloads
– But also assuming that only 10% of those were ‘lost’ sales
• Rally Master Pro: 95% first-day piracy rate
• Tap-Fu: 80% first-week piracy rate
• Orbital: 80% first-week dropping to 24% later
• Pirate behaviour and first-day / week spike

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 Solutions to Piracy?
• There is no catch-all solution. Sorry.
• Turn pirates into paying customers - in-app payments
• Send takedown requests (i.e. Whack-a-Mole)
• Ask Apple to do something. But what?

• Music – part of the solution is providing better-value

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 IP infringement
• Several high-profile examples of IP battles
– Edge / Edgy / Killer Edge Racing
– Stoneloops of Jurassica v Luxor
– MarioTD / Duck Hunt / BreakClassic / Super Pong 2
• Apple currently playing judge and jury

• The more high-profile iPhone gaming is, the more

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4. PRICING EVOLUTION

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 Prices. How low can they go?
• 2008-09: Developer complaints about dive to 99c
• Late 2009: Concerted efforts to buck the trend
– EA holding onto its premium prices
– Canabalt establishing $2.99 success for casual game
– Social games bundling points up to $99.99
• Yet price cuts now standard marketing practice
– ‘Peggling’ down to 99c for limited period
• Will 2010 break the $9.99 price barrier?
– Leaked Assassin’s Creed 2 at $11.99...

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Top Paid Games chart

• Avg Price: $2.34

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Top Grossing Games chart

• Avg Price: $4.74

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 In-App Payments
• Eliminate Pro, Skies of Glory, Tap Tap Revenge 3
• Mixed success
– TTR3 in Top Grossing chart – has sold 1m songs
– Eliminate – 500k downloads in a week (but not in TG chart)
– Skies of Glory?
• Other (paid game) examples show mixed results too
– Pocket God – in-app payments 27% of its revenues
– Freeverse – tens of thousands of Flick Fishing payments
– Enigmo: 1m install base but only 25 in-app sales a day

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 What About Advertising?
• In-app advertising fuelling big acquisitions
– Apple/Quattro and Google/AdMob
– Could developers be caught in the middle of a battle?
• Exclusive deals – AdMob/Tapulous (Sep-09)
• Need more success stories from developers
– Backflip Studios - $125k a month from ads (Nov-09)
• Separate trend: advergames
– Reebok iSprint
– Real Racing GTI
– Sirocco 24H Challenge
– Waterslide Extreme

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5. PROMOTION & DISCOVERY

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 Promotion
• 2009: Pubs and devs got savvy about marketing
– More use of social media in particular
• Developer-led efforts to collaborate on marketing
– Appvent Calendar: 100k downloads of Navy Patrol
– FreeAppaDay just launched with same idea
– APPvertisemARTs from ustwo
• Cross-promotion also becoming more important
– Can tie in with in-app payments (ngmoco / Eliminate)

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 Discovery
• Developers have focused on App Store charts
– Marketing strategies based on ‘get into the top 100’
• Apple’s Genius has been low-profile since launch
• Third-party services filling the gap
– Chorus / Chomp / Appolicious / Apptizr
– Mplayit / AppClassics / AppStoreHQ

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6. SOCIAL AND CONNECTIVITY

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 Social Games Platforms
• Fierce competition: OpenFeint, Scoreloop, Plus+,
Crystal, AGON Online, GameSpy...
• Difference emerging: white-label v brand
– Own-brand iPhone apps for OpenFeint and rivals
• This space is seeing investment
– Aug: $2.8m funding for Scoreloop
– Oct: DeNa invested in Aurora Feint
• Emerging value as promotional platforms
– OpenFeint Gold scheme / AGON consumer site

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 iPhone + Facebook
• So far, Facebook/iPhone links have been limited
– Facebook Connect used mainly for viral buzz
– Playfish / Zynga / Playdom not taking App Store by storm
– Cross-Platform games: Anytime Pool, Who Has The Biggest
Brain, Bumper Stars
• BUT: big iPhone/mobile firms investing in Facebook
– Glu built a social gaming team in 2009
– Ngmoco recruited ex MySpace SVP
– Digital Chocolate’s NanoStars concept

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7. PUBLISHING SHAKE-UP

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 New Publishers Coming In
• Console firms now interested in mobile
– GTA: Chinatown Wars out this week
– Activision released Call of Duty: World At War: Zombies
– Ubisoft self-publishing, rather than licensing to Gameloft
– Codemasters back in after exiting J2ME market
• But iPhone isn’t just about the console publishers
– Developers seeing opportunity to self-publish
– Social games firms may ramp up in 2010
– Casual publishers like PopCap already punching their weight
– Web Flash studios, iTV gaming firms...

• iPhone is a battleground more than DS and PSP

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 iPhone Firms Going Out
• Games can build buzz on iPhone then extend
– Fieldrunners went to PSP Minis, then mobile
– WiiWare, Xbox Live Arcade, Facebook, PC...
– Other smartphone platforms courting iPhone developers
• Multiple platforms will be increasingly important
– Make more money if prices are higher
– Make more money if competition is less intense
– Make more money if iPhone game tanks

• In 2010, we’ll be talking more about cross-platform

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iPhone v PSP Minis Pricing

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 Developers Skilling Up
• Developers have been self-publishing since the early
days of the App Store
• BUT now they’re becoming publishers too
– TAG Games and B-Boy Brawl
– Bulkypix publishing several games
• 2009 – became clear there IS a role for publishers

• Less about the mechanics of publishing, and more

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 Who’s Making Money?

Source: Top 20 App Store charts, 13-Jan-09

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8. APPLE AS PLATFORM OWNER

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 App Store Improvements
• Top Grossing chart to highlight biggest earners
• Genius for Apps to help discovery
• Redesigned App Store pages in iTunes
– More priority to screenshots
– Only first paragraph of description is shown
– Harder to find genres?
• Halved the price of iPod touch software update
• More transparency in approvals (but enough?)

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 But what next?
• Will Apple publish more first-party games?
– Recruiting Video Game Artist for ‘interactive multimedia’
– Previously hired Xbox senior director of strategy
• Will Apple launch its own social games service?
– M&A expert on board – could it buy a social platform?
• Will Apple take more control of in-app ads?
– $275m Quattro Wireless deal announced in January
– What now for developers using AdMob units?
• What will the iSlate mean for gaming?

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9. IPOD TOUCH’S IMPORTANCE

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 iPod Touch For Games
• “What customers told us was, they started to see it
as a games machine...” – Steve Jobs
• iPod Touch is the real rival to DS and PSP, not iPhone
• Downloads outstripped iPhone by 172% at Christmas
– Up by 900% on Christmas Day itself (Flurry)
• iPod Touch users download 18 apps a month
• Compared to 10 a month for iPhone (AdMob)

• Implications: connectivity not a given

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iTouch Christmas

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10. RISE OF THE NOT-QUITE-GAME

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 Not Quite Games, But...
• Foursquare / Gowalla / MyTown / Rummble
– Turning real-world social lives into virtual games
– Attracting significant investment from VCs
– Foursquare one check-in a second / 450k MyTown users
• Augmented Reality
– Layar, Junaio, Sekai Camera, Wikitude
– What games are possible – and how niche are they?
– Juniper: $732m by 2014 with games leading the way
• Multiplayer competitive fitness
– iSpeedRunner – train but also compare times

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 CHEERS!
• This presentation will be available on
www.iphonegamesbulletin.com
• Contact me: [email protected]

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