The case for a Windows 8 ecosystem for independent developers: Think twice about Apple and Android.

Whether you are a brand owner, an indie game developer or a traditional game publisher, smartphones cannot be ignored anymore. For the first time, smartphones outsold PCs in 2011 and this has major impacts on how we consume games and internet. Furthermore, the $0.99 and free-to-play model has disrupted the traditional gaming community by democratizing the development and publishing of games. For a few thousand dollars, indie developers can put games out there and hope for revenues but these developers should be worried about the latest data showing that 6 mobile apps out of 10 don’t even break even with their development cost (1). 

The Pocket God and Rovio success stories have been a minority on the app store given that there are 75,000 games already out there. While these stories are inspiring, developers should think twice about the first platform to put their games on and start looking at other avenues such as the Windows 8 ecosystem. 

Full disclosure: I own an iPhone, an iPad and I work on a PC. 

Apple iOS

iOS is the natural market for games. NewZoo’s recent report suggests that iOS captures 85% of  mobile gaming in the US (2). This makes sense given that iPhone is the most popular Smartphone and iPad is the leader on the tablet market. Apple also has one of the largest credit card databases for a painless check out process. North America has become “Apple-land” and I often tend to forget some people do not have iPhones. On the other hand, getting your app noticed not only requires a quality game but a decent marketing budget and good PR. 25,000 downloads per day are required to reach the top 25  on the App Store. That forces developers no other choice but to either pay to acquire users or partner with publishers.

Developers usually need to use customer acquisition channels to give their downloads a bump. To do so, Fiksu has been following the cost of acquiring a user and the latest March report points to a $1.30 cost to acquire a loyal user on iOS (3). I will let you do the math to get to a few thousand players and also estimate how much you should price your app to make a profit. We are in a situation now where the cost of acquisition outpaces the revenue per user for a majority of indie devs. Again, there are success stories out there but I am talking to the majority here. 

That leads indie devs with another option: Publishers. You can approach a Rovio, Chillingo, Big Fish or Disney for them to publish your game, old school style. Their cost of acquisition is much lower as they already have this huge user base. This can be in fact a good option because they will use their user base and top it up with marketing efforts to get your game at the top of the charts. Furthermore, they will help you polish your game and bring their expertise. On the other hand, be willing to give anywhere between 25-40% of your net revenues. That can complicate your P&L. It means that if you sell 100,000 games at $0.99, you give 30k to apple, 18k-28k to the publisher leaving you with 42k-52k per 100k in revenue. Given that only 12% of apps make more than 50k in revenues (1), odds that you can recoup your investment are worse than a slot machine. I’d still like to conclude on a positive note pointed out by Flurry in March which is that indie devs are dominating the iOS and Android market compared to established games (4). There is still an opportunity out there, just don’t believe in fairy tales. 

Android

On the positive side, data indicates that Android is the dominant OS in terms of market share. The cost of acquiring a user is not as high as iOS and the market place is not as crowded. Another great aspect is that the editorial team at Google is great at featuring your game if it’s a good game and that definitely helps sales but… have you developed on Android? The fragmentation of the devices and the number of versions of the OS makes development on Android  the same as the old days of Java, Brew and Symbian. The sheer differences between the 4000 devices (5) makes some features difficult to implement across all devices, thus creating an experience that is not standard across all devices. Furthermore, the ratio of people willing to spend on Android seems lower than iOS by a 4 to 1 ratio (6). Add on top of that a check-out process that is far from perfect and I can understand the reluctance for people to enter their credit card and buy. All this being said, I believe that if you are to develop on iOS and use an existing engine such as Unity that can port to Android fairly easily, it’s well worth the few weeks of additional development, otherwise, it’s a tough investment to justify.  

Windows 8 Ecosystem

There has been a lot of buzz around Microsoft since E3 and I am trying to see if there is an alternative to the platforms above. Given the lack of information on Win8 ecosystem, I am making lots of assumptions and predictions…so bear with me. 

Windows based phones currently account for 3-5% of the market share. It’s not a lot but remember that the smartphone race is far from being over around the world (6). While I could agree that a limited number of iPhone users would change, I have not heard many people being so passionate about their Google phone. Furthermore, people tend to change their mobile phone faster than a PC allowing for a potential change from one OS system to another if they are not pleased with their current phone. A second point for Microsoft are the rave reviews on the Metro interface and the new Lumia 900 that even Siri agrees is the best phone on the market (8). If they can release good phones at a lower price point than the competitors, they will definitely gain some market share in the US and Europe and potentially in Asia where the race is still wide open (9). I also believe they will be aggressive with their surface tablet which could be appealing to the public but mainly to Microsoft’s core audience: Businesses. 

While it’s true that Smartphones have outpaced PC sales in 2011, and yes it’s true that PCs are so 90’s and 00’s, there are still more PCs than Smartphones out there. I calculated that there have been roughly 316M windows based PCs sold in 2011 (10) bringing the total to a very conservative 1.5B windows based PCs around the world in 2011.  When Windows 7 was launched, 240 million copies were sold the first year (11). With the exciting new changes, one can assume that a similar smaller number of these people will either upgrade to the new Win8 or change computers. That’s a good user base for an OS and a good audience for Developers if the rumors are to be true, Win8, Win RT and Apollo (W8 phone) will share some components (12).  If you can use the same code base for all platforms and avoid Android’s fragmentation, your reach is fairly large. To put things in perspective, if the smartphone market is to hit 1 billion as expected this year and Windows Phone can capture 7-10% of the audience by the end of 2013, Microsoft would still have 70-100 million users on mobile. That makes 3DS and Sony’s Vita sales pale in comparison. 

This renewed interest in Windows products has been pointed out by Flurry as per their latest chart displaying an increase in new mobile projects for Win8. A staggering 521% year on year increase and now accounting for 4% of all new mobile projects started (13). As they say “Considering the much smaller Windows Phone install base compared to Android, Microsoft is currently over-indexing. From Google’s point-of-view, this must elevate Microsoft from an “also-ran” to a potential competitive threat with the resources and know-how to kick-start momentum and mount a campaign to reel in the second place player.” 

For game developers, what does this all mean? It means that you have a current XBL community of 40 million people that will translate and continue to grow on Win8 and Win8 phone with more casual players.  I bet people will be more willing to give their credit card number to Microsoft compared to Google and the possibility for social and casual gameplay just got better… If the interoperability is true, just think about free-to-play social based games. It could mean people could play on their Win8 PC and continue playing on a tablet or phone while not in front of their PC. Chip in Xbox in the living room connected to Surface and you are starting to get a robust ecosystem and I have not even addressed cloud gaming yet.  This unique ecosystem could well prove to be an Ace in their deck as it could capture a user’s attention at any time of the day, whether at work, in transit or at home.

It also means that If Microsoft keeps the same logic as the Xbox, there could be first party publishing through Microsoft Game Studio. That means that indie devs have to chip in $0 in marketing. It may also mean Microsoft could finance part of the development so you could break even from day 1 and then Rev Share with them. 

So, what’s in it for indie devs in the Win8 ecosystem?

• Your game on the largest OS on PC. 
• A unique ecosystem that capture users at any time of the day
• A low cost of user acquisition if you want to self-publish and the possibility to grab important market share on Win 8 store for cross promotion 
• A smaller mobile user base from day 1 but that will increase as Microsoft eats up some smartphone market share. 
• Risk free development if you can convince Microsoft Game Studio First party publishing to finance your game. 
• The possibility down the line to publish on XBOX (or Microsoft’s next console) where people are willing to pay big bucks to play. 

While it’s true that iOS and Android are more appealing right now, Microsoft is far from being out yet. They could well be a good middle ground solution between the busy and closed yet successful App Store and the Open but fragmented Android Market. If they can give something none of the two other platforms has given to game developers which is support and insight to the community, developing games for the Win8 ecosystem could be a different discussion a few years from now. Given that it’s a numbers game, a lot of the success will depend on how fast Microsoft can catch up and convert users in the smartphone and tablet race and what type of support they can give to the developer community to rally them. If they give the same support they have for XBLA, then we have a significant new player in the mobile games race. 



(1) http://app-promo.com/wake-up-call-infographic/ 
(2) http://www.newzoo.com/ENG/1504-Detail.html&id=109 
(3) http://www.fiksu.com/company/news-releases/iphone-app-downloads-plummet-march-while-mobile-marketing-costs-hold-steady-re
(4) http://blog.flurry.com/bid/82758/indie-game-makers-dominate-ios-and-android?source=Blog_Email_%5bIndie%20Game%20Makers%20Do%5d
(5) http://opensignalmaps.com/reports/fragmentation.php 
(6) http://blog.flurry.com/bid/79061/App-Developers-Bet-on-iOS-over-Android-this-Holiday-Season
(7) http://www.wired.com/beyond_the_beyond/2011/12/42-major-countries-ranked-by-smartphone-penetration-rates/
(8) http://www.businessinsider.com/you-may-think-the-iphone-is-the-best-smartphone-ever-but-siri-says-otherwise-2012-5
(9) http://www.windowsphonedaily.com/2012/05/big-in-china-windows-phone-captures-7.html 
(10) http://www.canalys.com/newsroom/smart-phones-overtake-client-pcs-2011
(11) http://hothardware.com/News/Microsoft-Sells-240-Million-Copies-Of-Windows-7-During-First-Year/ 
(12) http://www.windowsphonedaily.com/2012/06/windows-phone-daily-presents-apollo.html
(13) http://blog.flurry.com/bid/86277/microsoft-may-be-closer-than-it-appears-in-androids-mirror?source=Blog_Email_%5bMicrosoft%20May%20Be%20Clo%5d