EA, WildTangent, uWink Talk Lessons From Asia, New Revenue Streams

Author: by Staff

In this wide ranging panel at the 6th annual Wedbush Morgan Securities Management Access Conference in New York City, panelists including EA's Kathy Vrabeck and Atari Founder Nolan Bushnell discussed many aspects of the industry, from lessons learned from the mobile industry and Asia, to how new revenue streams could change the way people access games rather than being asked to "pay $60 or go to hell." Going Mobile Following Sony's recently reported comments on future plans for the PSP, EA Casual president Kathy Vrabeck helped kick off the panel with views on the shifting landscape of mobile games: "The industry to date has been, in North America, highly focused on single game downloads through carriers – a good business, but look at Asia and Europe. Smartphones aside - which we're really excited about as well - you see these markets going direct to consumer, carriers playing different role, less walled." "Look at Asia and see where mobile market could go," she restated, "Korea in particular. They have combinations of online and mobile together -- taking games to your phone and then taking your progress back into the online world. Asia is one of the largest markets for mobile to date foreshadowing where Europe goes and then North America after that." "Pay $60 or Go To Hell" Alex St. John, CEO, founder and fhairman of WildTangent next stated that gaming was moving more toward "becoming broadcast media" with enormous scale and efficiency, despite the "basic value proposition" of retail games, which he characterized as "buy this box for $60 or go to hell, I don't want your money." By comparison, St. John noted that using a different model, Wildtangent was rated by Comscore as the 5th largest games network in the world, and while 50 percent of revenue came from thousands of people a day buying games or currency, 98-99 percent of users played for free sponsored by ads. "We make just as much giving games away as we do asking for a credit card," he said. "In a few years any business not making money from ads is leaving half their money on the table." Instead, developers should look to "sell games not on a 'hey you owe $60' basis," but by buying tokens to spend across a service. For example, he noted, "a person who pays 60 bucks for Halo probably plays it 100 times. If you'd sold them that on 60 cents a play, you would have made the same money, plus you might've got people that wouldn't pay that $60 in the first place." Bite Sized Play Vrabeck agreed with St. John that "A big part of monetization going forward would be bite-sized pieces paid for by advertisers, or microtransactions " "Kids today are used to model of 99 cents a song rather than $12.99 for a CD," she continued. "I see that group becoming more comfortable with that model. It's only natural in gaming that you wouldn't have to ask for $60 in the casual market. It'll still be great for the core market, but in casual look for people to try your game for 99 cents, through gift cards, in more bite sized pieces. You have to learn how to operational that way. Mobile gives you leg up in that. It gives you operational efficiency." Vrabeck moved on to discuss the way in which EA have been using these methods already, including the use of microtransactions and advertising with Pogo.com. In addition, she noted the decision to release FIFA 07 in Korea for free with microtransactions. "In Asia we'd never be as successful because of piracy," she said, "so we thought, 'what if we gave the game away for free so there was no incentive to pirate?'" She offered as examples giving a base level client, but charging on "shoes, the right soccer ball, jerseys... You actually find a lot of people who will pay a lot more in total for the game than if they'd got all of that in one boxed product." Table Play Bushnell discussed his own unique way of monetizing games with his restaurant chain uWink: "I'm monetizing with hamburgers and cocktails -- a drunk with a credit card is a beautiful thing!" The casual space and social game space were two different sides of a coin with a lot of future growth, he believed, and especially felt that the "third platform in the living room" would be a surface technology coffee table, which would become the board game player of the future, though "probably not for another 6-8 years." He did note that there were still many inefficiencies to the nascent casual game market in North America. "In Asia/Korea, you don't have to have a credit card, you can buy a gift card. We don't have that infrastructure to the extend we could. My wife would never give my kids a credit card to go online," he said, as many game sites operated like roach motels -- easy to get in but you can't get out. "We found that even canceling a credit card, there were ways that people punched through with that monthly billing cycle," he continued, "Until that is fixed, the market will fundamentally be half or a third of what it could be." The Ad Game Continuing many of the points he presented at the recent ION Conference, St. John again declared his view that this would be the last generation of consoles, and more toward PCs. Gaming, he said, would also move much more toward both community -- already proven out by Pogo.com's user numbers (a service he called "WoW for old people") and World of Warcraft itself, with 1.2 billion people playing, none of them able to pirate it -- and advertising subsidized play. Asked what types of games best lend themselves to ads, St. John took the stance that in-game ads were not particularly effective, with unproven methods to measure viewership, and added that it was a "huge mistake to interrupt a game" with advertising. WildTangent, he said, though traditionally a supporter of the practice, was "no longer a believer." Instead, the company has taken to approach advertising on a per-play basis: when a player starts a game, they're given an option to use some of WildTangent's currency to play, or have the session 'sponsored' by an advertiser by watching a video ad before the game begins. Using this, WildTangent has seen remarkably high CPM (cost per thousand views) rates of some $140, without the need to modify the game. The company has seen, said St. John, 400 percent growth in ad revenues since we taking on the model, and noted that it lended itself well to further growth and scaling to a more "Google-like economy," rather than spending months chasing up large make-or-break type advertiser sponsorship accounts.