Digital Podcast 49: Automating the Digital Supply Chain

In Digital Podcast 49, we interview Richard Cottrell, Chief Executive Officer of Accenture’s newly formed Digital Media Services business about automating the digital supply chain. Richard describes Accenture’s planned offerings and how acquisitions like Digiplug and Origin Digital play a role in building out the services.

Our interest in the story was triggered by the announcement of the Origin Digital acquisition. We interviewed Origin Digital’s CEO Darcy Lorincz last year at Digital Hollywood and learned a bit about their efforts to automate the value chain.

Richard describes the new offering in Digital Podcast 49.

This is a new line of business for Accenture that complements their professional services business. With Digital Media Services, Accenture is working to provide an end to end solution for the value chain. The services cover five key areas. Asset management, transcoding to new formats, distribution of the content, commercial intelligence and digital rights management are all parts of the value chain. Accenture’s current offering covers the first three areas.

They see the market as being a potentially $1 billion addressable market and the current providers are highly fragmented. Richard says that the major media companies are looking for people who can bring both market expertise, global reach and secure financial backing.

Richard describes the benefits of the service being reduced investment costs, reduced complexity, reduced operating expenses and faster time to market.

The entrance of major players like Accenture into the automation of the digital supply chain is indicative of the increasing maturity of the digital media business and the exciting opportunities to bring supply chain thinking and technology to maximize the opportunity of digital media.

If you are interested in the real operations behind the digital media business this is a podcast worth listening to. In two to three years, these types of services have the ability to become the backbone of digital media as it grows into a significant business.

Technorati Tags: digital supply chain, Accenture

The Podcast Consumer in 2008

Edison Media Research has released a new study the podcast consumer. The study has lots of interesting information that I think reinforces the importance of traditional media companies starting to think of subscribable media as an important new line of business.

Key findings from the study include:

Podcasting continues to grow quickly: Audio podcast listeners grew from 13% of Americans to 18% and video podcast consumption grew from 11% to 15%.

Podcasts enable more media consumption: The people consuming podcasts spent approximately 90 minutes longer per week listening to online audio than other online audio consumers

Podcast consumers are an attractive advertising demo: Podcast consumers are more likely to have a college degree and earn in excess of $75,000. They are also more frequent online shoppers and spend more money online than other Americans. These consumers are also adverse to interruption based advertising and use pop up blockers, SPAM filters and other tools to block out commercials.

Podcast consumers are internet social: 25% of them have MySpace pages and spend lots more time on the internet than non listeners.

Edison’s key takeaways from the study for podcasters:

• Podcasting is a viable alternative means to target attractive consumers who are otherwise proving difficult to reach with traditional advertising. Consumers get to choose what they subscribe to and when they subscribe they can be both more engaged and more loyal
• Podcasters should consider lifestyles, context and even potential ‘dayparting’ for their audiences. In other words, don’t just leave it to chance that people will listen to your podcast any old time. Give them a time and a reason to listen to your content.
• Take lessons from broadcast media and improve production, staging and create true ‘theatre of the mind.” Production quality matters when your competing with NPR et al. Make your podcasts sound and look good. Make them easy to understand.
• Remember the ‘Mid-Tail.’ Don’t think you have to focus on the “long tail” niches. There are good segments of mid-sized audiences that are undeserved by traditional media that can be targeted via podcasting. Edison points to BMW drivers as an example.

Via MWGBlog.com

Technorati Tags: market research, edison media research, media consumption, podcast consumption, podcast market size

Realizing Podcasting’s Potential – The Market Beyond the Pod

Podcasting 1.0 has been the age of iTunes and iPods. The original software clients that were built in late 2004 and early 2005 were designed to automatically download media files and put them into your iTunes music folder. By labeling the files as podcasts, they automatically went into a folder on iTunes for podcasts and from there the files were automatically synchronized with your iPod.

Clever and simple it was. Using the RSS feed, you could set your software to record your favorite shows directly to your iPod for listening or viewing whenever you wanted. The iPod became a portable Tivo for audio and later video with the release of the video iPod.

Media could be published by anyone, anyone could subscribe and new stuff showed up on your iPod by simply connecting it to your computer. The term Podcast for this subscription based media distribution mechanism was a natural.

This simple innovation became even bigger when Apple saw the opportunity that podcasts presented. Massive amounts of new and free content that could be provided by iTunes. The fact that it was free meant that everyone could start filling up their 40 or 80 GB iPods with all kinds of subscribable media.

In 2005, we saw lots of growth in podcasting and by 2006 it had been picked up by mainstream media as well. NPR, NBC, ABC and many other media companies started to provide podcast content and these mainstream media publisher quickly rose to the tops of the iTunes charts along with a number of new players.

While the growth that came from Apple’s integration of podcasts into iTunes has been great, I believe the tight association and integration with iTunes and iPod is holding back podcasting from realizing its true potential.

The word itself leads one to believe you need an iPod if you want to get a podcast. Those of us in podcasting constantly try to communicate that you don’t need an iPod to enjoy podcasts, but it’s a small voice compared to the perceptions of consumers. The issue is further compounded by the fact that the easiest way to subscribe to podcasts is to use iTunes.

The Limitations of the Pod Market

The problem is that the installed base of between 100 and 200 million iPod devices is actually quite limited, particularly when you take into account the number of iPods people own and how many actually get used.

In my own home, my kids and I have six or seven iPods, and only one of them gets used for playing podcasts. I also have many friends who have been given the device for Christmas or a birthday, but don’t actually use it.

If we reduce the installed based by 50% for duplicate iPod owners and a further 50% for those who don’t use the device or listen to podcasts we end up with a potential market size of 25 to 50 million users. If we take the old 80-20 rule, it says that the hard core market for podcasts on iPods is probably between 5 and 10 million users at the current time.

If we move beyond iPods and say the market is iTunes users then things look a little brighter. iTunes is said to have an active user base of 500 million. If we apply the same math that we used above we could probably get the market up to 125 million people who have tried podcasts, with a hard core market of 25 million people who are heavy users.

Moving Beyond the iPod

The market starts to look more interesting if we move beyond iPods and iTunes to the broader internet. Some recent survey data from Universal McCann shows that of 475 million active internet users in the world 45 percent have downloaded a podcast and that 7 percent download daily. These numbers suggest a market of 213 million who have tried podcasts and a hard core market of 33 million users who download daily.

Beyond the PC, lies the huge potential of the mobile phone market. Phones that support subscribing to podcasts like the iPhone (received through iTunes) and Nokia’s N95 (received through an on-phone podcast application) show the potential of mobile phones as the next generation of portable Tivos.

There are billions of mobile phones in active use every day. While most of these phones don’t yet have the capability needed to be portable Tivos, the installed base continues to be upgraded at a rapid pace.

500 million cell phones equipped with mp3 players were shipped in 2007 and estimates call for over 900 million to be shipped each year by 2011. On the video front, 3G phones with video capabilities is one of the fastest growing segments.

Within the next 5 to 10 years, it is quite likely that most new mobile phones being sold will be video capable, and if good fortune/open markets prevail they will be WiFi enabled. This will expand the market for subscribable media to billions of mobile devices worldwide with potential audience sizes as big or bigger then television.

Connected digital TVs represent yet another big opportunity, but one that will take longer to evolve due to the slower turn over of the installed base of devices. HDTV’s are basically very large monitors that can be connected to the internet via set top boxes, PCs, Mac Minis, Apple TV and the like. Tivo is already providing some support for podcasting. The publish and subscribe model that is the foundation of podcasting can turn every one of these devices into Tivos for internet video and audio.

The PC, mobile and HDTV are the markets that will allow subscribable media/podcasting (or whatever new name it takes on) to realize its true potential. These markets will give podcasting the reach and scale required to turn subscribable media into a sizable industry. These are the markets that matter and the markets that every serious publisher should be working towards. Now is the time to establish your position.

Getting from here to there

Getting from here to there requires a change in mindset. In many cases, today’s traditional publishers treat subscribable media as a sideline with little strategic thought and poor execution.

In contrast, new media players like Revision3 and TWiT.TV are thinking strategically about building audiences and brands that form the basis of a real business. Winners will take the business seriously.

Publishers who see the opportunity on the horizon will begin to shift their focus from iPods/iTunes to the PC, mobile and connected TV segments. Too many publishers rely too heavily on iTunes. This dependence manifests itself in many ways such as the use of one click iTunes buttons as the only way to subscribe and the use of iTunes as the way to present the content archive.

This shift in focus requires a multi-device content strategy. This is particularly important for video, because what plays on an iPod, won’t necessarily play on a cell phone. In a recent survey I did of 25,000 video podcast episodes, I found only 6 episodes encoded with 3gp (the video standard for 3G phones). If publishers want to tap the mobile market, then they need to make sure that the content they produce can be played on these alternative devices.

Building real businesses in this sector will take investment and sound execution. Revision3 has taken in $9 million in investment and Mevio (formerly PodShow) has taken in $24 million in funding. This is the kind of investment that traditional publishers will need to make if they are serious about building new media businesses.

On the execution front, there are profound differences between those who are focused on building new media businesses and those that treat it as a sideline. Companies like Revision3 and TWiT.TV show a commitment to the business and best practices that is just not found in many traditional media companies.

These new media companies are successfully building brand franchises and growing audiences that are attractive to advertisers. They are positioning themselves ahead of the huge demand wave that’s building.

If you want to ride that wave, now is the time to get serious about building a new media business.

As always, comments and feedback are appreciated.

Technorati Tags: podcasting, podcast market size, podcasting 2.0, subscribable media, mobile media

TPU 36 | Real World Community Tips for Podcasters

In this episode of the Podcasting Underground, I have a discussion with Cliff Ravenscraft of the GSPN.tv network. We discuss strategies for building community and interacting with your audience. Cliff has built up a thriving community around his podcasts too the point that he has been able to quit his job and pursue his passion. One of his podcasts has over 14,000 listeners. I also give a quick tip on how to attract the attention of your market and keep them coming back for more. Items mentioned in this episode:

• Community Magnet - sign up for free to get the entire interview with Cliff as well as the Ten Laws of Magnetism
• GSPN.tv
• Your Story Podcast
• Entire audio comment from Ian Kath

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Christians Love Podcasts

Christians are statistically on par with national norms when it comes to being plugged in to digital technologies and social networks, a new study showed. But the study also found that the countrys faithful is even more in tune with podcasting than other adults are.

Results from a study conducted by The Barna Group showed that 38 percent of evangelicals and 31 percent of other born-again Christians had listened to a sermon or church teaching via podcasts – digital recordings available on the Internet – compared to only 17 percent of other adults.

complete article

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Podcasting Grants

The moral is grants are available for podcasting just look around!

The Hamilton Southeastern Schools Foundation recently announced grant winners receiving a total of $24,000 for educational programs and projects. Of 31 applications for over $61,000, 14 were selected for funding

Is Hollywood Killing the Game Industry?

There’s a love-hate relationship between Hollywood and gaming, and tremendous friction around licensed properties and what they mean for the gaming industry. In this panel, the experts explore where the relationship is symbiotic, where it is destructive, the underlying sources of friction, and how the relationship is now evolving. This is a continuation of our live blogging at the eighth panel from Digital Media Wire’s LA Games Conference 2008.

Bill Kispert, VP, Interactive, NBC Interactive
Sandi Isaacs, SVP, Interactive & Mobile, Paramount Digital Entertainment
Daniel Offner, Partner, Nixon Peabody LLP
Mike Breslin, VP, Global Marketing, I-play
Moderator: Andrew Wallenstein, Deputy Editor, The Hollywood Reporter

Where are we now in 2008 where things seem divisive in the Hollywood and games dynamics?

Mike – There are a few ways to look at it. You need collaboration between the production and the game developers, sets, and so forth; you can’t just hand over a style guide anymore. It also comes down to finding teams who share the creative vision. So collaboration is improving but it comes down to finding fit early in the process.

Keith – There are only three factors in the film license – time between film and game release, marketing budget, and likelihood of franchise to the film.

Sandi – I feel like everyone’s missing the point. It’s never been a more exciting time for film makers to collaborate with game makers. Now we have a great opportunity to start prototyping early in the process and explore business models, not just stay in the licensing box. At Paramount we’re putting together a team of game industry veterans to help make that happen. It’s also not just about the new release, but also the classics like The Godfather. It’s about the game, making a great experience and making it profitable for the studio.

Daniel – I’m slightly amused by the question, is Hollywood killing the game industry. We’ve worked with THQ for many years, and they make their bread and butter selling licensed games. There are some interesting changes now, though. The convergence of casual games, community and the web, and the access of content through broadband connectivity. The ability to tap the digital distribution platform opens up all kinds of interesting things. The other thing is having great content coming out of the studios and pairing that up with really great talent. I don’t think retail is going away – Wal-Mart, Amazon, etc. – but digital distribution is becoming very important.

Mike – I can speak with mobile industry perspective. One reason there has been consolidation in mobile is the cost of licenses with the peak of interest in mobile. Of course the studios are trying to maximize their license revenue, but from the side of the team investing in these licenses and putting together teams, you overextend on the licenses and can kill your business.

Sandi – Obviously we’re investing heavily in these properties which drives the mobile licensing terms. It’s a tricky fragmented business but the players know the challenge. It’s not the cost of the IP but the economics of the mobile game business overall.

What does the mobile game business look like, all license or some original IP too?

Mike – We’ve had success with some of our own IP. But on the license side, I think that Hollywood can help the game industry with the co-marketing and opportunity to leverage a brand where the studios are spending millions of dollars.

Keith – That’s a key point, you have to work with the license holder, because if you don’t, you’ll lose the value of the marketing, events, co-marketing if you don’t check in regularly and see what they are doing with the IP.

Sandi – Another factor is the broadening of the game demographic overall, expanding the scope of movies that work for games.

Keith – And now for the first time you have gamers making movies; the producer or director says from day one ‘where’s my game’, and wants to be involved on a creative level and ensure quality. They are also not demanding large up front payments as part of the deals.

Bill – You could argue that Hollywood can drive the game industry going forward – places, characters and worlds, with game play layered on top of it. Then there are millions of other promotional touch points, like theme parks, television, fast food, and more.

Keith – The other really important point is that when you talk about these $8 million marketing budgets, you can piggyback on those budgets and have credibility going into Wal-Mart for retail distribution and retail promotion. By paying for the license, you get to piggyback the buy for the sell-in level, let alone the consumer level.

Daniel – My question for the studios is, as what point will you be in my clients’ business and not need them any more.

Sandi – I think we already are and that’s the issue. There are going to be different parts of the value chain where we need the game companies, but other parts of the value chain where we don’t. We’re looking to work with partners based on value-added for both parties, not a single model.

Keith – That’s no different for any other part of the studios’ businesses.

Bill – Our ability to take things on ourselves also depends on the capacity we have available at different points of time. But it’s a very good time for independent developers to have conversations with studios. It used to be that we would go to Vivendi or another publisher and they in term would deal with the independent developers.

Sandi – It’s going to be very similar to the TV and film industry, lots of co-financing, lots of distribution deals.

With all these changing models that are happening, are there any upcoming releases that will put things to the test?

Sandi – On our side it will come from the casual gaming side. We are going to put in the time to develop really great games.

Boesky – There’s one coming up in September called Afro-Samurai from Gonzo. Gonzo committed to making a mini-series, and we invested in it from the creative side. Spike picked it up for a nominal license fee. They only got the right to run it; it was a great five episode commercial for us. We pick up revenue from the DVD, iTunes, action figures, and the action game coming out from Namco. All of the revenue from all of those ancillaries go directly to Gonzo, and Spike made so much money from the advertising without paying for content that they commissioned another run from us.

Bill – The notion is that if you’re really trying to build a franchise, you need content across platforms, and think about how you release them strategically.

Keith – The lie we told in the 90s is now true. We actually can use our game assets across media. Disney, Warner are starting to do it sometimes.

With a show of hands – is there a perception that Hollywood games are bad games? (Many hands are in the air)

… Andrew’s note: My fingers can’t keep up with the debate!

Mike – We all know there’s nothing more discerning than a gamer.

Keith – If it’s a bad deal, don’t buy the game. If you have a desperate publisher who wants something, or who messed up and can’t get it right – they won’t pull the public.

Sandi – We’re talking about hard core gaming reviews coming out and killing Sponge Bob. These mass market games are not targeted at the hard core gamer. It’s about being realistic, what game are you playing and what the audience expects for it.

Keith – If you compare these titles to other games, look at what you’re comparing them too. If I invest $30 million in BioShock, I can only invest $10-15 million in a licensed property because of the spend on the license.

Sandi – And that’s why the studios are developing games ourselves, so we can reinvest in our own IP.

Bill – We’ve introduced a hybrid model where we are co-funding games. Some developers said thank god, we’ve been waiting for the studios and networks to put skin in the game, and other showed no interest.

Daniel – A question for Ubisoft, THQ, and the others is will the studios still be giving out their best AAA properties? Will they be asking for a different economic deal, or will the studios just do it themselves and use publishers for retail distribution?

Sandi – If publishers have internal great teams, they often don’t want to put them on licensed properties.

Bill – We’ve tried to adjust our internal model to get involved early and put our publishers in a position to succeed.

Technorati Tags: LA Games Conference 2008, Hollywood, Videogames

The Challenges and Opportunities for Brands and Games

In this panel, the experts are focusing on advertising challenges and opportunities in games. They discuss what works and what doesn’t for in game advertising. They focus on what brands really want and how game companies need to start speaking a language advertisers understand. This is a continuation of our live blogging at the seventh panel from Digital Media Wire’s LA Games Conference 2008.

Panelists
Christian Batist, SVP Marketing, Sulake Inc. (Habbo Hotel)
Barry Schaffer, President, Promotional Currency
Julie Shumaker, SVP, Sales & Marketing, Double Fusion
Keith Kane, Co-Founder, SVP, Sales & Marketing, Giant Realm
Mark Friedler, Internet Advertising, Media, Games Entrepreneur/Founder, GameDaily
Moderator: Chris Lang, SVP, Research Strategies, SmithGeiger, LLC

Chris: Any case studies to start?

Julie: Sponsorship and engagement is really where there is opportunity right now. It’s like major league sports. Sponsorship are a really important part of the marketing mix. This is one way brands can reach fans. The combination of engagement and interactive experiences is allowing brands to participate in long play experiences. TMobile spent $60 million on their NBA sponsorship and mobile was the most important part of the campaign.

Chris: Will gamers put up with advertising?

Christian: It works well if you treat the gamers with respect. Logo slapping isn’t the way to go. You need to make it part of the experience. Have them find the ad and they win something and give them ways to wear your brand in the game.

Barry: We will work with the new release to promote it through specific brands or retail outlets. If you think about it like promotional items, but done digitally. Games, music, video can all be used promotional items.

Mark: Games are compelling as media. There is very high engagement. Attention to the game is very different to information around the game. The way to market to gamers is by working marketing around content about the game. CPM models don’t work in this kind of environment. You’re buying time, not really impressions. If you think of games as media, you start thinking about it differently. Free MMO games can monetize via digital goods. You can get very good revenue per user.

Julie: It’s no different than TV. Brands expect to get product placement to go with their impression buys.

Mark: The web is going micro. Everything is splintering. Players like EA want to spend $50 million. If everyone becomes their own media company, how does EA buy advertising?

Keith: These micro environments can be really scary to brands. There’s lots of things going on that brands don’t want to be part of. The marketing needs to be very relevant to the community. He describes a HP campaign for high performance machines that they ran in Machinima communities.

Q from Andrew via Mozes: How does the need for immersive placement impact scalability of in game advertising.

Julie: Without aggregation across lots of games you can’t scale. It takes a network of games to create audiences big enough.

Keith: Brand advertisers need to start thinking differently. Brands think they need a separate budget for game advertising. They should be thinking about how to reach audiences.

Julie: The game industry creates this problem by talking about PSP, Wii, DS etc. Brands should not have to care. They want to buy advertising and engagement.

Mark: We should be talking about engagement. If people want scale, they should go to Google and buy tonnage. There is going to be downward pressure on advertising because there is unlimited supply. You need to be able to offer media buyers engaging programs that are really simple for them to understand. He describes how this one MMO was able to offer virtual currency to members for signing up for credit card applications. The credit card company called them up and told them to stop after one week. The credit card company had a 12 month backlog after one week running the campaign.

Will there be single measure of engagement

Christian: It would be nice, but I don’t think so. The thing is to agree with your advertisers.

Julie: Advertising nomenclature is reach and frequency and CPM. Engagement is measured by ROI.

Mark: It’s also up to the industry to not take stupid ideas. We should segment it into different segments. Google allows you to buy clicks and measure results. If you’re trying to get a lifestyle product marketed, the product needs to look cool.

Barry: Engagement for us product selling, getting a new customer etc. A lot of the programs we run drive trial.

Christian: If people buy Corn Flakes in Brazil, the customer gets Habbo credits. The same type of program is running in Spain and Finland. It’s too early to tell the results, but the Spanish company pulled all their other advertising to focus on the Habbo program.

Technorati Tags: LA Games Conference 2008, gaming, in game advertising

How Will Mobile Games Break Out?

We continue our live blogging at the sixth panel from Digital Media Wire’s LA Games Conference 2008. The mobile games panel focuses on the question, what’s it going to take for mobile games to go mainstream, exploring differences between the US and international markets, and different business models that are being used to tackle the mobile phenomenon.

Mobile Games: Challenges & Opportunities to Create a Mass Market Phenomenon
Scott Scherer, VP Product Management, Hands-on Mobile
Jill Braff, SVP, Global Publishing, Glu Mobile
Stephen Jackson, CEO, Smashing Ideas
Kay Gruenwoldt, Head of Industry Marketing, Nokia
Erica Chriss, VP of Strategy & Business Development, Greystripe
Moderator: Mark Donovan, CMO & Senior Analyst, M:Metrics

Jill, what have you seen shift in the last year in terms of drivers of your business?

Jill – The increase in people playing mobile games. Back in 2002 with Sprint, we were doing focus groups and couldn’t find anyone playing. Now we can find active players a day after posting an ad in CraigsList. The core audience may be different from the typical mobile user, but that’s what you need to grow a business. Also, we’re trying to see the carriers start to measure RPU (Revenue Per User). As the networks become a commodity, these services become more important.

Scott, HandsOn involves bringing titles like Incredible Hulk to market. How is that doing?

Scott – Guitar Hero 3 has been a tremendous success, the number one title since it’s launch in December. It’s a brand that’s hard to screw up, but also hard to create a long tail and ongoing revenue stream. So we deployed an option where if you buy the game you get three additional songs each month, which drives people maintaining their subscription. People are coming back and trying out the new songs and getting more great experiences each month.

Mark – That underscores the shift to subscription models and evolving content.

Jill – It’s awesome to see this kind of stickiness to content and episodic content. Mobile really should be about this kind of close relationship with consumers.

Steven, you’re a serial entrepreneur with Smashing Ideas, a smaller company. What does this market look like to you?

Steven – The company has been a casual game maker for 12 years, generated 150 million game plays last year. We’re the largest independent Flash developer in the US. Adobe decided they’d spend $900M to address the mobile space with Flash Lite and we jumped on the Adobe bandwagon for the mobile space. We have 30 applications on Verizon and 80 screen savers. We create 60% of our games, and then for the other 40% distribute for other developers. As a small player, we play in the Adobe Flash Lite niche and that’s where we focus.

Kay, tell us what’s happening with Nokia. When nGage was first launched it was laughed at, but you’ve been tenacious and successfully relaunched. How does it fit in?

Kay – We’ve learned a lot over these last 3-4 years. It took quite a while to come up with the new nGage platform, and we’ve accomplished all the points we set out to address: fragmentation, discovery, purchase process. We’re focusing on a premium experience for higher end phones. The average price for games on the platform is from $8-14. People pay for it because they can try the content out first and perceive the value. Now, original IP is leading ahead. The content that our games publishing unit creates is selling very well. That’s great news for smaller game companies and developers, they have a chance to be successful.

Erica, your business model is what Greg just said is way too early, ad supported games. How does that work, and is it cannibalizing the market?

Erica – We see it as a great market, and we know we are not cannibalizing it because our publishers are telling us so. It’s increasing the scale of the entire market, enabling discovery, and providing content for folks who will never pay for content. Instead of having them pirate your content and pay you nothing, why not allow them to create meaningful experiences that you can monetize. We’re seeing 300K downloads per day, and a large percentage surveyed would not pay for games, and are experiencing similar conversion rates as other distribution models.

Are there top tier publishers signing on with Greystripe?

Erica – We do have a number of top tier publishers whom we work with, including Hands On and Vivendi. First, we can be thought of as part of a windowing strategy, like DVD vs. theatrical. Things that are utility based, applications, do very well. We also have content from top tier providers who are experimenting with simultaneous introduction through us and carriers. They are measuring cannibalization careful and finding none – we’re just an addition channel.

What are you seeing as the relative importance of carrier vs. handset vs. direct to consumer distribution?

Scott – For HandsOn most of the revenue comes from the carrier deck. For B2C, it’s less about creating a portal for us, and more about working with larger brands like World Poker Tour where it makes sense – we run a website that offers free play online and then upsell to mobile

Jill – Certainly today, the lion’s share of the business comes from carriers. I’m actually interested in learning more about how much money you’re seeing from advertisers, Erica. There are other channels that are more direct that we are exploring. Over time this will look more like one-to-one marketing. The great thing about mobile is that literally it is always with people.

Mobile as an industry is a real pain, with so much fragmentation and handset standards. Is that getting any better?

Jill – We really like the complicated part. Not only is it a barrier to entry but it’s something that for us is a competitive advantage. We also do localization, day and date launches, event marketing tied in with carrier marketing. It’s similar to any other entertainment business. You can’t let people have a game only on one type of phone. Consumers don’t understand the technical complexity, it has to be seamless for the consumer.

Scott – For us it’s a lot like what Jill said. License partners expect global launches across carriers. We end up doing dozens of unique builds instead of a “high” and a “low”. It ends up creating a lot of extra work that changes the economics of the business.

Kay – What this discussion shows is that if you really want to grow this business you have to look across these issues as a whole. How you distribute. Consumer experience and discovery tools. Billing mechanisms. We are trying to address these as a whole, and those who do will be successful.

What would the panel’s advice be for people making games on other platforms and are eyeing mobile?

Kay – My key advice is do not copy and paste, it will not work. You can ruin great IP and a great brand by copying and pasting. The technology is a lot different from a PC and a console. It has a lot more – cameras, motion sensors, touch screens, wifi, GPS. Don’t just slap what you have onto mobile.

Erica – What’s interesting is that might decrease your chances of getting carrier distribution. But we believe that consumer choice leads to real experimentation, original IP, and reinforce the entire system.

Jill – If I were a strong brand holder I would build a really strong license business given the risks and uncertainties. If I were a developer I’d talk to carriers and publishers. You need to understand the carrier retail environment, and then partner with a publisher as a way of getting in the channel. On the flip side if you were going to develop for nGage, iPhone, etc, you wouldn’t have to deal with the porting issues but do have to deal with the complexity of developing for these platforms. There’s room for innovation. Even the videogame business, which is dominated by large publishers, has room for this kind of innovation (look at Guitar Hero).

Erica – It’s actually a wide open market, and new developers have the opportunity to take share with hit products.

Mark – But most of the volume is through the carrier channel, and that’s a tough channel to crack if you’re two guys in a garage.

Is location a component of games you are developing or see in the market?

Kay – Location is something that needs to develop, especially location based gaming. The only reason it’s not out there bigger is that noone has yet been able to develop a valid business model for it. With GPS in so many devices, it’s something we have to look at. I can’t say more at this point. If anyone here has a great concept, hit me up after the panel!

Erica – We’ll experiment with anything and we have a very cool distributed mostly in Japan that is all location based treasure hunting etc.

Are you seeing things outside the US that foreshadow what we’ll see here?

Stephen – We’re seeing a lot of interest in off-deck distribution models outside the US.

Jill – As an industry we make the mistake of talking about mobile from a US perspective. It’s also not one size fits all outside the US. We’re very successful in China and it’s all very local content that would probably be rejected by Verizon. In Europe networking is just starting to happen in terms of game play. Or in Latin America people are experiencing entertainment the first time through mobile, they don’t have cable or Wiis because of cost.

Mark – Did you just suggest that Verizon is a stronger censor than the Chinese government…

Are mobile games being usurped by casual online games; are these competition for eyeballs, dollars and entertainment?

Kay – Everyone is competing, it’s entertainment as a whole whether movies, mobile, or others. One note is that we are now looking at cross platform gaming across mobile and PCs.

Jill – From the consumer point of view, people are used to being on many screens simultaneously. There’s a lot more gender neutral user base for mobile, so it’s more akin to and complementary with what you see in casual games. That seems to make the brands grow far more than a cannibalization effect.

Stephen – One of our customers is Cartoon Network and we’re taking their online games and immediately bringing them to mobile.

Are we seeing games start on mobile and then go to other platforms?

Jill – That’s where we are trying to go as an industry.

Kay – There are pretty good examples already of that happening, one example from Germany that went from mobile to retail distribution in supermarkets for PCs.

Stephen – The challenge for us is monetization. We are able to sell clicky sticky games for mobile, but not Flash games for online.

Erica – That’s a challenge as games go cross-platform, consumers free expectations transfer to mobile, so advertising is important.

You still haven’t told us how much money publishers can earn through advertising!

Erica – In places like India and China we are seeing advertising with higher CPMs through advertising than through purchase. We’re seeing CPM’s in the US as high as $40, and in India as high as $15.

What do you see for the mobile games market going forward?

Scott – The real innovation will be through multiplayer connected games, which is a way of having a terrific experience, to reach out and add new experiences.

Jill – All these new technologies and devices are not for technology’s sake but to create more immersive, richer experiences.

Stephen – We’ll see much better discovery, the ability to find, share and play content.

Kay – Richer, more immersive experiences. Multiplayer and connected game play going beyond what you can have on your PC because mobile is something you walk around with.

Erica – More UGC, more social viral content now that there is a revenue model that can support free things.

Technorati Tags: LA Games Conference 2008, Mobile gaming, International mobile

Mobile Gaming – A Puppy with Very Large Paws

Greg Ballard, CEO & President, Glu Mobile spoke at the LA Games Conference. Greg’s talk is titled Mobile Games 2008: The Right Stuff.

Glu Media is about a $100 million company in the mobile game space. In 2003 the industry was very fragmented. In 2004, Greg thought that an industry consolidation would take place with companies like Verisign, Yahoo, Real buying mobile game companies. It didn’t turn out that way. Now 50% of the market is controlled by 3 publishers: EA(25.6%), Glu (14%) and gameloft (11.8). The rest of the market is made up of huge numbers of publishers. It’s a healthy business for those that are getting big, but not so great for the smaller players.

At what point, does this become a mass market. Greg thinks it already is a mass market. He focuses on the size of the installed base that you’re targeting.

• 56 million next generation game consoles
• 85 million iPods
• 850 million personal computers
• 1.3 billion landline phones
• 1.3 billion internet users
• 1.5 billion television sets
• 3.3 billion cell phone users

There is a huge untapped market to address. Even if only 5% are playing games, that’s 165 million mobile gamers playing every month. While going from 5% to 6% seems small, each percent gained means 33 million new mobile gamers.

Mobile phone game sales are bigger than DS and PSP game purchased combined.

Every minute glu ports 10 games, every second they sell a game. In 2007, glu sold 30 million games.

The business is healthy, the business is mass market. The question is how to grow the pie. The explosion of new players and platforms in the mobile space. We’ve seen the introduction to iPhone, ngage, and android. This is not to take anything away from existing platforms, but Greg thinks its going to change the battlefield because of the companies behind these platforms who are leaders in the digital media world.

These new players are innovating in both hand sets and in business models. We’re seeing direct sales to consumers, bypassing the carriers. This makes it really interesting for content providers. In this kind of battle, content becomes the differentiator.

Flat data plans, better handsets, better merchandising, better games. 44.7 of smart phone users buy games compared to 19.6 on non-smart phones. The difference is related to flat rate data plans.

Greg compares the iPhone to the PSP and DS in terms of capabilities. The iPhone has more memory and more processing power.

If you look at merchandising, it’s about to get a lot better. Just look at ngage. It makes the buying experience much, much better.

If the business is healthy and growing fast, what’s the one thing holding it back. The issue from Greg’s perspective is the way we think about the value we sell games for.
Playstation titles are at $60. PC games are at $50. DS games are at $30. Mobile games sell for $8. The question is what happens to the price point for next gen mobile?

“It may be a small segment of the market today, but this is a puppy with very large paws,” says Greg.

Technorati Tags: LA Game Conference 2008, Greg Ballard, Glu Mobile, mobile gaming, gaming

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