Glu Mobile's Kristian Segerstrale: Part One

I think the mobile market has grown over the past four years from nothing to a two billion dollar industry, and it continues to grow. I think also that if you look at the industry's structure, and the availability of information in the industry, we have matured a lot over the past couple of years.

In 2004, you saw the emergence of the serious players in the industry, and in 2005 we started actually taking ourselves seriously enough and the industry started maturing to a point where consumer data started becoming relevant.

With this research, we wanted to understand our customer base better. We think that the industry still doesn't have enough data - we make a lot of implicit assumptions. We think that the mobile gamer is probably the same guy as the console gamer, we think it's probably an eighty-twenty male-female split - which actually turns out not to be true. We make a lot of implicit assumptions based almost on our own tastes and what we think might be successful out in the market.

We think that the industry is at a stage where we're reaching the kind of maturity where we need to begin to understand our customers. A bunch of other companies have also contributed to the market with some research, and we wanted to really dig a little bit deeper and really understand who the core consumers for our products are, and how we can, as an industry, target ourselves better and target our communications towards the most relevant consumer group in the market, and thereby help the industry to grow.

There are probably a couple of things. While not necessarily surprising, I think one of the interesting things about the research is the fact that the male-female gender split is so equal. I think that we are fundamentally talking about a very different type of target market from the console gamers.

The second thing is that the target market skews so young, and that you actually have, if you look at the 16 to 24 age group, around twenty per cent of people who have actually purchased games for their handset. That's something like four times the average across all UK mobile subscribers. So you actually have a market that's very heavily skewed towards 16-24, and very gender equal. That's an interesting piece of data.

If that's the data that actually defines what the market is, then the other piece of data that's interesting from a marketing perspective is the perceived price sensitivity of games - the fact that price is still the single biggest factor in determining purchase.

I think it's a wide sociological trend in some ways, if you look at different generations. If you think of people who were born in the fifties and sixties, they're very much a TV and radio generation, just like people born in the seventies were users of early computers like the BBC Micro and the Spectrum, and for some part of the population the early availability of computers was quite exciting. They by no means grew up with them, but still the knowledge of those things was available. If you then look at people who have actually grown up in the eighties, gaming started to be pretty much everywhere in terms of the availability of home computers and PlayStations or other home consoles. They were just a fact of life as you grew up.

If you then look at people growing up in the nineties, everybody has got a mobile phone. It's their primary, their single device that all young people have - it's something that they've simply grown up with. If you look at some of the data, not just from our research but some of the data that was released by, I think it was I-Play, about the age group from 12 to 16, something like 80 per cent of "tweens" actually play games on their mobile phones.

It's staggering, and it's the result of the fact that you have an entire generation who have grown up taking the mobile phone as their single essential device, as the one thing they wouldn't leave home without, and that they are perfectly comfortable both communicating with and using for entertainment purposes.

I would think so. If you look at how young people use their phones, I think it's equally essential for guys and girls, and I think they all try to get the most out of that single personal information device that they have.

I think markets in general are quite different; as an industry, we should always be wary of taking one data point and then assuming that that's the case across all other geographies. At the same time, I think that specifically on the skewing young, and on the broad conclusions, I think those are quite likely to be applicable purely because of the technological evolution has gone roughly at the same pace in these different places.

I think you're likely to have this new mobile generation, who have really taken the mobile phone to heart as opposed to just thinking of it as an extension to their home phones; it's really a device in its own right, which you carry around not just for voice communication abilities but also because of its ability to do other things.

I think that increasingly, we'll see companies focusing their advertising and their marketing efforts, and becoming more sophisticated and focused in their marketing as a whole. We've seen this in console gaming a long time ago, where you have products that are very tightly targeted at specific demographics. I think that as data becomes more available, mobile publishers will do the same. That's one thing.

The second, perhaps more important thing, is that this type of research and other research like it pinpoints those specific barriers that we still face as an industry, and can help us work together with our operator partners to actually grow the market. Things like the price sensitivity, things like making sure that we don't just sell games as one big chunk for five pounds, but also being able to sell in smaller bundles so that the vast majority of prepaid customers who fall into our target segment have better access to those games. Being able to provide a more sensible, more granular billing model for consumers of games is clearly important, as well as improving the overall accessibility of games.

So I think it both helps us target our message, and it also helps us pinpoint those things about the current mobile games ecosystem that we should probably focus on evolving in order to grow the market as a whole.

We did do some work on that. The interesting fact there was that if you look at the biggest market, the 16 to 24s, brand was actually only the third most significant factor that would influence a purchase decision. The single biggest influence was cost. The second, importantly, was the look and the overall perception of quality of a particular product, and only the third one was brand.

I think it shows to some extent that we are very much, as an industry, still in a trade marketing situation where at least half the reason why publishers do license brands is because brands will look good to your trade partners, and it will help you to secure your position, rather than actually making a big impact with consumers.

Brands are very important, and as a company we believe in brands as a way of communicating a new form of entertainment to customers. Just like in any kind of consumer product scenario, having those beacon brands available in each category, being able to walk to a household aisle in Sainsburys and seeing Fairy Liquid and Ariel laundry powder in that aisle helps you as a consumer to identify where you are and what you're about to purchase. It makes your life easier in some ways, and helps the overall communication - so brands are clearly important.

What the research shows is that in addition to brands, moving forward as the industry matures, there probably will be room also for original content and content which is tailored to the mobile device - given that it does seem that from a pure consumer perspective, once the access issues are resolved, brands are important but they're not perhaps the most important thing.