Short Fuse

That was one of the reasons we decided to focus purely on mobile and get away from social. We had some early success on Facebook and we understood that market but we felt like it was getting saturated really quickly. As players we were using iPhones and iPod Touch a lot more. We thought that was the way the industry is going to move in 2009 and now it's only accelerating. Devices are more powerful, we definitely see mobile as the leading opportunity in the industry right now. For anyone on Facebook now it's a lot more of a saturated market, player acquisition costs are very high and it's very difficult to generate revenue off Facebook if you don't have the very high level lock-down math. It you're not Zynga. It's really tough. But on mobile it's a lot more of a frictionless system, people can come into it easily and purchase easily.

I do think there's space for them. My whole view on consoles and the traditional handheld market is that there's still things you can do with those games, like on the 3DS or Vita, that you can't do as effectively as on mobile. It's possible to do something like Advance Wars on mobile but you're not seeing a lot of that. There's always going to be room for those devices but I believe that market will get smaller and smaller and it become even more of a core market. There will always be a hardcore audience just like there will always be a market for Call of Duty. When you see something like Infinity Blade, that level of production quality, that quality on mobile is going up substantially and what that does is eat in to that marginal player. When I could only play on console I could only play eight games a year. I'm 38 now and I have a lot less disposable time. I'll play Call of Duty, I'll play Arkham City, but otherwise I get my fix off something in my pocket when I'm riding the subway home.

We're starting to see the beginning of the challenges now. We can see what players are playing and their devices. We can see on 3G for example, which is a few generations old iPhone, that we have a very small audience playing on that device. On the one hand you have to support all of these devices, on the other hand you realise the market, the audience is moving just as fast as the devices are and they are transitioning up really quickly. The other huge advantage is that we have games that are on three to six month development cycles so if you're working on a game that takes two to three years to make, you get caught in that transition a year or a year and a half into a game where Microsoft goes and announces a new console. That's what happened for the first Xbox hardware. That's not good news. In this case with great engine technology like Unity or working with a team like Hothead who have their own technology that's capable of doing high-end next-gen console rendering, they love the fact that there's more and more power coming into these mobile devices because they can take some of that engine technology and repurpose it into making high production value and visually compelling games on mobile. The short dev cycle and the consumer adoption rate mitigate that risk for us.

We've just submitted and are releasing a game with Rebellion in the next few weeks, we're very excited about working with those guys. Then we've got a couple of big brands coming in the new year, we've got six games coming in the next three and a half months and all of them have that freemium model associated with them. We're trying to take that flexible business model, where players can get in and play for free, and then decide do they want to play their way through, do they want to accelerate by paying some money, are they happy to have ads? Regardless of genre, all of our games will have that player flexibility in mind. When you get into the big action games, some of the big publishers are still launching $6-$7 games on mobile and that's proven to be a big roadblock for a lot of players.

That's one of the things that motivated us to transition our business model. That idea that a big publisher can drop prices, take a hit and fill up all those top slots. That said two things: paid games are always going to have that risk. The big publisher is basically selling at an extremely low cost to gain market share and if it works for them they are going to continue to do it. So we can either complain about it or make sure our business model works around it. That's where the freemium model works for us. But it also said to us that we need to go towards a publishing model where we have a base of really avid players that are enjoying our games so that when we bring out more stuff we don't need to get into those top 25 positions in the App Store, we can deliver directly to the existing player base. That will be a continued risk for people selling 99 cent games.