Hi, my name is Luke Stapley with Cross Platform. We are a brokerage company that helps game developers in the East (specifically China and other South-East companies) come to the western market and help Western game companies come to the East. We help you find the right partners for your games and help to make good relationships for good future profit. Today I’m talking with you about Mobile game development in the west and how it differs from the East.
First, though I am talking specifically about mobile gaming, tablet gaming is becoming a part of mobile gaming and most of the discussion of mobile game development will go hand in hand with tablet gaming. Mobile gaming has always been a growing market that continues to increase year after year. I’ve talked to people in mobile for years and they are always excited about the growth in mobile use and how it will lead to better money in the industry. But there are a lot of differences in the way that mobile games are monetized and how profit sharing works. This presentation will help cover a lot of the basics of the game industry as a whole and how mobile gaming works with publishers, marketplaces and advertisers. This presentation is divided into six parts: how big is mobile gaming in the west, The differences between mobile gaming and other gaming platforms, how do developers and publishers work in the western gaming market, what are the profit schemes of western mobile markets, and other questions that I have been asked when talking with Chinese game companies. I hope to help you as a foreign game developer or publisher to understand how the game industry as a whole works in the West and what is expected and required when working with a game developer in the west. If you have any questions or issues after this presentation, please contact me. So, let’s begin…
Before we begin, let’s talk specifically about who is the Western Market? The western market is speaking to English speaking countries in Western Europe, North America and Australia. You will see some companies add other languages to a game to make it more appealing to players in other parts on the western market. America has a large growing Mexican population, while Canada has a small French population in Quebec. The same goes with Western Europe with English, French, German and Spanish also included in many games. Most game makers will follow English, French, Spanish, and German as the languages to use in localizing games. This is not always done, but can be if needed.
So lets start by going from the big numbers to the smaller information. First, 58% of Americans and 61% of Europeans are playing a game. Either PC, console, handheld or mobile. Newzoo.com, a research and consulting firm, estimates that the mobile game industry will make an estimated US $22.8 billion in 2013 in just North America alone. This is 32% of the total sales with Asia/Pacific estimation US $25.1 Billion (36%) of sales and Europe/Middle East/Africa having $19.5 Billion (28%) Having your game only in one region seems to be no longer something anyone can do in any country. According to the GSMA, People are spending over 126 minutes a day on their phone. Of the over 2 hours of phone use, people are using 14 minutes (about 11%) of that time playing a video game. How many games are people playing? Though I’m not sure, we do know from ABI Research that in 2012, most users have on average 37 different apps on their phone. I would assume that at least 3 of those apps are video games if not more. This means almost everyone has a game on their phone and many are willing to buy a game, buy in-game items, or click on advertisements as they play.
Though this talk is specifically for only discussing the mobile market, I thought I would also talk about the other platforms for a few moments before getting to the specifics of Mobile. When we talk about the video game industry, we are usually talking about 4 parts: The console/handheld sector, the PC sector, the mobile game sector, and Amusement/Arcade sector. The most popular today in the west is Console and Handheld sector. The games are beautiful, artistic, and polished. This sector can be very frightening to those with little to no experience. This is probably why many choose to go other routes such as PC and Mobile. The other reason may also be budgets as most games are heading into the multi-million dollar budget for both types of games. Many believe that the Chinese market is still very young in this market and needs more time to build up a strong reputation that USA, Japan, and parts of Europe have shown. PC Gaming is the second largest group and probably the most fractured as the types of games that players will play are widely different. Some will stick with RTS type games like Starcraft, Civilization, or WarHammer 40k. Others to RPGs, FPSs, or other smaller game types. The games that are gaining ground are MMORPG and Battle Arena games such as DOTA2 and League of Legends. Both have very strong loyalty but still small compared to other gaming choices. We’ll talk more about this in a later slide. Amusement and Arcade games is an industry slowly dying because of technology and how people live in the west. Most stay home and play games on powerful computers instead of going to the Arcade to play. This has led to more innovative gaming types such as dance and racing.
With Console Gaming becoming a banned item in China, the game market has lost a huge chunk of the gaming sector. Within Hong Kong, Taiwan, and other parts of Asia, they have had the opportunity to play high quality games ranging from exercise games to NBA simulation. Though still illegal, consoles still enter the market through grey means. (i.e. illegal to sell, but still sold in small shops or online stores with little prosecution or arrests) With all of the issues of buying and playing console games, console game development in China continues to grow as many big game companies such as EA, Ubisoft, and SEGA have come into cities such as Shanghai and Beijing to create studios that help build art, QA test, and even build full games for consumers around the world. The work being done in this sector of China is becoming very polished and many are looking at what could be a great future for console gaming industry inside China.
PC Gaming is still the second most used gaming with consoles being number 1. The ESA (Electronic Software Associtation) says 68% of American gamers play games on a Windows PC. At the beginning of 2000, most gamers were buying their games from a brick and mortar store whereas today this trend has gradually changed to online purchases using DRM thanks to the increase use of broadband. This has allowed companies like Steam, EA, Amazon, and Good Old Games to make sizeable profits and also allowed indie development to broaden out to more gamers. Games like Minecraft have started as indie games and quickly grew into fan favorites. With indies becoming a larger, other game types are starting to wane. MMORPGs that were once powerhouses of online gaming are at saturation points and many of the smaller online games have had to close shop leaving only a few larger groups to keep a hold on to the rest. Some believe that MMORPGs are starting to take hold in the west on mobile platforms and may become a future opportunity with better mobile connections to the internet. Current trends show that Arena type games such as League of Legends and DOTA2 are gaining in popularity due to eSports. Starcraft 2 also continues to build off the eSports interest.
Here are two graphs talking about the types of games people online are playing with which games are being purchased in 2012.
PC gaming will continue as PC and mobile usage continues. This chart can show you that the gaming industry is becoming as large or even larger than other types of entertainment.
Note: This graph shows subscriptions for over 100 different MMORPGs around the world. For detailed information in English: http://www.newzoo.com/trend-reports/mmo-trend-report/
As I mentioned before, there is very little sales going on in the Amusement/Arcade gaming due to the loss of business for arcades and less amusement centers all around America. Due to this issue, some arcades have installed more interesting ways to get people to play their arcade games. Though shooting and driving have always been big games, music games using dancing, playing an instrument, or tapping patterns has become a big part of today’s arcade. Also the need for 2 player games such as Air Hockey still show signs of interest. The other two parts that still have some merit is amusement games for small kids such as rides and “whack-a-mole” type games and Casino gambling games. Casino gambling games are on the rise as more casinos open up in US cities and Indian reservations. This is a section of gaming not many in the industry like to talk about due to its vices, but is very profitable among a few groups. Most are slot machines or card games. Pachinko gaming has no popularity in the West.
Mobile gaming is very exciting right now as most mobile phones are starting to overtake the handheld gaming devices many of us in our youths had. A typical Android phone can play almost any Nintendo game from the handheld side and even some console games. The power of Smartphones has made game development on the device much more of an interest for all game makers in the west instead of an afterthought or experiment from years past. Let’s quickly look at the numbers. Mobile gaming has increased by 35% in the past year with over 100 million players in the Western market. according to the PricewaterhouseCoopers, they estimate the mobile game industry to make $12.7 billion US in 2015 worldwide. And with over 36% of gamers in the west having a smartphone, this is a great opportunity to grab gamers from the west as well as China. With the ease of purchasing now more available in western markets, 32% of gamers are paying for their games on mobile. Most players in the west are accustomed to three types of games (F2P, P2P, and D2P) Free to play usually will allow for advertisements or some micro-transaction within the game. Pay to play usually is seen as a full game with little to no advertising and very little micro-transactions that will not hurt game-play. Demo to Pay is widely used to entice players to try the game out in a short version and allow them to transition to a full paid game. Most people now are either in the Android or Apple iOS model but as I’ll show in a further slide, there are still a large percentage not in this group. Where I see the West having issues trying to understand and learn the processes of user comprehension in mobile gaming, I see a lot of big growth coming from Asia and how they have used their years of mobile expertise to take over the market. It’s only up to now that the west is learning the hard lessons that Korea, Japan, and China have learned already. Later I can give you an example of how a game in Japan is correctly profiting in mobile gaming.
For more understanding of the game industry, here are the platforms in the USA and their market share
And here as well for the UK, you’ll see Windows platform is gaining more ground in the UK than USA
So who are these players? Well Newzoo research has shown 83% of gamers are from age 11 to 35 years old. Among men and women, it is a split between the two of who is playing games at almost 50/50. But the graph changes when we look at who is buying items and games on the mobile side. Most males are purchasing them and with numbers in iOS and Android. Most mobile gamers are full-time workers. Google play is allowing more low income families to buy and play games due to the cheaper prices of Android devices and most people who pay for gaming spend roughly $12 USD per month (ARPPU) on mobile gaming in the USA according to SuperData Research. The big question that people are asking currently is if Daily active users in the west are better than Monthly Active users in the west. From research done by Amazon.com and presented at Casual Connect USA 2013, it’s found that stickiness or how many times a player returns to the game every day or month is what makes a game great in the marketplace. This is very important as most players on mobile will only have a few minutes to play on mobile when on the bus, in the coffee shop, or in bed and will want to play the same game for months instead of days with continual new content. This stickiness factor of 20 – 30% is seen as pretty good among social games and also with mobile. Most developers will follow statistics such as MAU, DAU, Stickiness, ARPU (Revenue/MAU), and ARPPU (Revenue/purchasing users). While Japan kills in ARPPU, ARPU in the West still is very good. Please note that the work situation and income graphs are for all gamers and not for those who only pay for games.
Here is a chart of ARPU for the iOS market from Apps Annie Casual Connect 2012 slide.
Here is an example of the growth a game can have in the mobile market. Puzzle and Dragons was released in February 2012 in the Japanese iOS market. It has now reached both the Android market and English versions have been released for both. The game is a battle-puzzle genre that allows players to own a group of monsters that go through dungeons to seek out treasure. Players can upgrade their group of monsters by purchasing rarer monsters or pay to continue playing in the dungeon and not lose the loot they won from prior fights in the dungeon. The company has over 19 million downloads in worldwide and is currently making about $4.5 million US a day with an estimated gain of $1 billion US this year. This is at the same level as many AAA console games that are given a much bigger budge and advertising. As an example for game makers, the games don’t always have to be flashy or wonderful artistically. Most gamers on mobile are looking for great gameplay and a consistent game experience when it comes to mobile gaming. Its goals are much different than some parts of the game industry.
Currently we are at the very beginning of working to bring mobile games from China to the west. There are already a few social games and MMORPGs that are already doing well in the space and starting to get popular. But no one (other than small independent companies or small groups of game makers) in China is taking the western mobile gaming challenge. There are rumors and money being set forth with a few news stories in the west talking about deals made at ChinaJoy this year. One such deal is 7th Road’s game Wartune to the mobile side with support in the west from Kabam. Though this is a small start, it’s small drops that come before the rain showers.
Here is a chart showing future Smartphone penetration for USA, UK, and other parts of Europe.
Game Developers are by in large the same in all countries. All create an idea for a game, create the gameplay mechanics, art design, test, rebuild, bug check, and publish the game. The only differences are time, money, and resources. The positive about most mobile game developers are that the costs for creating a game are extremely low compared to PC, Console, and Amusement gaming. The only big issues that a developer coming to the West will need to worry about after a game is complete is how to monetize, integrate social sites, and getting players to play more games in your library.
If you wanted to create a game company in the west, you have a few ways to make it. First lets go the evil route of VC. Though many may say Venture Capital is a part of the industry, it comes with a lot of rules, incentives, and other things that as a developers you may not agree with. Most VC will work with you as long as they get a percentage of the total sales or your purchase price when you are bought out by a bigger company. They may also push you to create games at a faster speed and may even ask you to create games you never wanted to make. Though this sounds a lot like a publisher, most VC are not that in tune with the industry and could create disasters in your company. Prior success from an older game is the best as you are starting to build a company. This is great and allows you to still have freedom in your creations. The bad news is that your budget is set pretty tight and you have to stand by it. Though it’s a problem, it’s something a game developer would rather have then a VC or publisher breathing down their neck. Finally, starting a company from scratch is very hard but rewarding as you are able to get things done the way you want. The stress for success is high and long hours maybe put in. But those who succeed will be rewarded well and determination has made companies built in a attic turn into large corporations. The point for all of this is that mobile gaming is probably one of the best to start work from. The costs to create a mobile game are probably the lowest in the industry with many games created with a budget under $1 million USD.
The biggest thing in USA and worldwide is Facebook and Twitter. Both social services have greeted players with opportunities to share their high scores with their friends and recently create cloud gaming, allowing you to continue your game online after you played in your phone. With this in mind, it’s important to understand how to use Facebook and other social sites. Currently, Facebook is reaching out to game developers with the idea of allowing players to share their achievements in games with their friends on their friends news feed. This allows others to either try to compete with their friends or to give interest in the game. Compared to RenRen and other social networks in China, there doesn’t seem to be any large difference in this type of advertising. Though Facebook is starting to create cloud gaming. This allows players to save their games on their mobile phones and continue within Facebook’s gaming center. This allows more opportunities to keep the player active in your game. This along with new monetization formats are making Facebook implementation very important. Twitter still is used for smaller gaming announcements like high scores and have difficult integration with games on a phone. But integration is considered highly liked by players Other companies are now getting into the game with Weixin (WeChat in English), Kik, What’sApp, and Tango creating other outlets for games to be more social. This growth is still young and but growing quickly.
The big question people ask me are what marketplaces are available for the Western market other than the App Store or Google Play? There are a few additional marketplaces that are available for the developer or publisher. The question comes to play as to how they both monetize from their games. Most marketplaces currently only do a percentage split of monetization either using their in-house advertising platform or on purchases from the marketplace. The amount of marketplaces are very small compared to China’s tens of services. But the relationships are more trusting. Most (if not all) marketplaces only ask for an API to be installed and won’t ask for source code or other modifications to your game. Most also will ask for the developer to create and send updates to their games when required. A brief description is also needed for the game. Some marketplaces will have sales for games and may advertise your game in the marketplace. This is at times spontaneous or can be placed with special sales events that you create with the marketplace manager. Gaming the marketplace system, which happens constantly in Chinese marketplaces, is highly frowned upon and is not considered a positive thing in western companies. Promotion by other places (websites, forums, facebook, twitter, etc.) is highly recommended.
So the now for the real stuff. The stuff you came here to find out. How do I make money in the game industry in the West. With mobile there are four very basic ways: Free to play with revenue coming from advertisements, Purchases of the game either from a stand-alone game or a game demo available for free to test the game out, in-game purchases either as large section purchases or micro-transactions, and cross promotion of your game from another game in your library. Advertising revenue is usually the biggest push for gamers as most gamers are either too young or still fearful of purchasing a game or items for their game. This allow gamers to view ads from various partners in the ad-roll. What percentage of money you get and quality of ads from the advertisers depends on your advertising service. Some are very basic with Google Ad-sense to Extreme with video or high quality ads. Though in-game purchasing has been a very common item in Asian markets, it’s only been popular in the last 5 years in USA and Europe. Consumers who enjoy the games are as happy to pay for in-game items as most Asian gamers, but don’t expect a high amount of these types of players as research sees more gamers playing the games rather then buying in-game items. Cross promotion is very popular as companies will promote other games within their collection to gamers to allow them to play more games and add more brand loyalty. Brand loyalty is extremely successful in the west.
This graph probably shows why many Chinese companies want to get into the west. Mobile ads pay super well in the west compared to Asia. So F2P games that are Ad supported are getting a bigger pie than Asia.
When a developer markets a game, they only have two options to promote their game: Use a developer/Ad company to do the work for you or do it on your own. We will talk a little bit later about the advantages of a Publisher and how they promote your game, but instead I’d like to focus on the second option, which is to Market the game on your own. This can place a lot of pressure on the game maker. Most of the work done in the west are first creating a memorable name for your game including great icons for the app and optimizing the Play store. Most optimize by making great game screenshots, good descriptions of the game in the description section, and adding key words in the description. We recommend all of these with a few exceptions such as keywords. We recommend keeping the list short and at the bottom of the description. We also HIGHLY recommend not to abuse the rating system as most people can smell a fake review from a mile away.
In this section I’ll talk very quickly about the publishers and what they can do for you. There are very few in the mobile market, so trying to get a publisher to work with you is very difficult. Most mobile companies are independent and probably will continue to be so until the gaming market in Mobile grows. This is a great chance to test out your games and create a name for yourself in the market before larger publishers come in to take their share of the market. If you are lucky to work with a publisher, makes sure to understand what is and isn’t going to happen and what each side is required to do. Those who have loose ties with publishers don’t always get a second or third game with them.
What is a publisher? A publisher in Mobile and other gaming in the west are game companies that either have their own game development studios or will hire a developer to create a game. At times, they will buy either a company or game. But this is rare and not without the developer having some incredible technology or name recognition. The publisher will most likely do a lot of things that a regular developer may either not know what to do or have the resources to do. First they can help you find resources to make your game better, either helping you with better staff and coordination with elite developers, they can help in setting up how your game is advertised with more integrated or specific ads, they can bring more recognition to your game in the media, and they can help you with giving you suggestions that will make the game better for the gamer and more cost effective. There are other business items they can do as well like licensing and other issues that would be a nightmare to work out for a developer, allowing them to only worry about making a great game. Finally they can help in giving you powerful data that can help you to increase the fun and interest of your game either with testing the game with test groups or having it go through a few courses of hard QA testing. This allows your game to look more polished than most games out on the market. What do they want from you. A very good product and most likely a very large share of the game and most times, purchase of your intellectual property. Therefore, anything you make will no longer be yours and will be at the will of the publisher. It’s a very difficult to give up ideas, but if they are very good, you will be making great money.
There are two distinct ways that you are going to be paid if you are building a game for a publisher in the west: Either they invest into the company such as a venture capitalist does with their money, or most likely a direct cash flow as the project continues to grow. With investing into the company, the publisher will get some introductory money with a very low percentage of return when the game is released. This in turn creates a win for the publisher in case the game that may have not seemed to be a big seller will get richer for it’s risk. This is not very typical and may not be available for most game developers. The most common approach that has been done for decades in the industry is the payment through milestones. This means that as the game completes certain tasks, the publishers will send more cash to the developer to help them continue making the game. This has worked extremely well as this allows the publisher to see how the project progresses and give more feedback to the developer. This is much tougher however on the developer as the game has to be looked on again and again and cancelation of cash is always hanging over you. This also is an issue when poor publishers do not give money to the developers on time.
Luckily with publishers, they are very well honed in the art of advertising and either will use their own advertising models with ads in magazines, TV, websites, and other places to get the word out about your game. This is where publishers shine as they can also find which people will enjoy your games and specifically target advertisements to them. Unless you are great at gorilla advertising, this is the best you can get without spending a lot.
This slide was added to help you understand the ways you as a developer can access western and chinese groups to help build a better game, better tracking, better ads, and anything in between without the need of a publisher. I’d like to personally thank Jameel Khalfan of Pocket Gems for this slide as it’s the best slide discussing everything mobile gaming in the current market.
First question: How do advertisements work in mobile games? Answer: Most advertisements are either banner ads that are shown during the game or in menus. The other are pre and post roll advertisements where a player sees an advertisement before the gameplay or after gameplay ends. These can be videos or pictures of either in-game items to buy or other products. Second question: Does my game have to have high tech graphics, sounds, and a big team to be successful? Answer: No, many simple games with simple graphics have made it to the top. The biggest thing gamers are looking at is quality improvements and fun game mechanics. If you don’t do both, you will never get a great mobile game. Third question: Can I get a license for my game from marketplaces? Answer: I get this a lot. There are no upfront payments given from a marketplace to the developer. Though this model is popular with Asian MMORPG groups, this has never been done in the west. There may be exclusitivity licences, but this is extremely rare today. Fourth question: What types of games do westerners love to play? What game elements should I include? Answer: We love all games. Just make sure to follow the casual game mantra “Easy to learn, Hard to master”. Allowing players to have a great 3 – 10 min game experience will give the player multiple game plays and increase their interest to purchase items or click on ads. Fifth question: What should I look for in my game that I might not know about? Answer: Please be mindful of explicit nudity, language, and violence. Also be aware of cultural taboos with art content and descriptions within the game.
If you are serious about entering the gaming market in the west with your mobile game, please contact me for more information and I’m happy to answer most questions. Thank you.
Mobile Game Development in the West (English)
Mobile Game Development in the West vs. East
Luke Stapley – Cross Platform
Please view my notes for more information
Mobile Game Development Introduction
How Big is Mobile Gaming in the West?
The Differences Between Mobile Gaming and Other Gaming
How do Developers Work in the Western Game Industry
How do Publishers Work in the Western Game Industry
What Are The Profit Schemes In Western Mobile Markets
How Big is Mobile Gaming in the West
The Western Market
– USA (English, Spanish)
– Canada (English, French)
– Australia (English)
– UK (English)
– Western Europe (English, French, German, Spanish)
How Big is Mobile Gaming in the West?
58% of Americans and 61% of Europeans are playing games.
Mobile Game industry will make an estimated US $22.8 billion in
2013 for North America
People spend more than 126 minutes a day using smart phone
In 2012, Worldwide Smartphone users have on average 37 apps on
People using smart phones play video games on average of 14
minutes per day. (~11%)
Sources: GSMA, The Mobile economy 2013; newzoo.com; ABI Research; ESA, Essential facts about the computer and video game industry
Difference Between Mobile Gaming and Other Gaming Platforms
– Popular Gaming in West vs. China
Sony, Microsoft, Nintendo
Banned in China since 2000, Consoles in China are a grey market
Many game developers overseas use China for game assets and
more recently full games.
Rumors of opening up console gaming in China are growing.
Gaming in the West vs. East
– 68% of gamers play on a PC
– Windows gaming is still King!
– Most gamers buy online using Steam, Origin,
Amazon.com, GOG.com, or other means.
– Gamers are playing both Indie and High-end games in
all different game styles
– MMORPG numbers are falling
Very popular in the early 1980’s to late 1990’s has now become a
niche market due to PC and Console gaming.
Very difficult market to work with in the West due to it’s low sales.
High sales now are only in Casino games for places in Las Vegas
and Atlantic City.
Mobile gaming has been increasing by 35% in the past year with
over 100 million gamers.
Estimated to make $12.7 billion in the USA market in 2015
32% of mobile gamers pay money for games
36% of all game players have a Smartphone.
Most players now have multiple options for playing and paying for
a game (purchase, in-game ads, micro-transactions, demos)
Most OS creators are now catering to game makers to help
promote their devices
Mobile Market Share
Source: Comscore, May 2013 U.S. Smartphone Subscriber Market Share
How do Developers Work in the Western Game Industry
Getting money for your game idea
Make the game
Integration with social sites
Selling your game to the user
Getting money for your game idea
Prior Successful Game Profits
Start from Scratch
Integration with social sites
– Creating cross platform play
– Creating better social experiences
– Adding more monetization to game makers
Selling Your Game to the Player
What is expected for a marketplace?
F2P (Free to Play)
– Direct Purchase
Allow a Developer/Marketing company to market your game.
Marketing your game on your own:
– Creating great name players remember and great icons for the game that
helps the player want to try.
– Advertise in Ad networks
– Using social networks (Twitter, Facebook, BBS)
– Continue retention rates (push notifications, new updates, optimize, etc.)
– Watch how gamers play your game
How do Publishers Work in the Western Game Industry
What is a Publisher
What can they do for you?
– Payment of game (profit sharing?)
– Advertising the game
– In-Game Advertisements
What do they want?
What is a Publisher?
They work with strong creators releasing games that are
usually seen as better games than most self-published
Usually will have resources that a developer may not
have (User acquisition, monetization best practices, ingame sales, analytics, etc.)
Help collaborate with the developer to make the game
better for the player.
Publishing models in the West
Two different types:
– Investment of the company
• Paying the company for the game with low percentage of
– Direct advisement of a project
• Paying a company for creating the game through milestones.
Publishers can create their own advertising or use other
Paid User Acquisition
Source: Jameel Khalfan, Casual Connect: When Publishing Works for Free to Play Games
FAQ on Western Game Development
How do advertisements work in mobile games?
Does my game have to have high tech graphics, sounds, and big
teams to be successful?
Can I do licenses with my game?
What types of games do westerners play? Good game elements?
What should I look for in my game that I might not know about?
My Contact Information
CEO, Cross Platform