Thursday, November 22, 2012

Tablet is the new console

Just got back from Slush2012 which will be remembered for the breakthrough of SuperCell, the Finnish game company. SuperCell´s games are mainly published on tablet, but you can play them on mobile phones too. CEO and the current gaming rock star Ilkka Paananen mentioned that one of the key things that a start-up entrepreneur must master is the ability to stay focused and say no to all those ideas that are out of scope. And it seems to work for SuperCell. Company is now valued at amazing 600 million and is producing revenue of 750K per day.

SuperCells decision to focus on tablets is a smart move. 67% of the time spent on tablets is games, compared to the 39 % on smart phones (Flurry Analytics, sept 2012) and users already spend more time with apps than web. Tablet users are also older, more female and more affluent. Compared to 3-5 million units that good console games sell, tablet based games outnumber them in millions. Take Rovio´s Angry Birds, they have already over billion downloads. One might argue that freemium model doesn´t muster the same amount of revenue that the console games do. Well, according to Accel Partners, the paying user lifetime value in casual games is 25-35 dollars. That plus billion downloads is..well, you do the math. Moreover, in Q1 2012, the independent game studios´ share of game sessions of was 68%, so not only the tablet opens the competition for the consumers time to a new breed of independent game makers, it also broadens the target group for gaming and increases the value of the market.

As the games on tablets keep getting better and capturing wider audiences, it seems that the "traditional" consoles have to start working hard to maintain their status as the gaming center of the living room. Although the controls and the gaming experience is better on consoles for some titles, rest assured, the growth of the tablet gaming will keep on amazing us all.

Sunday, November 18, 2012

New Entertainment Ecosystem

By publishing good quality games about the movie or TV IPs, studios and production houses engage an audience that might not be interested otherwise. Hollywood studios spend millions of dollars to promote the upcoming movies with TV ad campaigns but seem to forget that the cost of creating a good game is only a fraction of that. Not to mention that if the game becomes a hit, the studios can earn more money. But of course not every game becomes a hit, just as not every ad campaign brings results. Before in order to get the attention of the 15-25 year olds, the studios have to advertise in TV with millions of dollars. What the new entertainment companies have realized, is that by releasing an IP as a game as well as a TV series or a movie, they reduce the need to market with bought media. In fact, the IP ecosystem can be used as a platform to market other brands more efficiently than with traditional bought media. The game drives engagement and grows awereness and monetizes the IP. The TV and movies grow the awereness even further and keeps on monetizing (the long tail is of course the DVD release and the TV rigths). 



Game IP´s on the other hand, need the TV/Movie adaptations and licensing of their games to reach a wider audience and to build depth to their story. This is needed especially with casual games, that have to be simple enough to engage the widest audience possible which often means that the story behind the game is minimal. TV/Movie adaptations bring depth to the game characters and open up the game world which deepen the relationship between the fans and open more possibilities to licensing.

Merchandising and licensing is the third and equally important part of the new entertainment ecosystem. If for some reason the IP hasn´t reached all of its potential audience, the merchandising and licensing will. And will also monetize the IP even further. In order to support the new entertainment ecosystem however, the M&L must be done with the same dedication to quality in mind as the game and the TV/Movies. Again the devil is in the detail and nothing can screw the IP like a bad product and the risk of that happening is high, since majority of production is usually done by third parties.

Rovio´s Angry Birds is a prime example of the new entertainment ecosystem. The company has hundreds of millions of fans that connect with the Angry Birds brand through games, videos, products, theme parks and more. Even Disney has noticed the change, they released Wreck-It-Ralph as a game and a movie simoltaniously and merchandise is sure to follow. But just releasing a game and a movie doesnt make hits. As the saying goes, the devil is in the details. At the end of the day, fans decide whether or not an IP makes it and the fans are well equipped to see through scams. That means that the game and movie studios need to evolve in to entertainment companies that sustain immemerers brand experience through the different touchpoint, be it games, movies or merchandising.