Live from New York, we’re at the Inside Social Apps conference at the New Yorker Hotel. From freemium to sponsored apps, developers are actively trying to determine how and what users will pay for their goods. Inside Network Managing Editor AJ Glasser talked about the current marketplace with president and chief business development officer of RocketPlay Matthew Cullen, KIXEYE’s VP of product marketing John Getze, Pocket Gems CEO Ben Liu, Happy Elements’ senior director of corporate development Mike Lee and Wilson Kriegel, the former CRO of OMGPOP/Zynga Mobile.
The Following is a paraphrased account of what was said on the panel.
Glasser: Prior to 2012, monetization was limited to Facebook Credits, so now we’re shifting gears to discussing the nature of monetization and also the ecosystem which they monetize. To start, with John, your stuff is free to play. How do you make money?
Getze: With time! As they progress in the game, we want to get them interested and invested. Then they want to speed up the process.
Glasser: You are monetizing patience! What is the main activity that saves time?
Getze: Probably repairing your base.
Glasser: Mike, how do you monetize?
Lee: Through love. In our main game, we have fish [who can fall in love with each other].
Glasser: And Matthew?
Cullen: We have our users, predominantly men, and we give them more areas to gamble on. Also virtual currency to get a daily bonus.
Liu: To express themselves. We don’t think too much about monetization, but more fun. Our top seller is more space to show the kind of thing you want to create.
Glasser: For you, Wilson?
Kriegel: Usually have three tier: Free, free to play and premium.
Glasser: Now design philosophy. Before free-to-play hit North America, many companies didn’t know. Others had monetization locked down, but not gameplay.
Liu: For us, it’s about the fun experience players can customize. It starts with that. We think about starting something fun and engaging. Monetization comes with that.
Getze: You can’t monetize fun. If it’s not fun, putting money on it isn’t going to help. KIXEYE started with six of us and there was a vacuum on Facebook about games we wanted to play the core category. If you’re not a recognized entity or brand, you need to get a user involved. If I see Madden on my iPhone, I have an idea of what it will be like.
Kriegel: Fine line, where a money-making game could not be fun, but lots of fun games don’t make any money. It has to be a conscious effort about your target market and so forth. It can’t override the fun factor, but there are lots of pieces that come into play. It is a key variable.
Cullen: We were similar. We wanted to do something that was fun for men in the casino vertical different than cards. Just recently we focused on monetization – once we got the metrics to work, got it sticky, then we focused on money.
Lee: We try to keep things sticky and also try to monetize players, but they are often separate motivations. One game has three million players, so we can crosspromote.
Liu: We created the first isometric battle game and were successful with it. Mobile is still young, so coming out with an innovative or first-time experience will often bring monetization.
Glasser: If you have a great game and you realize it can make money, how do you add monetization to it?
Kriegel: Advertising can often be a part of it. Like Draw Something at OMGPOP, it had a large amount of views, so advertising was coming in.
Glasser: So is there anything you can do on the design side?
Getze: When we did Backyard Monsters, it didn’t monetize much since we were figuring out our audience. Six months in we added monetization for decorations, but it didn’t do well. KIXEYE is more of a service than a product since it gets updated every day.
Liu: We still consider ourselves indie developers, so we work with other indie developers for partnerships and exposure.
Glasser: Each of your companies monetizes at a different rate, so how do you know where to go.
Kriegel: These companies are founded by a group of people with a particular mind set. For us, we were founded in New York City, so lots of Flash developers here, but not on the backend. However many times we tried to do a farm game, we sucked. With Draw Something on the different platforms, we focused on our core skill sets. The monetizations fell in space. We did half-million plus MAU.
Glasser: How much did Zynga help with that?
Kriegel: By the time Zynga acquired us, we were huge and already sucked out the DAUs. We had 20 million DAUs a month and a half in on a $60,000 budget. We did our best to capitalize, we did monetizations. The free and paid version could play the same app. It was an exciting time where social networks could help you grow without spending money and then get money without spending as much money. Zynga helped, and now there is a TV show coming out. You have to build games that are franchisable, otherwise you can’t have a business.
Cullen: We realized that men were underserved, particularly on Facebook… the challenge is that sports betting is time based, unlike slots, so you have a lot of downtime, so you have a lot of people needing other things to do.
Liu: I think there is something to look at analytics with the two previous examples, but you also need authenticity. Authenticity and building something you love and feel passionate about has to be the roots.
Glasser: How do you decide what platform to focus on?
Liu: We strongly believe the future is mobile. We’re experiencing a huge sea-shift from desktop to mobile computing that will be as strong as the beginning of the Internet. We’ve already seen iOS become a major platform, Android rising and Amazon becoming a major platform.
Getze: We’re just thinking about mobile. We haven’t seen a good RPG or a FPS. I can’t see playing Call of Duty. You have to be, designwise, cognitive of
Kriegel: We’ve jumped to different platform. We’re all sitting pretty here, as all of our companies are well capitalized. But if you have a half million bucks to do a Facebook game and monetizing it, good luck with that. You can build shitty games at the beginning of a cycle, but later you can’t get away with it, including the cost of the resources, marketing, etc. You have to decide which is best suited and what will execute best.
Cullen: That’s exactly why we did our deal with Zynga for Facebook, probably will do the same with mobile. It’s so fragmented and so tough to get in and build critical mass. Our first slots game will be iPad only in January. We are going the route of publishing as we want to conserve our cash.
Lee: I’m assuming you’re talking about net revenue! One of our games for Japanese feature phones is one of our most profitable.
Glasser: On that note, you can have money coming in, but it could be too cost expensive to be profitable. Should you go to a publisher?
Liu: You need 100 percent focus on making a game and it’s hard to be distracted. It’s hard to get new installs, companies with millions of users. It’s a matter of focus. Make sure you’re using your limited funds in the best way.
Kriegel: If you want to self-publish like KIXEYE, you want to own the data and so on. But for each partner you take on, you’re still shifting cost for engineering and resources. Marketing time for direct users acquisition goes into development, or what have you.
Cullen: I’d agree with that. It really depends on your deal, though. We’ve seen some awful deals. If you think about the acquisition cost to acquire users, I don’t even need a spreadsheet to know those numbers.
Glasser: How open would you be open to partnering for new markets overseas?
Kriegel: Definitely, with Japan, Korea and China. Russia is coming up as far as localization, opinion and style. I think each key market has its own value.
Liu: It depends on what stage you are on as a company. Early on, us taking on a partner was a waste of time. The US market can handle different genres, and its not worth taking on the distraction of traveling to other countries. I think it’s a later age thing.
Lee: We think US developers are very lucky in that they have a large enough market. If you’re not based in China, Japan or US, you may not have a market big enough to grow. For us, we expanded to other parts of Asia.
Getze: Social gaming companies are generally not social. Its asyncronistic, you do your thing and then you spam friends to get power. That’s why Draw Something and others are doing well, as they are actually social. As far as going to a publisher, you’re giving up a lot. They have a lot of developers and they are focused, really, on one, like the music business.
Kriegel: Angry Birds had EA, which they broke away from later, but they had 50 games, no money, and had to develop. And all entertainment is a hit-driven business.
Glassser: Predictions for the next twelve months?
Cullen: For our space, a massive influx of folks in the gambling space. I think there will be some consolidation, a lot of stuff out there.
Getze: Depends on the area, but I think mobile itself will be huge.
Lee: We can bet on the fragmentation of the platforms. We’re glad to see different, non-Facebook platforms come into play. The fragmentation is giving the Asian developer a leg up.
Liu: As I said before, I think mobile is the future. Great time to be a mobile developer. There are all these platforms where you can go directly to the user, no barrier to entry. You also see a more hidden competition with messaging and other types of apps helping people discover apps. As far as genres, it really is the early part of mobile. You’ll see in the upcoming year the shift in new genres and ideas.
Kriegel: Four is core gaming, like KIXEYE, as well as casino gaming. Tablets will be a big part. Communication with gaming will be trends. If you look at the history, though, of gaming in the past 20 years, it is about being AAA brand. If you are the main brand target of a genre, you will make the most money.