People Don’t Use TV Apps, and Mobile Gaming Is Set to Implode

Bold rhetoric from top executives and analysts at CES

If you spent any time walking around the various small cities that the major electronics companies erected last week at CES, you probably noticed how confident their executives were that the average consumer is set to have a much different, more intimate relationship with their TV manufacturer.

Instead of exclusively interacting with their cable company’s electronic programming guide, or through a secondary device like an Xbox, the Samsungs, Sonys and LGs of the world seem pretty certain that everybody’s going to start using their user interface, their movie service, their navigation mechanisms and their app stores as the primary way they use TV. (How many people currently even use the remote controls that come with the TVs they’ve purchased?)

But a handful of panelists at a CES event on Thursday threw some cold water on that dream. To here them tell it, if anybody’s got a shot at hijacking the TV experience, it’s tablet and smartphone makers.

“TV is all about content,” said Henry Derovanessian, vp of engineering, DirecTV. “We’ve launched quite a few apps, particularly social apps. The take rate on these apps is pretty minimal. TVs are there to provide entertainment.”

And while Kurt Hoppe, director of Smart TV innovation and new business at LG Electronics did note that the company has seen “an amazing usage of casual games on smart TV,” he acknowleged that social TV apps and personalized interfaces aren’t exactly taking off, at least on the TV itself.

“Your smart TV is not your computer,” Hoppe said. “Yes, there’s a younger demo that loves to tell the world what they’re doing at all times of day and night. But they’re maybe typing that on their smart phone in their lap.”

“It’s TV,” Hoppe continued. “It has to be very simple. People aren’t going to spend 15 to 20 minutes to drag and drop [a customized app experience] like desktop.”

Speaking of the importance of mobile in most consumers’ entertainment lives, later in the day a group of gaming experts shared some not-so-optimistic assessments of the market for mobile games.

“Mobile games [have a] lack of passion among users,” opined Chris Petrovic, gm of digital ventures for GameStop. "Monetization is a challenge … .You’re going after an audience that plays games for time wasting rather than a hobby. I think we’re going to see the same implosion in mobile coming that happened in social games.” While Petrovic didn’t name names, it was clear he was referring to Zynga’s recent collapse.

Gaming veteran Nanea Reeves, recently named COO at Machinima, said that mobile gaming will have a tough time until the games get more sophisticated, and more hard-core gamers find what they're looking for on smartphones and iPads.

“Core gamers need more functionality,” she said. “The term 'casual gamer' is a misnomer. They are not gamers. They download a few games like Tetris and Bejewled and they play them over and over. They don’t buy a lot.”

And even if they did, “with mobile games, discovery is a bear,” said Reeves. “Even on my own phone its hard.”

Added Mark Friedler, vp of business development at Playerize, “99 percent of iOS apps don’t make money.”

Naturally, there are exceptions. Teemu Huuhtanen, head of M&A for Rovio, maker of the mega-hit Angry Birds, said the company enjoyed 30 million downloads over the holidays, 8 million alone on Christmas Day. He blamed VCs for pouring too much money into the space, leading to companies that are just "paying for users."

Users are not a problem for Rovio. Huuhtanen said that even though certain Angry Birds titles don’t monetize every gaming session, the company makes money on merchandise, such as stuffed Angry Bird animals. Plus, the company pulls in 20 percent of its revenue from advertising, said Huuhtanen.

That’s a rarity though. According to most of the panelists, in-game mobile ad spending is nascent, or “anemic,” as Petrovic put it.

Beyond debating whether mobile is in a bubble, the panelists spent much of Thursday’s entertaining session making proclamations about 2013 (consoles are dead, or maybe not) and taking shots at Nintendo.

Moderator Mike Vorhaus, president of the consulting firm Magid Advisiors, said: “The Wii U is not a new console.”

Playerize’s Friedler was harsher. “I think Nintendo is toast. The Wii U is a crappy product.”