Trip Hawkins Says the Way to Monetize iPhone Games is Virtual Goods

Trip Hawkins, the founder of Electronic Arts and once heavily involved in both Apple Computer and 3DO, has been around the industry from nearly the beginning. Suffice to say, his opinions certainly carry a great deal of weight when he speaks up.

Hawkins left not long ago to pursue the mobile gaming space with his business Digital Chocolate. It is within this space that he has stated the company’s move away from a “pure-play” mobile design to focus on more casual games platforms including the iPhone. But a recent interview with Slide to Play revealed many more interesting insights and opinions regarding the iPhone.

Over the course of the past six months it has been a virtual impossibility not hear about the success of the iPhone or app store. Part of the reason for this, as Hawkins sees it, was the change in consumer behavior. “Consumers didn’t realize they wanted an innovative, powerful handset and great content until Apple showed them they did,” he said. It was something so new and unique that people “actually cared which mobile carrier they subscribed too (because of Apple’s exclusive relationship with AT&T).”

The platform had any number of features from simple WiFi connections, fantastic usability, and an absolute deluge of downloadable applications. Hawkins states that Apple’s platform made the experience more like the internet rather than a phone, and by combining it with the iTunes Store, the number of downloads became greater than any other mobile device. It may be easy to see it now (since hindsight is 20/20), but it was a truly creative take on mobile platforms, and with that precedent, according to Hawkins, the iPhone has paved the way for other mobile companies’ and developers’ “permission to innovate.”

With the innovation of the iPhone and its App Store, Hawkins believes the platform to be a powerful tool (which he intends to use for Digital Chocolate with titles such as AvaPeeps: FlirtNation) in the targeting of a market he calls the “Omni Media Gamer.” As defined by him, these are the people that do not consider themselves gamers in the least, but still play “supercasual” or social games.

To this end, it wouldn’t seem that games that cost anything will work very well with that market as many “premium games” have started at a cost of $9.99 and quickly dwindled to nothing. That in mind, it is Hawkins’ opinion that it will be microtransactions, virtual goods, and other similar monetization revenues that will pave the way for this audience. “If you look at conversion rates for casual web games on big portals, they’re terrible–somewhere between 1-2%,” he states. “Web gamers aren’t in the habit of paying for games like they do in retail. It’s a completely different business.”

This new way of thinking about games is, what Hawkins believes to be, a significant challenge for larger companies who are use to the traditional game development model and will struggle to keep their games up to their level of quality and under budget. Moreover, if they do have a success, “they won’t necessarily understand why.” This is something more for the smaller companies and startups. Unfortunately, at the same time, there is so much buzz around the App Store that “discovery is a real problem.” Obviously, smaller companies do not have the marketing budgets of the big names and they will be forced to “drive traffic to their App from elsewhere.” All in all, the problems and challenges associated with developing on the iPhone are significant regardless of point of view.

Despite these would-be issues, the mobile device has proven to be an excellent gaming platform. But regardless of such facts, Hawkins claims that he doesn’t think that either the iPhone or iPod Touch will be part of a larger gaming strategy. He says, “I love Apple, and if I thought they were really moving into video games in a big way, I’d welcome them. But the fact is that they’ve had plenty of opportunities for the last 30 years, and they simply don’t seem that interested. I’m not even sure how committed they are over the next 5 years.”

[via Slide to Play]