The collapse of the original Atari back in the 1980s has been a lesson to the games industry ever since, particularly on how an originally healthy games platform can be scuppered by having too many poor-quality games.
Sound familiar? Okay, it's a bit scaremonger-like to compare mobile to the original Atari, but the mobile game industry has arguably not heeded those lessons. At least, that was the thought mooted by Glu's president and CEO Greg Ballard, during his presentation at the Nokia World show yesterday.
Less is more
"Quality is tied to quantity," he said. "In the Atari disaster, there were too many games on the system, and the quality of those games became less and less relevant to consumers, who became so overwhelmed by choices, they eventually stopped buying. We're getting right back to the Atari days with mobile: many different titles are seeking attention on the decks, and nothing good is going to come of that."
In the Q&A section at the end of his session, we asked if there really is a danger that mobile gaming could crash and burn like Atari did.
"I always thought there was the danger of that," said Ballard. "Whenever we've seen blips in the mobile games market, where it's stalled for a couple of quarters, I've wondered to myself whether we've gotten to the point where people have had a bad experience buying games, and bounced out of the mobile business entirely. I don't think it's happening – we are seeing repeat users – but we have to be careful."
Growth is good
The comments came as part of a thoughtful and hard-hitting presentation explaining the problems facing mobile games publishers in Europe specifically. It was more business-focused than we'd usually cover on Pocket Gamer, but the implications affect the games we play and the companies who make them, so we thought it was worth covering here.
Ballard kicked off by saying things are going well for Glu, and that the publisher expects its revenues from mobile games to grow by 40 per cent this year. He also reckons the quality of mobile games is better than it ever has been, and pointed out that in most respects, today's mobile phones are more powerful than the computers that kicked off the PC gaming industry in the 1990s.
"The number of people we are able to reach swamps the PC and console businesses, but more interestingly, data usage is growing as well, and more and more consumers are capable of playing our games. The networks are getting faster, handsets are getting better, and we see a direct correlation between that and increased consumption of games."
That's the positivity, now for the problems. Ballard outlined three reasons why Europe is a problematic market for mobile publishers, starting with the economics. He pointed out that the price of a game in the US has risen from $4.50 (£2.20) to $7.50 (£3.70) between 2004 and 2007, yet in Europe it's stayed the same at around £5.
Meanwhile, Ballard says Glu's margins are being squeezed in Europe more than anywhere else, thanks to the various people taking their cut of the download pie. As an illustration, he broke down where your fiver for a game goes: £1.50 goes to the distributor of the game, then £1.75 goes to the operator, leaving £1.75 for Glu, out of which it may have to pay a separate cut to the brand-owner for a licensed game.
"We have to sell more units in Europe than in North America, yet we're actually selling fewer units in Europe," he said, touting a slide showing that Glu's top five mobile games in Europe sell 70 per cent of the sales of its top five US titles.
Meanwhile, it's more work to port a game to different handsets in Europe – for Transformers, Ballard said Glu made 25,000 versions of the game for different handsets, operators and languages, yet 21,000 of those were in Europe. Oh, and added to this, games have a shorter shelf life here in Europe, too, which Ballard puts down to our lack of subscription-based pricing.
Consolidation the solution?
So what does all this mean for Pocket Gamer readers? "It means publishers have to think short term," said Ballard. "We can't invest as much in European focused games as in global titles, and we have to put a premium of quantity over quality. We do continue to launch European or even British-only titles, but the economics of our business make that increasingly a challenge."
The second problem in Europe is the experience of buying a mobile game, with Ballard comparing operator portals negatively to real-world retailer EB Games (although he did have warm words for Vodafone Live). He also praised Nokia's efforts.
"The one bright spot is things like N-Gage, which have now started to address directly the interface between the carriers [operators], the game companies and the consumer, making the interface more intuitive, offering sample games, and making the experience much more consistent with something like the EB Store."
The third problem in Europe, according to Ballard, is that there are still too many publishers releasing too many mobile games, despite the fact that the sales charts are dominated by the big firms. The problem, in Ballard's view, is that while the big publishers reinvest their profits in marketing mobile games – and thus growing the market – the smaller publishers don't.
He'd like to see more consolidation in Europe, with publishers buying each other, going out of business, or simply being removed from the operator portals (something that's apparently happening in the US already).
So there you have it. A very industry-focused presentation, and one that rival publishers, operators and smaller firms will doubtless have strong views on. The gist of it, though, is one of the Big Three mobile publishers saying there are some serious problems here in Europe, which may explain why we get below-par or rubbish mobile games.
Which is bad news for everyone.