Gameloft's Gonzague De Vallois talks Dungeon Hunter, freemium, and the new direction for the company

It's been a testing few months for one of the world's leading mobile publishers Gameloft.

Having managed to anger long-time fans by turning the Dungeon Hunter franchise into a freemium experience (a pretty decent one, too, if you forget about the legacy), the company also found itself in hot water over the insertion of adverts into Hero of Sparta II and the repackaging of Gangstar: Miami as a new title - Urban Crime.

But, there are two sides to every story, as we all know.

So, to get Gameloft's take on events, we sat down with the company's vice president of worldwide publishing Gonzague De Vallois to ask about the recent controversies and learn a bit more about the direction Gameloft will be taking in 2012.

Gonzague De Vallois: Maybe I can step back a little and give the background to our transition.

To start with, then, I must mention that the belief that the mobile phone would be the most popular gaming device out there eventually was part of our DNA, and I think that is happening with the smartphone.

So, that's always been the motto - games for everybody. It's true that when smartphones first came out we started to address 'innovators' - the first buyers of these devices - and we were addressing them mainly through premium games, like Modern Combat 2: Black Pegasus, N.O.V.A. 2, Dungeon Hunter 2: a premium experience at a reasonable price.

There have been two major shifts in the past two years. One is that smartphones are extending their reach to a wider audience. The second is that the freemium model has been exploding in terms of market share and penetration, and the two aspects are definitely linked.

So, as we were traditionally a premium games publisher, we decided to explore - to go into those roots, the casual and the mass market games. Games like Oregon Trail: American Settler and Let's Golf 3.

We also wanted to explore the freemium model, either to implement it in casual titles or to investigate whether there could be more gameplay [styles] that would be more suitable to the freemium model - as people are discovering on the PC side.

Yes, one of the gameplay styles we found was Dungeon Hunter. We thought very deeply about this and thought, "yup, the gameplay would work."

The freemium trend is a long-lasting trend. It's a strong trend. We see it in the PC side of the video game business, so that's where we’re coming from. That's also why we gave it a trial with gameplay that made sense.

We experienced quite some backlash on this one for a few reasons. The first was because of the freemium model, where Dungeon Hunter 1 and 2 fans were expecting something premium.

The second was because of the gameplay and storyline. To match the freemium business model, we tweaked the gameplay and removed the storyline / exploration phase.

The game is good. What we did not anticipate very well was the level of expectation from our fans about the type of gameplay and the freemium model.

Maybe we didn't do a good enough job preparing them for this shift in the franchise. We wanted to spin it off a little - that does not mean we do not want to take it back to its original roots. We are listening to our fans: we owe them a lot from the last two or three years.

You have to have trials. We think the game is good, and what we see is that in markets where we [hadn't released earlier Dungeon Hunter titles] like South Korea, the game has been very well received and very well rated.

Our long-term fans expected a real follow-up from the first two titles, though. In transitional periods, you need to do tests and that opens up the doors to mistakes. That was one.

Yeah, we don't believe freemium will overtake everything.

What we've seen in 2011 and early 2012 is that it's hard for premium games to live among thousands, tens of thousands, hundreds of thousands of freemium titles, because why should people pay when they have so many opportunities to play for free?

Even more on a device like the smartphone. You can do lots of things on [such a device]: you can watch TV, read the news, go on Facebook, tweet, and so on.

So, people have short game sessions. When [they have the choice] between one premium or twenty freemium, they'll take the freemium, play for ten minutes for free, and they have their 'bite' of entertainment.

So, it's a real challenge, given this trend. The second trend is that you have more and more power in the device. If you want to deliver a good premium game experience, you need to invest a lot of time, energy, and money, because the level of expectation is rising.

Those two elements - the quality of the device and the competition of the freemium games - mean that we need to focus on key segments on the paymium side to ensure that we can balance our investment.

In the past, developers have revealed piracy rates stand at around 70-80 per cent. These numbers pretty much tally with our research.

Those three elements meant we had to investigate other business models, but we will still have a pretty strong premium line-up, which is focused on some very big IPs.

We made this transition in 2011, so it's a bit early to say. Freemium is a completely different business model, and we have to see in the long term how that translates.

Today, we look at things on a game-per-game basis rather than, say, make a freemium game that would subsidise a premium line-up.

What we do now is make a game, then we [add to it] through updates, so we have a production team working on it. We also have what we call a monitisation team - this team analyses all the data to ensure we can adapt the gameplay and the pricing to maximise the experience.

It's a completely different business model. Our first numbers were encouraging, because the good thing about freemium is it allows you to reach millions of people that might be attracted by your free experience.

We will see in the long term, but we cannot say right now that the freemium line-up supports the premium.

No. There are some genres that are more suitable to a freemium model than others. You can't have a linear progression to the gameplay - that doesn't exactly suit a freemium model.

But, there are some genres that make sense for the freemium model - racing games make sense, because you can buy more cars to go faster, for instance.

It's true that for the gameplay that does make sense, we have to try to maybe do a better job of showing [gamers] the value they have there.

What's really interesting about the freemium side is you can have a real free experience without limitations like 'lite' versions can bring, and then you can decide if you want to pay or not - how much, how long.

We have to show our consumers the benefits of this type of model, and retain our 'pure' fans - those more into the premium side of things - by continuing to develop very high-quality games like Gangstar: Rio or Modern Combat.

We are really making the effort to please our consumers.

Yeah, I mean, we have experienced the transition effect internally, too - our entire organisation was set up to support the gamer-type of audience and games.

In 2011, after those evolutions in the market that we spoke about, we had to internally shift things about and make changes.

The mindset and the creative. When you do The Oregon Trail, you cannot have the same game designer as N.O.V.A. 2.

We had to change that. We also had to learn how to design freemium, because you need to make sure people feel they have a good reason to pay inside the game. With a premium game, by contrast, you do a big marketing push to tell people to [spend money].

So, we had to change part of the company. But, we also knew on the consumer side that there would be an impact from these major trends.

We can understand the frustration from our core fans that we've been working with the last two years, and we don't want to get rid of them and say, "hey, we're going after other people now." They are still our core fans, and we will keep these premium line-ups to make sure they have good experiences.

We are going after other audiences, though, and we need to find a way to explain that.

Why did we do Urban Crime? We thought that the Gangstar-type environment and gameplay could attract a wider audience then it was attracting.

So, for that we had to do two things: we had to simplify the gameplay by shortening the missions to adapt to this 'snacking' approach of casual gamers; and we had to try the freemium model so that people could get into it.

We're not targeting the Gangstar fan with Urban Crime - that's why with this one we didn't make the mistake of calling it 'Gangstar: something'. We are going after other audiences, and what we can see is that hundreds of thousands of consumers are downloading Urban Crime.

Of course, we experienced a backlash from the original fans, but we should have told them that "it's not for you. If you want a premium experience - the real Gangstar experience - you have Gangstar: Rio and Gangstar: Miami Vindication."

If you want to try this kind of experience - say, you are not a hardcore gamer that's ready to invest so much time and energy in Rio - then you can try Urban Crime. You can play for free and find out if you like this kind of experience.

It's all about different targets, really. That's what maybe we didn't explain particularly well. Every time we launch something, our fans think that it's for them - of course, because we've been mainly targeting them.

Yes, we experienced a bit of backlash on that one. Because it was much more casual - a more mass market game - we thought a freemium model would be more suitable to attract more users to this type of experience.

Honestly, it's a really cool game, but the full price point was killing it - it was not enabling it to reach a wider audience. So, that's why we switched to the freemium model, and we're very happy with the switch.

We have to explain that there are different business models for the different audiences, and we will keep this premium line-up and we will have this freemium branch.

We also need to explain the value of freemium titles - we are not just launching games to 'surf' the freemium wave. That's not true.

Consumers always know when a game is good and when a game is bad, and we always think that the consumer is the king. They will decide whether a game is successful in the long term. We are not trying to get a quick 'win' on the freemium side.

If you look at Dungeon Hunter 3, there is a lot of production behind the game. What we have to improve is our communication - say more often why we are doing things - and optimise the freemium experience, so that people feel they have a really good reason to pay inside the game.

What we decided to do with Hero of Sparta II at the end of the year was to switch it to an advertising model. I think the idea behind it is still valid - people are willing to see advertising if they can play for free.

There is a model here, but, once again, as it is a new model we have to make sure that we do it well, and we listen to the reactions.

What we did not do well with Hero of Sparta II was the implementation of the advertising. We went too far. At the end, it's a question of experience - if you make sure the advertising banners do not cover anything, do not break the experience, then it's fine.

When we experienced a strong backlash against Hero of Sparta II, I decided to discontinue the advertising immediately.

We will revisit this, test it, another way maybe. In a transition, as we are, we need these tests. It doesn't mean we are allowed to make mistakes that frustrate our users -we are not allowed to do that and we try not to do so.

But, we sometimes don't manage to fulfil all of the expectations.

So, to answer the first part of the question: yes, there will definitely be more conversions in future.

What's happened recently has made us think about this - about how we communicate to our community.

But, we've been through this transition before, in 2004 in the Java business. When the first feature phones came out, it was exactly the same as smartphones. The first users were innovators, so the first games we developed at that time were things like Prince of Persia and Splinter Cell.

And then later when the phones were flooding the market, we extended our reach to include games like Block Breaker Deluxe and Let's Golf [Java version]. But, our primary distribution method at that time was through carriers, and we had no contact with our consumers, which was frustrating.

We are going through that transitional phase in our smartphone business, but now we have this direct relationship.

We've built the Gameloft brand through the premium types of experiences, so we are thinking about how to combine those two. Our mission is to address the mass market - it's why the company was created, and what we've been doing on Java.

It's always a question of experience. I think we've made sure that with games like Oregon Trail and Fantasy Town we really bring the best experience to the player - and the ratings on the App Store and feedback from the consumer support this.

In regards to Theme Park, the feedback on the App Store was not that positive. What we've seen is that casual gamers are even more 'demanding' when it comes to quality of experience.

We're sure that EA will improve, and The Sims free-to-play game that launched recently had pretty good ratings, so we're sure EA can raise the bar.

What's happened to the Unreal Engine games?

We have one scheduled for around Q1. The challenge of working with a new engine is that we have to learn about this engine and make sure our teams can make the best out of it, and each engine has its complexities and limits.

It's a learning curve for us, but we still have games in development using this engine that bring new experiences. There have been a few hiccups on the road, though.

In fact, for us, there are two lines of business: freemium and paymium. There won't be any pure premium, but there will always be an opportunity to download new levels, etc.

Exactly. So, those two will continue, we will keep learning about what the consumer expects from certain types of games, what types of audiences there are, and the different types of markets.

These are very different - if you look at Germany, for example, it's a premium market; in the UK, it is much more a freemium, casual type of market.

The smartphone business is really exploding: we see these different behaviours in different markets, so we'll keep those two lines of business.

By the end of 2012, you will have €50 smartphones at one end and quad-core smartphones on the other end. CES was interesting because we really were demoing our games at the two extremes - the $100 tablet and VoIP for high-end smartphones.

So, we have the challenge of bringing the right experience to each device, for each market, for each language. What is good is that the mass market will get bigger, and that's really exciting for us, because it opens up a lot of opportunties.

We have to make sure we bring the right experiences to each market. But, because the market is growing, it means we'll have more competition and the specific market tastes will become more and more important - the Chinese taste is not exactly the same as British taste, or Mexican taste.

So, it's going to be a year of lots of challenges, but also exciting opportunities.