Convergence in games

It's been the buzz for some time but no one had, with few exceptions, been seeing too much of it but now it seems to start taking off: cross-platform convergence of games. It is a bit of a holy grail: the network operators (or carriers) are not always the most creative and daring bunch when it comes to trying things out and they take a very healthy cut of the revenues from a tough, fragmented and still relatively small market. No wonder then that a lot of people are praying for alternative solutions. But, alas, it never really worked: every games publisher will tell you that, other than for music, wallpapers, etc, the direct-to-consumer model never really worked for games; the operators dominate the space as the, by far, most important distribution channels.

This could be, one thinks, overcome when more users would actually get themselves familiar with the games in a less constrained environment, the web being an immediate answer. Many have tried, many have failed (even the superstars of mobile games, Gameloft, stopped their in-house offering). But, hey, maybe it was just the wrong approach. Trip Hawkins' brainchild Digital Chocolate showed with their approach to their award-winning game TowerBloxx how it can also be done: they created a Facebook app and an online Flash version of the game that have been roaring successes: allegdely, the Flash game saw more than 10 million plays to date and the Facebook app has had 430,000 lifetime users. For a property that sprung from mobile, these are very respectable numbers indeed. And whilst I have no idea if it actually helped selling more games (300,000 clicked the "buy now" button but, for some odd reason, they don't know how many actually bought it), it will have played its part to keeping the game in the front of people's minds - and that's half the work done, isn't it?

Other players are onto it, too: online gaming giant Oberon Media bought mobile publisher I-Play last year in order to offer a more comprehensive line-up across media boundaries. Real is doing similar things. It is probably only a question of time before EA connects its pogo.com online destination with its mobile titles. I also know of quite a few smaller developers that start to very actively incorporate the multi-platform into their game design and development considerations. Very encouraging, that is!

And it makes so much sense of course: handsets get more and more powerful, the garden walles gardens start to come down with flat-rate data plans for mobiles becoming more and more the rule: all in all, a perfect runway for the ascent of convergent media consumption.

Now let's add (mobile) Flash to the equation, and things could become very interesting indeed... (and, yes, I know, we may not yet have the install base but it's getting there...)

Helio numbers...

In Earthlink's earnings call, they unearthed some usage numbers for US MVNO Helio, the joint venture between Earthlink and South Korea's SK Telecom. And, despite the fact that Helio still seems to burn through cash rather quickly, these numbers do not look too bad:

- Helio's ARPU was more than $85 a month compared to an industry average of under $50.
- Its users average more than 550 text messages a month, and instant message penetration is 3x the industry average.
- A whopping 95% of Helio customers access the web through their mobile devices (industry average: c. 13%.
- In December, Helio's users uploaded photos from their devices to the web at a rate 5x of the industry average.

But then came the bad bit: Helio finished the quarter with just over 180,000 subs, which is a 28% growth rate over the prior quarter, but its revenues of $56 million may be an increase of 147% over the prior year but only 8% over the prior quarter. That means their top-line growth was not matched by their bottom-line one, quite to the contrary. The available news do not shed light onto why that is so but it is concerning as it means that they do either not have their costs under control (expending more per added user than per previously existing one) or they have a serious CPA problem: if the margin per incremental user gets slimmer, they may have to spend more to recruit them. Not healthy...

Because Earthlink has pulled out of additional funding requirements for Helio, the burden rests on SKT's shoulders. For how much longer is anyone's guess although, to be fair, SKT has shown a pretty healthy amount of patience in this.