4G, LTE & Games: Casual On Speed!

Next to app stores (or markets or marketplaces or app worlds or, well, Ovi), the dominating theme of CTIA Wireless was 4G/LTE. Now, as sexy and de jour as app stores might be, the latter has a hugely larger commercial impact (the Verizon Wireless contract for their LTE network will be a multi-billion deal alone!). But what is a network without applications?

So it was just as well that, one day before CTIA Wireless, I had the great pleasure of contributing to the "Connecting the Consumer" panel at Alcatel-Lucent's 4G Symposium (with Disney, Samsung, Buzznet and Atlantic Records all contributing, providing for the various facets of content [games, video/film, music, web]). The ground had been laid by the keynote of the formidable Mitch Singer, Sony Pictures CTO and a long-standing thought-leader in changing sectors (he's one of the people who brought the original Napster down and - in his own words - "look was the music industry has become"). Mitch had reminded us of "The Innovator's Dilemma" (Read it! It's worth it!), which deals with how businesses should tackle change...

And this brings me to the nucleus of this post, which is how the content industry will (should?) approach the next big thing that is LTE.

By way of background: LTE (Long-Term Evolution; don't ask why but this is apparently what it stands for) is largely seen as the successor to current third-generation (3G) networks (UMTS, WCDMA, HSDPA, HSUPA, CDMA2000, EVDO, call me if you want more acronyms...). LTE appears to have won the "fight" against Wi-Max (as some early commentators predicted) with carriers (Verizon Wireless, Vodafone and China Mobile amongst them) and vendors (Alcatel-Lucent, Ericsson, etc) strongly supporting it. The standard is capable of delivering speeds well in excess of 10MB/s over wireless networks. So, world, be prepared!

One of the obvious beneficiaries should be the games sector home of the tech-savvy early adopters: ultra-high broadband, super-speeds, fantastic opportunities. Or so they say...

The games market can probably - to this extent at least - be simplistically divided into a) hard-core and b) casual games. The former would comprise massively multi-player online games (MMO) as well as fast-paced, high-end racing and action games. The latter is, well, everything from Solitaire to Scrabble and Tetris. And, yes, the latter is the one genre played by far more people, including the online gaming industry's "golden customer", the proverbial 42-year-old housewife from Ohio (absolutely no offense meant, implied or indeed merited!). Whilst it is easy to see how a high-end action game would benefit from high bandwidth, the case may be slightly less obvious for the casual games space (on PCs alone, this is a $2.5bn+ market already today!).

Given the casual games' higher adoption across a much broader demographic, it is however conceivable that carriers (the ultimate gate keepers for mobile content at least in the world as we currently know it) would want to reach that broader demographic: higher spending power than geeky kids, faithful, not necessarily wanting to change things every 5 minutes, predictable spending habits - this is a much safer and more promising target demographic than my 13-year-old son who will happily switch allegiance to a provider the moment another one has something cooler, cheaper, slightly funkier, whatever, ... to offer.

So what can 4G do for the (mobile) casual games space? It brings, quite simply, wireless (or wire-free; remember that sweet tagline from Orange days long gone?) digital media to par with the wireline one (and will, in very large parts of the world, effectively be digital media (or do you think Brazil, China et al will dig up their vast countries to lay down copper or fibre cables to connect their non-urban consumers?).

So what, you say? Well, this allows consumers to actually play as they did before the arrival of the first crude iterations of the Internet, and that is socially: what was a game before computers and gaming consoles took over? An intrinsically social activity (cards, board games, petanque, golf, you name it). We have seen a huge uptake of social games on the Internet with tens of millions of consumers enjoying fairly simple games on Facebook and other platforms. And the next generation wireless will enable that again wherever you are (see here for a presentation I recently gave at Casual Connect in Hamburg on the topic).

So, high connectedness it is then! Games that will allow to interact with peers, friends, total strangers that happen to have the same passion for the same type of game around the world. Games become a social activity again. It is a less fancy, less futuristic vision than all-immersive high-end niche products such as World of Warcraft (which will also see its fair share of fame once the wireless networks can support it) but it is one that will finally make any wireless device as ubiquitous as many in the industrialized world (East or West) have learned wireline connected devices to be. And it actually takes some of the sting out of concerns that (digital) games will make video zombies out of our children.

This development (with LTE as the backbone) opens a market to be counted in billions rather than millions, and most of them will be wireless (the number of mobile phones outnumbers the number of Internet-connected PCs by a ratio of 2.5:1 already today!). And this is where the true market opportunity lies!

Next-Gen iPhone Will Wipe Out DS & PSP

Today, there was a piece analyzing recent reports whereby Apple was well on its way to wipe out DS and PSP from the handheld gaming sphere, and that it would therefore seek to address a number of weaknesses in its next iteration of the iPhone (and iPod Touch) that would add a few currently missing features that should bridge the - already slim - gap to the PSP.

You have of course read it here before but I would like to revisit this again. I had mentioned the huge advantage of having swift and global digital distribution, giving Apple and any developer pondering which platform to choose an easy solution. Accelerometer and multi-touch add new gameplay features. Plus the iPhone is lighter than its rivals (and of course does a number of other things pretty decently, too, namely playing music, making phone calls or surfing the web).

And then there are the numbers. It took Apple less than 3 months to boast 1.5x the number of games of DS and PSP combined (1,500). The digital distribution model keeps on impressing and shows that this is really what consumers want in terms of accessibility, purchase mechanism (download as opposed to physical cartridge) and - yes - perhaps also price (although there is rumour that Apple wants to introduce a premium segment).

So here is what Apple allegedly wants to change:

• Enhanced graphics (to address its current lack of loading complex textures);
• improved processing capabilities (through its own ARM chip, which is currently developing; this follows the acquisition of PA Semi last spring);
• Better camera (minimum 3.5 mega-pixels) and video-recording.

Multi-tasking as demonstrated by the Palm Pre with its WebOS would be something I would like to see. 

No word if cut-and-paste will work as well, it seems... Oh well, I guess they need to leave something to complain about for the old-school geeks to who Apple still is the fruity devil... ;-)

Photo Credit: http://www.macblogz.com/Media/2008/6/iphone-flash-nand.jpg

Apple AppStore Rises and Rises: Now Past 500 Million Downloads!

It is quite breathtaking: it took them 3 months to hit 100m. Then, only 5 weeks after they announced that they went past 300 million downloads, Apple announced that they just raced past 500 million. This means 200 million downloads in 5 weeks, 40 million per week, 5.7 million per day or 4,000 per minute! Get that! Whilst numbers don't equate to happiness, I sincerely hope that Steve Jobs will be taking some comfort from this and recover well.

I will not tire of harping about the (nigh) flawless end-to-end experience that enables that: a gaming experience that challenges "traditional" handheld gaming devices like Nintendo DS and Sony PSP, an interface that promotes games beyond the hardcore crowd, connectivity that allows "social gaming" to evolve (see also here), and a purchase experience that does not force a user through onerous double-digit-click orgies and various ominous warnings.

So despite the fact that we still do not have clearer numbers illuminating the underlying commercials of the average application and game on their, I tip my hat, I take a bow, I applaud...

iPod Touch mounts Handheld Gaming Challenge

A recent article discussed the rise and rise of the iPod Touch (that's the iPhone without the phone). It apparently surged to the top of Amazon's sales charts, and mobile ad firm AdMob reports that ads served to the device more than tripled between November and December to 292m. This growth is said to even shadow growth of iPhone ads served and is being called, well, unprecedented. People are said to shun the forced marriage with AT&T's long-term phone plan that come with the iPhone. Makes you think (if you're an operator).

That's all fine and dandy but I thought this was probably a good time to look at the iPod's role as a handheld gaming device again. This was sparked by a remark from one of the Kleiner Perkins' chiefs (they're the ones who set up the iFund, which invests exclusively into companies active in the iPhone/iPod Touch ecosphere) noting that the iPod Touch was now asserting itself as a more versatile alternative to the Nintendo DS or Sony's PSP. This has of course been discussed for a while. The sales figures of the iPod Touch now seem to back these early (and initially largely theoretical) thoughts. 

Nintendo has been keenly aware of this even before the recently published app download numbers were out. In the words of the CEO of Nintendo US (from the above WSJ article):

"Whether you chose to play on your DS or listen to music on your iPod, we're already in the same competitive space for time."

And whilst one could argue about the pound-for-pound comparison of pure touchscreen vs devices with gamepads for certain types of games, the huge upside Apple has created is the hassle-free and easy distribution model for games: a DS developer needs to buy the cartridges (and pay for them up-front), find retailers, and then sell. This means huge cash outlay and very significant commercial risk over and above the development cost, making for a much less risky business model. And as to the input: some of the accelerometer-powered racing games are significantly better to control than with any game pad.

The DS is and arguably will be for a while a formidable gaming platform (as the father of a 10-year-old girl I can certainly vouch for that) but the sheer number of games available on the AppStore is likely to create a space longer term that may well tilt the balance in favour of the latter: you've got a) the arguably best music player in the market, b) higher WiFi usability (the DS doesn't really allow you to surf the web), c) e-mail, maps, and all those nice little (and often useless) apps, d) much, much more choice of games at lower cost (anywhere from $0.99 to $9.99 as opposed to $30 for, say, Cooking Mama 2) and - to top it all of - e) the coolness factor of the sleek Apple form factor. Tough competitor, that.

For mobile games developers and new iPhone game entrants this constitutes and exciting development as it opens the revenue potential further up, and all that at a comparatively efficient and high-margin market place.

EA makes more with mobile than with PS3 and PSP!?

Someone went deep into EA's financials to find that the gaming giant actually makes more money with its mobile games than it does with releases on the super-high-end Sony PS3: the numbers are apparently $37m for mobile vs. $21m and $17m for PSP and PS3 respectively, and this is despite a shallow 5.7% revenue growth (industry leaders Gameloft grew by 51% in the same time).

However, one must of course take into account that the PS3 was only released in spring 2007, so will have a smaller install base and - arguably most importantly - it leaves aside the first big season for the PS3, namely the upcoming Christmas sales, which traditionally account for a huge amount of console and game sales.

It is nonetheless very encouraging that even mighty EA, despite the huge marketing effort by Sony, made more from mobile, which is still being perceived niche by many, than from Sony's new flagship!

Sony Ericsson to leverage PSP and Bravia brands?

According to the FT, Sony Ericsson ponders the release of PSP and Bravia (its TV moniker) branded high-end mobile phones, quoting SE's president, Miles Flint. The Bravia-phone is - I was surprised to learn - already a reality, namely as a mobile TV phone with DoCoMo in Japan. Regarding a PSP phone, Flint was cautious, saying that the technology was still some way from being perfected. “We need to make sure that it is a credible phone, and be sure we are justified in putting that identity on it,” he was quoted.

This approach would continue SE's strategy to leverage Sony consumer electronics brands in its phone business, which it has done with the ubiquitous Walkman (now turned video player) and its digital camera brand, Cybershot. This strategy has apparently helped to double its margins - in addition to moving up one spot from #5 to #4 in the leading manufacturers' list.

It seems eminently sensible to try and build on Sony's considerable fame in consumer electronics, in particular as Nokia (most recently with its high-powered and feature-packed N95) and new entrant Apple seem to be pushing the edge of the envelope, and LG adding on the design front (the Prada phone and the LG Shine spring to mind). SE's approach of weaving the trust it enjoys from consumers for its electronic devices into the mobile phone branding may well be suitable to counter this race. However, as was also noted, Mr Flint did not forget to point out the most important thing: “We need to make sure that it is a credible phone, and be sure we are justified in putting that identity on it." There you go!

The statements probably come on the back of reports during the last weeks (e.g. here and here) that SE was to release a games phone with a games-oriented user interface and styling, and comprising - geek excitement levels rising through the roof - things like motion-sensitivity, which will pave the way for Wii-like gameplay on a handset (be aware of flying handsets on your commute then).

Real Networks buys Sony NetServices

Real steps it up again: After their acquisition of WiderThan last year (ring-backs, music-on-demand, etc) catapulted them to the forefront of mobile music services, they have now acquired Sony's NetServices division that runs Vodafone's audio-streaming services in Germany, Ireland, Italy, Greece, Portugal, Romania and the UK as well as the one for TeliaSonera in Finland.

The whole audio-streaming thing still puzzles me though: the original commercial model for ringtones was clear but it was based on hardware barriers and constraints rather than the fantastic content (let's face it, monophonic ringtones were pretty horrific). However, with Bluetooth and memory cards now being on virtually every phone and storage of 1GB and more not raising an eyebrow anymore, this would seem doomed (also see my post on declining sales here).

One could argue that it is sensible to then move on to streaming but can anyone explain to me why I should pay for what basically is radio when even a shabby old Nokia 6230 comes with a stereo FM receiver that does the trick, too, and for free? That, I believe, is the difference to ringtones: I do have alternatives to getting to basically the same content - it then comes down to packaging, ease of use, etc and carriers haven't been particularly good at that, have they?