Why an iPhone Deal with Verizon Wireless would be Cool

Today, interesting reports surfaced (or re-surfaced?) according to which Verizon Wireless and Apple are in discussions about bringing the iPhone to the former. However, because Verizon runs on a CDMA network and Apple has only ever supported GSM, commentators reckoned that this deal might be for Verizon's next-generation LTE network. And this is when one can start dreaming...

To recap: Verizon will be amongst the (if not The) first tier-1 network operators rolling out the next generation of wireless networks under the LTE standard (see here for more on this). Under LTE, unprecedented wireless bandwidth will be available, comparable (or exceeding) what households in Western and Far-Eastern countries have in their homes today. But then you would have it of course wherever you are (well, if the respective technology is installed).

Due to the immense speeds, a lot of people think that the first big change will be on the (computer) broadband side of things: no need for wireline access if the speeds are the same and you can actually wander around and through town and always be with your provider. Simplicity, ease of use, bliss of connected life.

When it comes to mobile handsets (previously known as phones), the iPhone is of course (and despite the heckling by its many critics) arguably the most successful multimedia device known to man (so far). To marry this with these speeds? Ah, what would await us (see here for earlier thoughts). The iPhone (if they can fix the battery life) would be perfectly suited to bring the new lush wireless life to the masses (albeit first to the more affluent ones): rich graphics, innovative inputs and the fairly unique form factor would show the opportunities off rather beautifully and could hence aid to avoid the post-3G hangover where people asked themselves why on earth they should get 3G phones: there was nothing much to do with them (other than being able to make "faster" phone calls...).

The most common uses would arguably be music and apps with the latter being even more successful than the former: it is estimated that iTunes took 6 years to record 6.8 bn downloads; the App Store did 1 bn in only 9 months (or 1.3bn p.a.), which would equal 7.8 bn in 6 years if no further growth would occur. Anyway, with 1.1 bn downloads p.a. not being too shabby either, let's take both, so what do we get?

On the music side, it would either mean quick and high-quality downloads or, more likely (?), streamed music. The same applies to the VOD and movie segments.

On the apps side, LTE would arguably push the envelope into two directions: (1) high-end, graphically rich games, and (2) ultra-connected social games that seamlessly bridge media platforms. Now: both types had their advent on the iPhone. Speak to any number of high-end games makers, and they will tell you that their life became much easier since the iPhone was there. Look at products like EA's Scrabble (with full Facebook integration), Playfish's games (coming from the other end, i.e. from Facebook to iPhone), etc and you have the foundations laid here, too. With LTE, all this becomes mass-marketable to a much higher extent. And this would be real fun!

Mobile Social Gaming?!

I'll be giving a presentation at Casual Connect Europe in a few weeks and have hence been looking a little at the concept of social gaming. In particular with the iPhone success story, this concept has received its fare share of the limelight recently - and rightly so: the unique distinguishing factor of a mobile phone is that it is always with its owner and that it's always on, making it the perfect tool for connecting with people (well, this is what they were invented for in the first place), and the iPhone does that well not only with voice or SMS...

The "social" aspect of mobile gaming has mostly focussed on this connectivity and this is also what has been haunting it, at least in most parts of the world because of the horrendous fragmentation on the carrier and handset side. To make a fully integrated connected mobile game, one needs to integrate with a vast number of carriers (in the US, the situation is a little different - integration in only the 3 or 4 biggest carriers - Verizon Wireless, AT&T, Sprint/Nextel and maybe T-Mobile, and you're in business big time; there is e.g. WPT Texas Hold'Em that scored tremendous commercial success, including full web-to-mobile-to-web play), and they cannot seem to resolve on a common standard; nearly every carrier runs its own little system...

However, do games really have to be fully connected multi-player with in-game chat, buddy lists, alerts, etc, etc, in order to be "social" games? I do not think so. They "merely" have to become a social object, and set in an environment to leverage the social aspect of this (there's more from Jyri Engestrom on object-centered sociality). This does not work for every game in every case but there are plenty of examples out there both in mobile and online: Playfish (founded by mobile games veteran Kristian Segerstrale) runs a number of games on Facebook that are stand-alone single-player games but integrated into Facebook in a way that pushed them all the way up the rankings. Digital Chocolate runs a very successful franchise with TowerBloxx on mobile and online - again a single-player game with hooks into existing social networks (the latter providing the environment that facilitates them becoming a social object). Orange Israel recently created a raft of online destinations around Totomi: a micro-site, a Facebook Group is all you need to create a community around a game.

So whilst I am and will remain a big fan of connected games (phones are to connect with people!), some simple data streams out (high-scores, etc) AND links into existing social networks are actually likely to activate a lot of the potential in there. 

I will be continuing to ponder this, and I would be most grateful for any input!

Playfish fishes for big bucks

Playfish, the social network gaming company founded by wireless industry veteran Kristian Segerstrale, announced a series B round worth a very respectable $17m from Accel Partners and Index Ventures. Playfish boasts 10m monthly users and claims that 4 of its 5 games are in Facebook's top 10. The company also said it recently joined Google's in-game advertising solution and presumably banks on capitalizing on this success. No word on financials but they surely are getting their slice of it (just how thick that slice is, I'd like to know). No word either on any mobile activities (which might be coming given Kristian's background as founder of Macromedia).

Playfish's mantra is to enable people to play games with their real-world friends via the infrastructure provided by social networks, and I can confirm that this works: I am an avid player of their games, particularly "Who has the biggest brain?" (I am no. 5 amongst my friends so far; a list which is topped by Kristian and I cannot help but think that he might possess cheat codes...).

A round of this size by investors of this pedigree raised in these times deserves our unreserved respect. You rock, guys!

The State of Play...

This week (nearly everyone) trecked out to San Francisco for the Game Developers Conference (no, not me), and we therefore could hear and read a lot about where gaming, specifically also mobile gaming, is these days. So what is the state of play? Varied, it seems:

On-deck/off-deck was addressed: Kristian Segerstrale, formerly of Macrospace/Glu, now fresh start-up entrepreneur with his Playfish offering described the current landscape rather neatly: "Competitive development, Ogopolistic publishers, but monopolistic retail." (This was - unsurprisingly - seconded by Nokia's multimedia guru, Anssi Vanjoki). Segerstrale damned the economics of the space with carriers syphoning off 30-40% for billing when the same can be had for a few points from Google check-out, Paypal, etc. He went on to predict that it will be the carriers' doom to stick to that model and painted a bright future. I quite agree with him on this, mainly for two reasons: 1) the move into flat-rate data plans for mobiles; these will take away the fear of people browsing outside the constraints of the carrier that they will face huge bills, and - to some extents connected to the first point - 2) the fall of the walled gardens. This will mean that a whole new playing field is opening: consumers will no longer be constrained to buy games (and, for that matter, any other content) on their carrier deck where choice has been limited and innovation not always prevailing but anywhere on the whole wide web.

Such a development would arguably also clean up with another of these quirky carrier specifics, namely content discovery. On one of GDC's panel discussions it was noted that, "[w]hen shopping on the deck, it is easy to know what an application does based on its name. However games are much harder to sell based on a 17-character title. There is no description and no ability to preview a game (such as viewing a trailer) before downloading. In the discussion, the example of Amazon was used to describe the kind of preview and recommendation system that needs to develop for mobile games." True enough...

On the market as a whole, others, namely some of the money-men, were less buoyant: Mitch Lasky, formerly of Jamdat, now a VC with Benchmark Capital, warned that finding an exit in the next 2 years would be tough as the industry was "in the midst of a multi-year transition", whatever that is supposed to mean. He is of course right in that the sector is consolidating, and 2007 was a tough year for most in the mobile game space (more on that below).

And then came the mobile gaming heavyweights from Gameloft and claimed that there had not been a Christmas in 2007. How's that for a bleak outlook? The mighty Frenchmen' President & CEO, Michel Guillemot compared that to a transition (is this a theme?) between console platforms: before the new one is really in, no one will buy a game anymore. Now, with all due respect, I do not believe that the slump of the mobile games market that many seemed to have been experiencing is hardware-driven. I would rather blame it on the choking hold the severely flawed business model in the space (see above) and actually increasing scarcity of deck space due to carriers reducing the number of slots available.

This last bit specifically was stoically conceded by Glu's Jill Braff: she said one had to understand the way carriers operate (and, yes, from their perspective I think I do) and then "work in the system". That might all be fine and dandy for the few who manage to place it. It does not, however, grow the market, educate consumers (and retailers) or gets games to that next level. I mean, on 5-8% take-up on downloadable mobile games, you are talking about a niche. Shouldn't Ms Brasff rather be pondering on how to break that mold and make mobile gaming a true mass market phenomenon? Getting your head down, sighing and "work in the system" might not actually be an approach that helps that.

The gordian knot will only be cut if the distribution funnel opens up: this does not necessarily mean that carriers will lose the war but they will have to change their approach -- eventually. Just imagine an ISP trying to dictate what game you'd be allowed to access. There used to be one, you say? True enough: the old AOL model. And where are they now when it comes to access? The iron curtain fell, the walled gardens on the Internet fell, and they will fall on mobile, too.