On Gaming's Future: Mobile Reality Check

In the last couple of weeks, we’ve had the launch of the iPad 3 and a slew of rumours about what we may see in the next-gen home consoles. As usual, the growing Apple-centric members of the enthusiast press were quick to chime in on how the iPad 3 is somehow revolutionising games yet again, how Apple are the only ones that get the future of games and how iPad specs are accelerating so rapidly that in a few years, it will not only have rendered dedicated handhelds obsolete but now home consoles as well.

Never mind the inherent dangers of Apple controlling the industry, this is where all gaming is going they say and somehow, a monopoly is now a good thing. I think the predictions as they lay them out are very much a result of the Apple reality distortion field that still permeates the press today. However, they’re not entirely off base and to say that the current AAA industry doesn’t have major problems that currently don’t have a clear path to being solved is also false. I think AAA games as they are today are in very real danger but I don’t think mobile games on your TV is where things are going either. As usual, the answer lies somewhere in the middle. I think if we’re going to answer the question on where gaming is going to be in a few years, it’s important to have a reality check of both sides of this debate as both are overstating their benefits and understating their weaknesses. Each have a lot of challenges both now and going forward and many of these are more similar between them than either would like to admit. This post is going to focus on the mobile space and the next one in a couple of days will focus on the AAA space.

When we hear the enthusiast press and Apple crusaders talk about mobile gaming (which is largely dominated by iOS, this can’t really be disputed yet), the talk is how it’s ushering a return to a golden era when games were less complicated, cheaper to create, the developers and not publishers controlled the content and innovation was encouraged and praised. Indeed, these are all generally good things. Games on iOS right now are low risk and every week, we hear stories about a small team having their project make a killing which leads to massive riches. Every time there are layoffs or departures from AAA studios, there’s usually a story the next day about how those people have gone off and formed new teams in the mobile and social spaces. Games on iOS are cheap to make, cheaper to buy and come with a massive and growing install base right out of the gate. It seems like the sector is in a stratospheric rise that has no limit and which will mean great things for innovation and new gaming experiences in the future.

That’s the reality for right now but the sad truth becoming more evident all the time is that mobile game development is quickly becoming as risky as other parts of the industry and will only get worse as the technology improves. There are tens of thousands, if not hundreds of thousands of games alone on the iTunes App Store right now and hundreds more being added every week. The better part of 90% of these offerings are garbage and not worth a second glance but the sheer volume makes it impossible to determine what’s good and what isn’t. iTunes has user reviews but like most other places, they often aren’t trustworthy and are dependent on personal taste. Even with many games selling for as little as a buck, people are being choosy because those bucks add up fast with that much choice and poor quality content out there.

So how does the average consumer decide what to buy? Usually by looking at the top seller or staff picks list, which are almost always dominated with the same few titles and rarely change. Unless a new game becomes a viral hit, has publisher and PR backing or gets co-promotion from Apple through one of these lists or placement in a TV ad, the chances of it becoming a huge seller are almost lottery-win thin. Apple has always thought of gaming as a red-headed stepchild and the revolution many say they started was something they fell into by accident and which has been perpetuated largely with their indifference. Steve Jobs believed computers were tools and that gaming was a waste of their potential and that’s still very much part of Apple’s culture.

The reality is that while we may always hear the press talk about runaway hits like Angry Birds or Draw Something, they are actually flukes and do not at all represent the norm. The makers of both of those titles had a string of releases prior to their seminal hits, most of which were flops. In fact, the often unspoken truth is that a tiny group of developers make almost all of the revenue on iOS and many respected developers are now seeing the platform becoming just like the rest of the industry it’s supposedly revolutionising. In other words, in only a few short years iOS has become almost entirely hit driven and dominated by a few key players who are following the money and not focusing on innovation or new ideas.

The one major advantage iOS has over home consoles and to a lesser extent PC is that the cost of entry is very low. One of the great things it has done has allowed the “bedroom programmers” to sweep back in and have a strong creative voice again. An individual or small team that would never be able to develop on a console can make an iOS game in their spare time, put it out there and maybe get rich from it. While there’s certainly a chance of that, the hard truths above make it a rare chance at best. Mark Rein, Vice-President of Epic Games who have released the very successful (and co-promoted by Apple) Infinity Blade series said on a podcast earlier this year that the average iOS game grosses $700 over its lifetime. Granted, he just threw that out with no citation but I’m going to assume given his position that he knows what he’s talking about.

$700 is nothing and makes even a part-time development endeavour a big financial risk. Even if we assume Rein is low-balling and the average return is ten to twenty times that, it’s still not enough for even one person to make a living on, let alone a team of people working full-time. For a lot of hobbyist developers, the risk may be worth it and I say more power to them. Some of the biggest successes and innovations in the world came from people with only a shoestring and a dream. But as a supposed new revolution that will bring with it a whole new facet of the industry, the picture is not super rosy. The press has people believing that the cost to get into iOS games is super low and because of that, it’s virtually a guarantee that you’ll get your investment back if not make a sizeable profit. That’s simply not the case and while the low cost of entry may allow a newly funded team to survive a flop or two, they can’t do so indefinitely until they get lucky enough to find their golden goose. Most of these people who are fleeing AAA development to make mobile games are going to fail and don’t have much greater a chance of success as they do in AAA, though getting funding to try is certainly easier. As tablets and phones get more powerful, it will only get worse.

The press is talking about how powerful the iPad 3 is and how it can rival the power of an Xbox 360. That’s actually not true at all right now but as these tablets continue to increase in power, there’s a good chance that in a few years, they will have similar graphical and processing capabilities as even the next-gen consoles. At that time, you could put your tablet down on a wireless video dock, pick up a Bluetooth game pad and play a AAA experience on your TV with a console you can pick up and take with you. Sounds pretty good from a user experience point of view and honestly, I really like the idea.

The danger is that the technical arms race is what made AAA games so incredibly expensive and risky and with iOS being fairly risky already, it will get even more so as power increases. This will quickly lead to the small developers being marginalised and forced out and the larger ones to need bigger and bigger budgets (and by extension more marketing which means even more money) to ensure that their games succeed. See where this is going? Right to where AAA games are now. Long development times, huge budgets and teams and few creative risks being taken. $1-$5 games won’t be possible anymore when they go from costing thousands to millions and then tens of millions to make and market. As prices go up, so do the apprehensions of customers to try out a bunch of games in succession to find out what they like. The marketing for these larger games will also drown out indie developers and push them back from the mainstream to a low-profit niche for enthusiasts only. Different form factor, same problems. This isn’t good for developers or gamers.

The raw fact is this: Publishers are desperate for new sustainable revenue streams right now and with a couple of exceptions like Electronic Arts, none of them have gotten behind iOS gaming in a big way. Some might say they’re just dinosaurs stuck in old ways and not embracing new things but these are large companies that are run by smart people in one of the most dynamic, rapidly changing industries in the world. They know fortunes in gaming can change overnight and how to latch on to things that have big success potential. With their resources, it wouldn’t be hard for them to try a few iOS games out and see what happens. Yet they largely aren’t and most of them are tie-ins to other properties, not original titles. Why is that? Is that because they simply don’t see them as big enough for their league or could it be that perhaps they don’t see the long-term potential in the segment and that it stands to be more of a fad than the wave of the future? The AAA industry is hurting right now but it still makes far more money per year than iOS gaming and it’s foolish to discount their knowledge and decisions. If they are lining up to back the Wii U but aren’t paying much attention to iOS, I think that says something significant.

So what needs to happen to prevent this platform from burning out and becoming like the AAA industry it’s trying to avoid? I honestly have more thoughts on this from the AAA side, only because that industry has been around much longer and isn’t in such a state of flux. I think the first and biggest thing is that Apple needs to take some pages from the book of Steam. They need to stop thinking of gaming as an afterthought and start embracing it. Rather than just letting games exist on iOS and having Darwin rule the ecosystem, they need to start showcasing titles and really giving attention and promotion to indies. Don’t just let the best selling or viral titles get noticed, start showing off the unique and creative experiences offered on your platform and show why sometimes the smaller games can be just as good or better than the technical show pieces like Infinity Blade. Steam is its own platform and owned by a company that makes games too but Valve don’t shy away from promoting the work of others and giving great projects from all levels of development the spotlight. If they want iOS to take over living rooms and become the next great force in gaming, they need to show everything that makes the platform great and ensure that it doesn’t just become about flashy graphics and big marketing budgets.

Even Apple must realise that iOS’s current growth is a fashion trend and is going to slow in the next couple of years. The platform’s not going anywhere but sales of new devices will taper and their user base will begin to plateau. If they don’t step up and start selling the benefits of their hardware as a gaming platform for all kinds of different experiences, they risk handing the keys of gaming back to the console makers before iOS gaming truly has rubber hit road. The small developers are fuelling the growth of iOS gaming and they’re the reason the enthusiast press is so infatuated with it right now. If it simply becomes about flashy graphics and style over substance, it will lose its lustre and the renaissance will fade. There’s great opportunity for creativity to shine here, Apple needs to get off the sidelines and start backing that. Otherwise gaming may go roaring right past them.
By the end of the week, I’ll have my next post up which will tackle this same issue but from the AAA side.

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2 Responses to On Gaming's Future: Mobile Reality Check

  1. Pingback: On Gaming’s Future: AAA Reality Check « Geek Bravado

  2. Pingback: The social games bubble is bursting and mobile is next « Geek Bravado

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