There seems to be a strong US focus here, and - perhaps coincidentally - a broader use of the "casual game" term than what I'm used to. Certain console and PC titles seem to fall under this category, which surprises me as I can't really see how anything could be less casual than a gaming session sat at a screen. Suspect this may be due to wearing mobile-shaped blinkers for half a decade.

At other events I've been to, the tone has been a rather unrealistic "how do we get around those pesky operators". There seems to be a bit more realism here: "you may not like the operators but you don't have much of a choice but to work with them... today".

I've enjoyed all the talks I've been to so far. "Alternate business models for mobile" didn't really reveal any fantastic new models as such, but it was great to hear experiences from aggregators, developers, and media companies trying to get commercially successful in this area.

The event seems very developer-oriented.

Casual games on mobile: Why operators and publishers are excited to see more casual mobile content

Gunnar Larsen, Director Mobile Games Europe, Real Networks
Alex Bubb, Jamdat
Bryan Trussel, Microsoft Casual Games
Tim Harrison, Head of Games Vodafone

First slide emphasises difficulty of fragmented value chain.

GL: What is a mobile casual game? Is it the same as a PC casual game?

TH: On mobile the fundamentals are similar to the PC. Being here today reminds him of mobile conferences a few years ago. Modes of play and discovery are different. The common ground is simplicity, approachability and fun. It's a less self-conscious form of gameplay: games as boredom-busters and to kill time, not for games' sake. The difference is the level of complexity in the mobile space. Operators see community as importantly as games publishers.

AB: Jamdat have one of the most successful puzzle titles. The demographic is huge: everyone has played Tetris, even people who don't consider themselves gamers.

BT: It's not coincidence that your top casual titles are the top titles on mobile. You need to be sensitive on mobile: it needs to be simple to learn, no tutorials. Mobile is about smaller timeslices

GL: PC is more about relaxation, mobile is a boredom-buster.

BT: You'll always go to your PC or Xbox to spend half an hour playing.

TH: We were surprised by the number of people playing mobile games at home, after research we did last year. Playing a console game involves an investment of time. There's lots of reasons to choose one platform over another.

AB: Dip in, dip out is important. But that might not be the entire game.

TH: Solitaire is the killer app on any platform. Tetris is big too.

AB: The discovery mechanism is very different on mobile.

GL: How big is the opportunity? We hear 1.5b game-enabled handsets.

TH: Mobile is one of the thinnest areas in terms of numbers. The majority of the market is controlled by notoriously cagey operators. Market estimates for mobile gaming range from 1.5bn - 4bn [ dollars or pounds? ]. But we've not scratched the surface yet. The discovery mechanism for games is a key reason why not. 65-80% of mobile owners have played a game on their phone (though the majority are playing an embedded game). Our challenge is converting these embedded players into downloading players. We're doing "free trial" games on handsets. Flash isn't a model we can imitate yet, with only 1% of our handsets Flash-enabled, but "try before you buy" works.

BT: There is money being made in mobile right now. Handsets are getting more capable - the potential audience is increasing. It's possible to get more efficiencies in the value chain.

GL: What are the challenges? What's the process for bringing a game to market?

AB: There is limited shelf space in the mobile market. A simple game is a good start. There are complexities you need to overcome: porting etc. Different handsets, chipsets, etc. But there are ways around this.

GL: What's your advice to a mobile developer with a great game?

TH: Talk to a good publisher, or an aggregator operating in direct-to-consumer. Mobile operators want value adds on top of a great game; they want a way to attract customers. You need a sustainable roadmap of high-quality product.

BT: It's not that carriers don't want games: there's just too many out there.

GL: How do you recommend that developers handle porting and fragmentation?

AB: Every publisher has their own strategy. The difference between a mobile and console publisher is a split between front-line and deployment production. We're scaling up in Romania etc to handle this.

BT: Mobile hasn't seen an abstraction layer for different hardware. Why isn't there such an abstraction layer?

TH: This is the price we pay for the ubiquity of mobile, unfortunately. So much creative energy and revenue goes into back-end, not game creation and marketing. There will be consolidation of operating systems to a certain extent. It's like the home computer market in the 80s. We're moving out of that phase into the early-PC type phase. Mobile is still a few years away from this consolidation.

GL: How important is it for Vodafone to support 300 handsets? Can they get away with fewer?

TH: Vodafone Live is our proposition. We don't sell it as devices. All our dreams have been built upon the ubiquity of the device.

AB: For casual games, porting is easier. The lifecycle of products seems to be longer too.

BT: The easy games to write and port are the ones with a longer shelf life.

TH: Naming is important. Words like "racing", "action" or "puzzle" in a game title are a great benefit towards driving sales from an operator portal.

GL: What business models are suitable for mobile? Today it's pay-per-download. Is subscription a valid business model?

AB: Ultimately yes. It's not Jamdats focus now but long-term it has to be the way forward.

GL: How can we give people a better feel for the game before they spend their money?

BT: It's very important. The casual game on the PC is successful because you know what you're getting into. Mobile doesn't have the depth of recognition. Mobile users don't have a trust relationship with the game deck right now. Until we have trust, we'll have wary consumers.

TH: We're looking at game trailers in video to give a feel for the game.

GL: Is the pricing OK? A game in the UK cost £4.50, £5

TH: We think it's right at the moment but many customers don't perceive it as good value.

GL: Brian, do you see the web-to-mobile opportunity as interesting?

BT: There's a brilliant opportunity there. Someone who's just played the game on the web is the ideal customer to buy on mobile: they're pre-qualified.

GL: Is direct-to-consumer a threat to your business?

TH: No, at the end of the day the carriers are still making money. In many markets it's a bigger opportunity for carriers than the portal business.

BT: You come into mobile and see all the problems, then difficulties downloading games make sense. It's healthy to ignore the complications that are involved in doing this if we want to look towards a more pleasant future.

Q: Is Vodafone looking at exploiting advertising opportunities for casual and other kinds of gaming?

TH: Top of my wishlist for mobile is the equivalent of "viral flash games". From a monetary point of view it's harder.

Q: When will standardisation occur? When will games become valuable enough to have standardisation pushed?

TH: Mobile has been driven by open, not proprietary, standardisation. Open standards get implemented in different ways on different handsets. All that will happen will be market forces: a more consistent version of Java across devices is good for everyone.

Q: How will shortage of deck space change in future?

TH: the growth of off-portal brings more storefronts. Some folks will target specific handsets - not operators, but other guys. Faster handset and 3G allow sophistication of portals.

AB: Improved search will help.

TH: MMS discovery too.

Q: 3D, connected multiplayer games, cross-platform games: hype or reality

3D: 2x real, 1 x hype
Connected multiplayer: 2 x hype, 1 x real
Cross-platform: 3 x real

Alternative business models for Europe

Julie Pitt, General Manager, RealArcade
Riccardo Zacconi, CEO MidasPlayer
Eric Bethke, CEO GoPets
Kai Bolik, CEO GameDuell
Mathieu Nouzareth, President Boonty

JP: Try-before-you-buy games really picked up after the crash. Real Networks had to convince GameHouse to build a downloadable game. In Asia this model doesn't work so well (perhaps thanks to lack of protection for IP). 2% of games downloaders make a purchase; so most folks aren't spending money for content.

MN: Advertisers are willing to spend lots of money online. They need good products to help them do this. CPM for banners are too low. Rich Media advertising might be an answer. In-game advertising might be an answer.

[ Yuck - are we as an industry really fixated on banner advertising - still? How do production costs for a rich media advert stack up - presumably they're much higher? In-game ads sound more interesting, and you can see a precedent for it with product placement in films - it's familiar, perhaps. ]

MN: A 20mb game with a 2% conversion rate means you're shifting 2GB of data for each 2 sales - that cuts into margins.

JP: Most advertising has been around online games. What about in-game advertising?
MN: Perhaps this is more acceptable in the US which is more accepting of advertising.

KB: When we founded in 2003, games were popular. We wanted to monetise free players and do so by letting them pay small amounts at a time: they place a bet etc. So they're not paying for game content at all.

RZ: We have a 2-step process: at the first step he plays for free, up to 10 times. After that he's asked to upgrade to a paid account: £10, $10, 10 zloty. Once he is paid up, to compete against others he has to take small amounts from his deposit.

[ So it's either advertising-supported or gambling games, thus far. ]

RZ: Our experience is that many factors are at play here: the maturity of the market (how old your players are), say. We offer more than 37 payment systems: different ones for different markets. e.g. in the US credit cards work well, in the UK they're alright, in Germany they don't work that well.

EB: We think that advertising is extremely important. We're cautious about it. Gopets have a tool to let you design clothing for your pets so product placement seems quite natural. This is more exciting for advertisers than banner ads say. Companies like Massive are acting as a bridge between developers and advertisers. There is no equivalent of Massive in the UK yet.

[ So... specialist media buyers for the games industry then. Seems sensible. ]

JP: Massive focus more on the hardcore traditional gaming. They've not really looked at casual gaming much.

[ But this seems to be a theme here: lots of folks from the traditional gaming industry see casual as a new market for them, rather than a new sort of activity. And given that the models, the content, and the audience are all rather different... does this hold? ]

EB: Massive came to us to sign a deal. But they don't have any salespeople selling to women. I could put together Gap Jeans for the pets, but it's difficult without such a salesforce.

JP: It's not necessarily about the play, it's about the things you can add to the play and monetise.

EB: In Korea they had only games with subscription models for some time. Everything else collapsed - retail etc. Then came price competition, and free MMOs. The intention was to build volume then start charging - but users kept switching between games to avoid paying up. Then the "death model" was tried out: paying for new lives, selling accessories, etc. This was quite popular because it kept the perception of "freeness" in the games, but still provided for revenue. Players ended up spending more than they played for the subscription model.

MN: Mixing casual and MMOs is a new idea. Until recently MMOs are for serious gamers and casual games for everyone else.

EB: Western perception is "oh yeah, Korea are just nuts".

RZ: We've launched a sophisticated community. 80% of our users set up an avatar, 25% have bought additional items for their avatar. From surveys, we know that users like this - it's about showing off, it's not just about money.

EB: There was a phase in Korea when everyone had avatars you dress up. That lasted about 9 months before players noticed it had no effect on gameplay. Temporary gameplay-affecting items are the ones which make the most money. Gopets make $30 pcm from their paying users.

RZ: Lipstick, winning modes and losing modes are the biggest sellers.

EB: We have our own virtual currency, which has different exchange rates in different territories depending on friction costs accrued by working with different payment mechanisms. Our top selling item is a virtual rock for our virtual zen garden.

EB: Games have to be designed from the ground up for a given business model. Taking a subscription game and moving it over doesn't work that well. In the West we don't like these models because they seem unfair: but it's just like real life!

[ Maybe this is because we look to games for escapism? ]

Q: You're selling perishable goods. The rock can be used only once and resold. Are you looking to enable a marketplace and let players create and sell their own items?

EB: The initial approach is to make items non-transferable and perishable. This works for a little bit if you're the first mover. CyWorld (?) in Korea had a model where you rented skins for your site, which worked at first but then started losing players. Permanent items should be permanent. If they paid for something from you, they've bought it, and should be able to sell it. Don't be arrogant and insist they buy only from you.

Q: Who are your customers?

EB: Women in their teens and 25-45. Most revenue comes from the latter but the user-base is split.

JP: Other than avatars, how can we monetise community?

MN: Subscriptions? With a low price-point, yep.

RZ: We're monetising what is basically an online community. We don't want users to go away; with our model, we make money from plays so we need to keep them in.

EB: You can make subscriptions work with the item model. We have a limited-edition item which is only available to premium subscribers. This item normally has more game value and tends to resell for $25-35 each time too - so the player sees values. But the item-selling model came first, not subscriptions.

KB: Subscriptions fit well with any long-term proposition; anything which players think they'll need for a long time. Subscriptions need to have unique or exclusive elements to be successful.

JP: Do you price games lower in Italy and Spain (where the market demands lower pricing)

MN: On a case-by-case basis, yes. 25-30% lower.

EB: We price v differently between different territories (China, Philippines, etc.). How do players react to this?

MN: They don't tend to know. Players don't tend to go into price comparison services.

[ All this despite the single currency across Europe! I wonder how long this blindness to price variations will continue. ]

JP: How likely is it that the model will change completely? e.g. ISPs pay for content and bundle with access, as in the RealNetworks/Comcast music product bundle.

MN: This is taking over very quickly in Europe now. If you buy large quantities of games in advance you can do so very cheaply - e.g. 10% of retail. ISPs are fighting hard to acquire and retain customers. We've worked with ISPs giving away free music, games and videos. Games are more effective than music or videos when given away for free.

EB: Some carriers will pay for exclusivity on mobile games.

JP: Where is this going to go in the future?

MN: We've not mentioned loyalty schemes (frequent flyer miles etc.).

JP: People could pay for game content via these existing schemes?

MN: We're doing this in Korea. Companies have such an inventory of this virtual currency that they need ways to get it spent!

KB: Skill gaming is a perfect example of this: a points-burner.

[ Is skill-gaming a euphemism for gambling these days? ]

EB: The item business model is the most efficient I know of: players get to spend what they want to spend. This will happen to every market. The idea that you pay a fixed price for your content will die: we don't do this almost anywhere else in our lives.

[ ? Aside from mobile tariffs, TV subscriptions, magazine subscriptions, etc. ]

Q: What about in-game advertising vs advergames?

MN: I've yet to see a good advergame.

EB: Advertisers want to advertise a product, not develop good games. If I had a product that women over 30 bought a lot of, I'd talk to PopCap.

Q: From the gamers POV, buying an item means more involvement. Isn't this the opposite of casual?

EB: In Korea they have a term "advanced casual games". They have play times of 5-20 minutes. e.g. "freestyle basketball".

Jessica Tams welcomes everyone. "Casual games are easy to learn, but hard to master." Little upfront knowledge or skill needed. Can be played in a series of micro time slices potentially over a long time period. They're easy to acquire. They're platform agnostic.

Alternate business models for mobile

Thomas Richter, Director Content Services Jamba/Jamster

Paul Rehrig, responsible for digital product innovation (inc mobile), Warner Music Group

Adam Martin, CTO Mindcandy

XX: MD Overloaded

Tony Pearce: CEO PlayerX

Mindcandy did the worlds first "alternate reality" game. Cross-media stuff, people running around cities, live events, etc. Currently running a global treasure hunt for 50-100k players.

TR: What is the proven business model today?
XX: Operator portal sales is the most proven. Then aggregator portals. Then through own web sites.
PR: Agrees; also consider retail which will be big in the next 5 years. Bundling content with CDs, to give more of an "album experience" (i.e. persuade people not to download instead).

[ What about off-portal sales promoted via print magazines - isn't this what built the ringtones and logo industry? ]

TR: Got any statistics?
PR: In the US, 90%+ of mobile games are controlled by operators. 18 months ago that was 100%. You won't make money there without strong carrier relationships. In Europe it's 50/50 operators/major portals.
TR: Adam, how far did you go in including mobile in your games?
AM: It was a core part at first. They needed to launch quicker; mobile is about to become more an apparent part of it now.

[ I presume this means it's been under-represented to date... ]

AM: (talking about their game). We have player contact via retail, mobile and more. It's entirely cross-media; we don't have a mobile strategy as such. When you're doing something entirely new you can launch everything in one go.

TP: The music industry has a lot to say about comarketing and business models involving other content. What's your experience?
PR: Partnering with a media company is a good idea. We spend 4-8m dollars promoting a given record over an 18-month period.
TP: What budget do you have to share?
PR: With the Green Day album American Idiot, the CD includes a shortcode (in 33 countries) with the Green Day keyword. Users SMSing to this get back a menu of content which includes ringtones, video, wallpapers, games, etc. That's a lot of eyeballs and hits.

[ How many? ]

PR: We do a lot with street teams, radio, television, etc too. We've done this routinely.
TP: How about putting music into a game?
PR: We've developed an affordable per-use licensing model. We're interesting in working with publishers to talk about new models for downloadable soundtracks: charge a subscription for access to league tables, in-game soundtracks, etc. This is a reality technically today. Also interested in artist- and movie-themed soundtracks. e.g. 50 Cents Bulletproof game - the largest-selling in America? Maybe only 10 a year though.
TP: Tony, how far have you gone with these kinds of models?
TR: Publishers look at all channels to determine how much a game will make. Developers ask for forecasts for sales. Operators are still king when it comes to pushing big numbers. I'd love to go outside operators if that made sense - Jamba and Jamster have done very well, retail I struggle with. I started the DigitalBridges retail channel, did a retail box with CPW, PhonesForU. For the first year this was a great success, because operators weren't targeting the casual gamer very well. This was good for developers too: seeing your game being sold in the shops. Sales weren't fantastic: they were good Christmas presents or stocking-fillers, but retail proved expensive as a year-round investment. There are logistics, packaging, returns, etc: it's similar to the operator model, except there's no logistics for operators.
TP: So you'd team up with media companies for distribution?
TR: We did this a few years ago, putting ringtones with CDs. Some worked fantastically, some didn't. Getting a game onto Tier 1 operator decks, with a banner, gives a number of sales we can forecast.
TP: People don't buy mobile games in boxes.
TR: The other downside for retail is the price. You can't sell at £5 - not in a box. So it's 3/4 euros on a portal vs 11/12 euros on a box.
AM: We shipped just a piece of cardboard to shops, to minimise cost of goods. Then once we have them online we have a relationship.
TP: Any more thoughts from retail?
XX: We do retail as well, we were in CPW. We had all these challenges, we stopped after a year. Lots of first-time sales, but when they discover it's a scratchcard they never come back to buy another. Like a PC, the mobile is the distribution, payment and consumption device.
TR: So is retail dead?
TP: No, it's incremental. It's a hassle (retailers are hard work to deal with).
TR: Who's buying?
TP: Present-buyers. The argument that it comes with a manual doesn't really hold.
PR: Existing distribution mechanisms don't really work for mobile games. What good is a box when the product is a 60k file transmitted over the air? Eliminating retail as a priority would be wrong though: it needs to be done more creatively. You can see a 5% response to bundled shortcodes etc. when it's done right.
XX: We use retail as a marketing communication channel, giving away free first levels.

[ Questions follow ]

Q: What does the 5% response rate equate to?
PR: We have an artist called Pretty Ricky. A slip of paper with a shortcode on it, bundled into the record (which sold 1.2m copies), generated 100k responses for sign-ups: either to buy content or sign up to an SMS club. 3000 people wanted to pay to become a member of the club. We didn't do a mobile game here. Where there's a rabid fan-base, you find users who will pay for additional content. It varies by country and by artist.
TR: Jamba did a few tests with people of paper in console game DVDs and didn't get such good returns. People didn't want to pay 5 euros on top of a game purchase to get a version for their phone.

TP: We did a promotion where you were given a mobile game when an EA game got purchased.
PR: It's operators, then handset vendors, then media companies (in order of priority for who to partner with).
TR: [understandably] thinks aggregators can rival operators.
AM: If you can get a retailer to care, you can get a lot from that.
PR: BREW is important in the US and Brazil. You need BREW in these territories. It a distribution and development environment. You can't work outside the BREW ecosystem with a BREW carrier: it's been promised for ages but never happened. 33% of the US market is BREW-only, making big problems if you want to work outside the carriers.

Q: It seems the biggest problem is that it's difficult for users to get games on their phones. Has anyone talked to hardware manufacturers for alternate methods of getting games onto handsets?
PR: The problem is fragmentation of handsets, not the lack of availability of willingness. There needs to be consensus at the handset level and we're a long way from any alternative to deck-driven distribution.
XX: 300 device SKUs per game. We have games bundled with Nokia and Samsung handsets. For us there's a challenge: how do we get paid? Nokia don't pay, they see it as promotion. We gave away the game for free in the end.
PR: Most J2ME implementations support some sort of trial-then-subscribe model. If you want to preload onto a handset, go to the operator not the handset vendor.
TP: All our games are standalone download games.
TR: Is the subscription model interesting?
TP: Yes if you've got the right sort of content. Connected games where you buy inside the game? Potentially huge but there are complications today. We've come a long way in the last 2.5 years but there are lots of downsides (we had one game with >1200 SKUs, lots of different handsets, languages).
TR: Can anyone share figures? Someone earlier was saying there was no business in mobile gaming.
TP: It's a handful of games that make all the money. You should expect (with a good-quality game on all operators): 10k downloads/month/operator should make you very happy. There are games which stick in the top 10 - e.g. Tetris. The hardcore gamer games go into the charts and fall out: e.g. Splinter Cell. It's casual games that sell.
PR: Mobile games are a $1b business today. Mobile is a better distributed platform for games than any other: there are 1.5b mobile game-enabled handsets today. Typical subscriber for games lasts for 4 months. Find games that deliver long-term value.

Q: Do you think carriers work as they do because they have had no time to do it better? Or is the control they exert a deliberate choice?
PR: Their mentality is "it's our network". They have the costs of building and maintaining it, subsidising handsets, customer care. The cost of taking a customer call is $8 - so if an operator takes a single call from a customer over a game, they're out of pocket. It's important to understand their mentality.
TR: Operators are getting more relaxed. Everything that drives traffic and brings customers is good.

Q: You talk about 90% of deals going through operators. Is the other 10% big enough to make money in Europe and Asia?
XX: It depends on your development costs.
Q: How hard is it for new players to get in? Can we make money now?
XX: It's difficult to enter the market. The supply is bigger than demand right now. Supply is scaling back - some Chinese/Russian companies were pushing out 20 games a month, but are slowing now.

TR: Where do you see the mobile gaming industry, as an independent industry, in 5 years?
XX: The large studios will own most of the market. But the operators need some smaller studios, to pump out some very creative games. Connected gaming, social gaming, MMORPG, are all opportunities.
TP: I wouldn't like to be entering the operator/carrier space as a developer now. If you have a brand and a license they'll talk to you, but 99% of the time you get referred back to publishers. But... operator distribution space is limited, so it'd be good to have other channels catch up. You need continuous products, not just 1 game every couple of months.
PR: Even if you get into one carrier and they take your game, you need to be on others too. Find a good publisher: there are 5-7 good ones. Also consider bundles: e.g. in Japan a ringtone sells for 100 yen. Ringtone + song = 300 yen, all in the same transaction. Video + game + ringtone + song = 500 yen, for KDDI customers. It's not expensive for a publisher to add content they already have into these bundles. Finally, convergence: devices coming out now are not far away from being games machines. There'll be phones which are game-optimised. There's an opportunity here to target these devices with a subset of ports for serious gamers... or address the mass market with more casual games.

TR: Adam, how do you fit with your games content?
AM: We haven't talked to operators yet. Retail is an untapped opportunity for lots of people. Operators have a strangehold and it's less and less viable for us to break in that way.

Q: Re conversion ratio for scratchcards and promotional games. New devices like the Ngage aren't doing that well. What do you think?
PR: Lots of issues with Ngage, but high-end phones sell well. They have good support for 3D, real audio, multiplayer, in-game chat. I don't have comprehensive data on scratchcards etc.
TR: Our experience is that they don't do very well. Phones are getting like sneakers - expensive ones are cool.
PR: You'd think that carriers want to talk to music companies. They won't talk to me - they just can't talk to everyone. If you want worldwide distribution, work with a shortlist of 10 companies who have distribution worldwide and sacrifice margin for lower costs, better distribution and 20-30% of post-carrier revenue. Revenue shares can go from 15-50%.

Q: Downstairs earlier we saw unbranded casual games. Mobile games tend to be very brand-led. What's the crossover between downloadable PC and mobile games?
PR: It's about brand recognition. Top brands get to the top of decks.
TR: That's true for a deck. But we sell most of our games from a web portal with search, etc. Our best game last month was Bubble Ducky: no brand, etc. Yes, I'm a strong believer in this crossover. Most casual gaming is via PC - you can cross-market any platform with any other.