Word on the Street - Major Devs might leave app store.
synthesis
Member Posts: 1,693
Word on the street is that Major powerhouse devs like EA and Gameloft are considering abandoning the appStore. Rumor has it that they are coming to the conclusion that for their large companies...associated with the cost to produce a major game title for iPhone...that it is hard to make any profit based on the volume of sales that title generates at the price points required to compete in the app store.
Since the appstore price levels continue to gravitate primarily towards $1-$2 (paid)...they are finding it very hard to compete at those prices levels (and be profitable). The volume of sales they need to justify their development budgets for a AAA title are just not there...even though about 20M apps are sold daily.
Soooo....
What this may mean could be any one of a number of things:
1) The large devs may abandon the app store completely with any new/future titles.
2) The large devs may reduce the number of titles they introduce (compared to now).
3) The large devs partner with smaller dev companies (leaner and meaner) to develop a AAA title.
4) The larger devs may lease their title license to smaller devs for a royalty share.
In any case...it seems to be +1 for smaller indie devs. We are winning the price wars with the big companies. Even if they farm out the titles...the budgets will have to be reduced to be profitable meaning they will be lighter and less developed. Our $1-$2 price points (and the fact that the market is demanding those price points) seem to be driving them out...which we think means 2 things...
1) More limited access to signature titles on the app market (good or bad depending out anyone's perspective)
2) More potential for headline exposure for the smaller devs (good for us)
Since the appstore price levels continue to gravitate primarily towards $1-$2 (paid)...they are finding it very hard to compete at those prices levels (and be profitable). The volume of sales they need to justify their development budgets for a AAA title are just not there...even though about 20M apps are sold daily.
Soooo....
What this may mean could be any one of a number of things:
1) The large devs may abandon the app store completely with any new/future titles.
2) The large devs may reduce the number of titles they introduce (compared to now).
3) The large devs partner with smaller dev companies (leaner and meaner) to develop a AAA title.
4) The larger devs may lease their title license to smaller devs for a royalty share.
In any case...it seems to be +1 for smaller indie devs. We are winning the price wars with the big companies. Even if they farm out the titles...the budgets will have to be reduced to be profitable meaning they will be lighter and less developed. Our $1-$2 price points (and the fact that the market is demanding those price points) seem to be driving them out...which we think means 2 things...
1) More limited access to signature titles on the app market (good or bad depending out anyone's perspective)
2) More potential for headline exposure for the smaller devs (good for us)
Comments
Although i do think the price should be a little higher like a tier 2 min.
Darren.
A cursory look at what Gameloft announced at E3 ( http://www.gameloft.co.uk/download-games/news/1367-gameloft-reveals-huge-slate-of-games-at-e3/ ) shows four iphone games and five iPad games on the way (this was back in June).
Compare that to two DSi games and one PSP game, it shows pretty clearly where their focus is.
And their recent financials paints a different picture to what you're suggesting:
http://techcrunch.com/2010/02/02/gameloft-iphone-revenue/
http://www.mobilecrunch.com/2009/11/03/gameloft-announces-q3-results-expands-into-southeast-asia-and-the-middle-east/
Gameloft has been around for over a decade and was there when the first WAP handsets appeared. It was doing pretty much NOTHING for most of that time till the iPhone appeared.
Why? Because mobile gaming, up to that point, had been fractured. If you were making a game for Nokia phones (and I have) you'd need to test it across all handsets. It's similar to what's happening to Android right now - you can make a game for Android, but typically you'd have to cater for the lowest common denominator handset. Otherwise, you'd have to make assets for every screen type/resolution/feature set.
The iPhone has stayed the same, pretty much, since it was launched. Same screen size. Same OS type etc etc. You only really need to target one device for your assets, and it'll work across all ipod/iphone systems.
Yes, with iPhone 4, you can make higher res assets. But still, you can see how easy it is to port these assets to lesser devices using just GameSalad.
iPad is slightly different, having a much larger screen. But that's still only two configurations you really need to look at. With other manufacturers, you're looking at games having to work across multiple configurations.
The fact is, it's cheap to make even good quality titles on the iPhone. Dirt cheap. Just the cost of setting up is reduced dramatically. A developer's 'desk' will typically have a Mac/PC and a dev kit.
Nintendo DS dev kits cost about 2k EACH. Same with PSP. So you're talking 4k per person just on dev kits alone.
Compare that to what you need for the iPhone, and you're slashing your costs in half, if not more so, right there.
Add on the significant amount of marketing needed to recoup the cost of development on a PSP/DS, as well as the generally higher price point, and you can see why big business is more inclined towards the iphone when dealing with mobile games.
The financial risk is *far* less.
EA is different. It has its mobile division, sure, and I know first-hand that they're actively getting out of the Wii/PSP markets as they see them as being in rapid decline. When a Wii Harry Potter game gets canned, you know there's trouble in those markets.
But you can see from recent sale activity that EA are doing just fine on the iPhone thanks very much:
http://www.gamasutra.com/view/news/29077/TopGrossing_iTunes_Apps_EA_Takes_Over_Charts_During_Catalog_Sale.php
Notice that most of these were from a recent $.99 sale of their titles. But also notice that in that top 10, Tetris and FIFA were doing extremely well at $2.99
Honestly, you need to listen in on a different street.
QS
EDIT - Oh, and I might add that EA/Gameloft have huge brand awareness.
People gravitate to what they know. A lot of Gameloft and EA's titles use the brand awareness built up by 'proper' games on the consoles. Fifa, Tetris, Prince of Persia, Splinter Cell etc etc
For an indie to convince someone their game is better than the perceived quality and value of a 'blockbuster' game is hard.
Not impossible, as we've seen with Angry Birds/Doodle Jump/Flight Control.
But still bloody hard.
QS
Dr. Sam Beckett never returned home...
Twitter: https://twitter.com/Quantum_Sheep
Web: https://quantumsheep.itch.io
Theyve had pretty big year on year improved financials over the past 3-4 years, with an increasing amount of it coming from iPhone, so even though they earn less per unit, its still a very lucrative market for them. Like QS said, its just a hell of a lot easier to make and sell iphone games than it is for other, more fragmented mobile devices.
I'd think its similar for EA mobile too.... and they consistently hog a majority of the top10 games list.
So although Im sure that both companies regularly try to convince Apple that they should ditch 99c apps in favour of a higher pricing structure (its how the Top Grossing category came into existence), I doubt we'll see them leaving the appstore for some time.
Too big a jump.
With the great games that are coming out at $.99 it is difficult to feel sorry for the multi-billion companies if they feel the competition is too hot.
Procedural gfx and world editors (think spore) are a step in the right direction.
Procedural gfx and world editors (think spore) are a step in the right direction.
Again...It is speculation...
"Word on the street" = Rumors
The post was based on stuff we've been reading around the net on industry blogs.
Whether it comes to fruition is to be determined...only time will tell.
BTW:
@ ORBZ...
Glad to see you popping back in now.