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Premium Game's Place in Mobile Gaming: Fishlabs on Pushing For Bigger Games, Combating Piracy and the Future of Smartphones

Posted on Monday, August 22 @ 18:57:02 PST by Sebastian_Moss
With most smartphone users used to paying a pittance to play a game, it's hard to convince them to spend $10 on an iOS game. Fishlabs managed to pull this incredible feat off with Galaxy on Fire 2, but CEO Michael Schade is still adamant that Apple should provide a premium games section that highlights similar titles.

To talk about this, ad-based games and the rampant spread of piracy on Android, we chatted to Schade at Develop in Brighton.

Hi, Michael, could you start by introducing yourself and telling us about your work at Fishlabs?

My name is Michael Schade and I am CEO and co-founder of Fishlabs. We’re specialized in high-end 3D mobile games, we've done 15 titles on iPhone, we've got about 50 million downloads in total and our flagship title is Galaxy on Fire 2, which is the exception to the rule and sells quite nicely at $9.99 on the App Store.
How do you think Apple and other mobile platform holders and publishers treat premium games?

You always have a need for premium games when you introduce a new platform – this is actually why Fishlabs exists: We started with Sony Ericsson when they were paying us to create games to show off the rendering capabilities of the K700 back in 2004, which was the first mass market mobile with 3D graphics. Now, with iPhone and iPad and iPod Touch, which have around a 200 million install base, Apple still, from time to time, features stuff that pushes the platform. However, since there are so many titles out there, there is definitely a need for premium categories if we, and other developers, are investing a couple of hundred thousand, if not 1-2 million Euros – that’s the bracket – then we want to be sure that we get discovered and we don’t have to rely only on recommendation.
So, if Apple were to set up a premium section, how would they define what is premium – price, development costs or how good they think the game is?
Oh, that’s a very tricky question indeed. [Laughs] Every time I bring that to the table Apple asks the same question. I’d say it could be completely editorial, they decide what they think is premium – that’d be good enough for me, we’d just need to try hard enough to meet their internal premium criteria. I would appreciate if there was a floor price, and my gut’s feeling is that it should be $9.99 because that’s the lowest price for pay-per-play that I’ve seen on Steam for instance. There are good 2D games, really good 2D games that are being sold for 9.99 Euros, so if you go $9.99 it’s even lower than that. So I think that’s the premium price. If somebody’s not willing to pay 10 bucks for a game on a platform he paid 800 bucks for, then that’s not premium.
But do you think that because most iOS games are free or 59p, most gamers will play 10 of them rather than buying one 9.99 game?
I think the consumer is cleverer than that, they realize that if you pay just 59p for a game, you can’t expect the same experience as if you paid £5.99. Especially if your target group is more in the traditional hardcore gaming space, these guys are coming from a different price point anyway, and I closely follow discussions on forums where people discuss “what can you expect from a game that’s only 59p?” So if this category is targeted, and marketed at, I think it would be very successful. To a certain degree, it’s kind of a surprise that Apple have premium products, for a premium audience but don’t have a premium category for premium content, I think it’s a natural fit.
But do you take a kind of console approach, where you want to sell them high-end, high priced games at the beginning, then they play the game for 10-12 hours and that’s it, or do you also follow the free-to-play model of using lots of microtransactions?
We actually just introduced some in-app purchases for Galaxy on Fire 2, so you can purchase some DLC which is called Valkyrie, and shortcut the route to owning your own base station to park all your different spaceships. So either you play quite a lot, or you just pay 59p and you just have it – and that works quite well actually. You have to realize that people already bought one of the most expensive games on the App Store and they are not complaining about getting the space station because they really want to have it, and it’s not a high price point. I just read a nice article about CCP charging 80 – I think it’s Euros – for a monocle for your character, which is only a vanity gadget… that’s a little out of scope.
For free-to-play games to be successful they have to lock players in to their game for as long as possible, sometimes even years. As more and more F2P games come out, more players will be locked in and so your market will decrease – is that a worry?

Oh, exactly I think there’s going to be a competition for gaming time, for gaming time budget. The challenge for developers, especially if you are going for a free-to-play model, where the game is more a service than a product, you need to find a way that the game is really sticky, and that the players stay with the game. World of Warcraft was early enough to create a strong user base, so people stuck with the game because their friends were playing, so a lot of people don’t leave because their peer group are there. Whoever comes next on a different platform has to make sure that it’s compelling enough that people really stay with the game. My impression is that there’s something that works for the casual gamers, I think loyalty there is not strong – if something else comes along they just drop the first stuff and go to the next one. Whereas if you have a hardcore audience, you have a very loyal fanbase – and we can see that with Galaxy on Fire as we’ve had the title now for five years, and we’re constantly improving the title and people are following us even if they switch their devices from Sony Ericsson to Nokia to iOS, and now some people are going over to Android and they are asking if we can port over the game – they just want to play it again. That proves to us that you can build a loyal, hardcore fanbase that follows you.
The panel talked about whether mobiles were the next console, but with fragmentation – especially on Android – couldn’t it be argued that they’re the next PC?
That’s a good comparison, yeah, I think Android is more the next PC and with Apple it’s a bit better, but we’re starting to see fragmentation here as well: We have the iPads with a different resolution, iPad 2 has much more rendering power, we have to come up with different assets. So, it’s not as consistent as with the latest console generation, however it competes at a much higher level in terms of install base. 200 million iOS devices is more than all the current gen consoles combined. That’s a serious number here. But as I said, I think some of the OEMs or the platform owners eventually will come up with a completely converged platform, so it’s not only a mobile game or only a console game, it can be played on any platform with maybe slight differences, or a little bit different gameplay. But just a few OEMs can do that, that’ll be Apple and Microsoft and maybe Sony… but Sony is a bit further away.
But Sony have tried to push the PlayStation Suite, where they bring PlayStation quality games to mobile – what do you think of that?
Well that’s PS1 and I’d say: “Who bothers about PS1 these days when you have iPhone games that are at PSP level?” I don’t think PS1 titles are moving the needle for Sony.
Do you think the convergence will be hardware based or not happen until cloud takes off properly?
Hardware will play quite a strong role here because if the hardware is capable enough and if the eco-system is attractive enough for developers like us to create games that are pushing the limits, then people will choose distinctive hardware. Just to give you an example, I was a big PlayStation fan but I got an Xbox in the end because I wanted to play Halo, and sooner or later we will see that on mobile but we haven’t seen it yet.
But as products converge they could get more similar, do you think, therefore, that franchises will be the most important purchasing factor?
Franchises will be important because the platform holder also gets some media buzz. In media, this has always been very important, and one thing is for sure: The battle is on. And nobody said it better than Stephen Elop, the CEO of Nokia, at the Uplink conference, he said that it’s not about the hardware anymore, it’s about the ecosystem, who provides the better ecosystem, not only for the consumer, but for anybody whose involved in the value chain – be it the operator who is selling the devices, the developer creating content and the hardware manufacturers who they rely on to make the product.
Do you think this is the time for OEMs to prove they have the best ecosystem, is it make it or bust?
You might not be gone, but you’d be facing a hard time. I think it’s Apple and Microsoft, Google TV is out there, but Google has a challenge of… firstly the platform is not mature enough yet and doesn’t protect content well enough against software piracy etc. – the biggest challenge is that since Google tries to sell Android to different OEMs, they naturally want to differentiate their software. You could say the same for Microsoft with their phones, but it’s a tighter system and they’re more in control. With Android everybody wants to do something different.
So which do you prefer then?
Well if you put a gun to my head, I’d have to say Apple, they’re in the lead, sure. It’s Apple, then it’s Microsoft, then it’s Google.
But neither Apple TV or Google TV haven’t really picked off – why do you think that is?

That’s a good question, maybe with wireless connectivity with iPad 2 and iOS 5 that might be a game changer here. And maybe if the Apple TV station gets rendering power itself and the content is really truly accessible on any device, that might be successful.
If they did release an Apple TV that played games would you make games for it?
What about Google TV?
Then Google would have to prove first that we can make money on Android smartphones and tablets, and that’s not the situation.
So you haven’t been profitable on Android?
No [laughs], I wish it was different, and some say we should add more devices, but I can clearly see the metrics of how many people have paid, and if we did support more devices we still would not be profitable. On iOS, if you have a successful title, there is the chance to make a lot of money, and if you look on Android, you see the most successful titles out there. And if I take a closer look at the sales of our competitors then I’m not so excited about these numbers.
Do you feel it’s Android’s fault with the way the market is designed, or something else? There are certainly a lot of Android devices out there.
Absolutely, there are lots out there. Interestingly, some consumers still claim that there are more Android devices in the market than iOS, which is simply not the case – it’s 200 million iOS to 100 million Android. A lot of people are mixing up that, on a quarterly basis, there are more Android devices sold than iOS devices that is true. However, the install base is not bigger, yet. Eventually it will become bigger, I think that is sure.
But I think the problems arise from discoverability of content in the Android market, that’s a bit harder. The integration on the desktop is not so tight like on iTunes, like the closed solution. You don’t need to jailbreak your device so you can play any content, even in-app is not suitable for piracy prevention because, if you have root access, then you just copy the whole in-app purchase table, and that’s pointless.
So have you had a lot of piracy then?
Oh yeah, it’s above 90%. And the ultima ratio from Google is like using in-app purchasing, not only to prevent piracy, but also to make sure the user has a really good experience and only needs to buy the full game if they’re really happy. But that didn’t work so well. However, you can see that the downloads are not too bad, so you can see that we’re in the brackets 50-100 thousand only for the Tegra 2 powered devices, so that’s not too bad, but the ratio of people who purchased is really low.
If Apple did decide to have a premium platform, would you be worried that big publishers, who are more used to large console games, would muscle in on the territory?
I think, if the big publishers are really serious, and don’t dilute themselves with 99 cents pricepoints for the AAA titles, then they’ll have the big advantage of the higher production value and the marketing behind it. So then, it would be very hard for smaller developers, but there’s always a chance that if you’re a little bit more innovative, little faster, a little bit cleverer then you have a chance… but it’s changing. The iOS was an independent’s dream, and it is more and more changing, all the marketing spots on iOS sites are sold out for at least six, if not twelve, months. So how do you compete as an indie developer? It is going to be more and more of a lottery for indie developers, and the big publishers putting more and more money into this.
So do you feel that you always have to stay one step ahead with emerging platforms?
I think you have to deliver what your audience wants and you have to make sure that your audience is following. I think a good example is CCP with EVE Online, they only have one title, but they are successful and they have a hardcore audience. That is one recipe, but it is hard to duplicate that because, if you start later, the circumstances are different. I don’t believe that guys who have a one hit wonder can repeat that quite easily - Angry Bird might be an exception to the rule, but I’ve hardly ever seen anybody else come up with a second big title from a two guy, very small studio. What we mobile game developers need to learn, need to understand, are some mechanics from the free-to-play model, without pissing people off with spamming etc. Do it the clever way, there are some very good examples on how to monetize your fanbase, and grow your install base.
Do you think free-to-play risks following the same path as 3D, where bad 3D movies put people off the entire genre?
Oh yeah, totally, we will see that. I believe there will be a competition for free-to-play as well, because of the time budget that is available, people will be pissed off – certain games are not designed to give you a great game experience, but are designed to just squeeze the most money out of you. People will walk away if there is a better alternative.
Conversely, you also made an ad-based game for Barclaycard, which was very successful – was that surprising?
Yes, it was very surprising, especially for me. I was such a non-believer in that particular game. Waterslide Extreme has 24 million downloads so far, and has created more than 3 million hours of brand engagement. [Laughs] it’s unbelievable, I thought it was super lame going down a waterslide, tilting left and right, but luckily a lot of people are into that. It’s a good example that shows that you never know.
Are more ad-based games something that you’re looking into for the future?
That’s not a bad guess [grins].
I’m sure lots of other companies called you up after that.
The ad-based games business is very important for us, it’s a fairly big chunk of our revenue, it keeps us stable because the risks are fairly low, the money comes in on a steady basis. However, the leverage is poor. The 24 million is a great PR success for us, but we don’t get more money because of it.
What I liked about it was that it was clearly an ad-based game, what do you think of games that try and hide the fact that they are adverts?
Every time a brand approaches us and says we want to do a successful ad game, then we say that the user experience comes first, and you have to forget about your brand and message in the first place. That doesn’t go down quite well, but some do really understand, and Barclaycard were perfect. You said it, it was clearly an ad game, but the game experience was totally about entertainment and having fun – that’s it. But the problem is: how do you upsell the product or the service? That is something in ad games we will see more and more, how can you bring people back to the point of interest once you have engaged so many millions of users?
Will you merge your games so that they have the same logins, user profiles and so on?
No, not really. Actually, we’re not collecting any data in terms of emails and such, because we do not believe that this is actually moving sales. It’s word of mouth, delivering exceptional game experience. That may work if you have tens of millions of users, which we don’t have outside of our ad games, and obviously we can’t collect emails for that.
What do you think of OnLive?
Obviously the quality is stunning, but to a certain extent, I think what the OnLive guys are missing, if they say that it is a great use case for smartphones, operators just don’t like applications that eat up a lot of bandwidth, because that’s the bottleneck. Clearly, video streaming eats up a lot of bandwidth, eats up the battery… I’m not such a great believer in OnLive. I think the biggest challenge is that these games are not meant to be played on a mobile device, so they will always suffer from clumsy controls etc. If OnLive want to be successful on mobile devices as well, they need to have a portfolio of games made for mobile.
Would you like to be part of that portfolio?

I don’t know the metrics right now, we are more focused on working with OEMs, and getting the most out of their hardware.
You’ve done some exclusive deals with OEMs, is that something you’re still looking to do?
Absolutely. It depends on the year, but sometimes 30% comes from ad games, 30% from downloads and 30% from OEMs, it changes a little bit depending on when you launch a specific title.
What are your thoughts on Windows Phone 7? It hasn’t really kicked off.
In terms of install base I think the issue was that it was a little bit too late maybe. I like the UI though, and I am very excited about Windows 8 because then we have a seamless integration and a seamless experience on the desktop and the phone/tablet.  We are a great believer in the joint venture between Nokia and Microsoft, also because Qualcomm are very much behind it, they provide the hardware behind it, so Nokia now has two big friends putting a lot of money behind this. From a developer’s perspective, they need to open up native code, so we can have native code running on it.
Are Blackberry dead then?
It’s definitely not in a good position, I don’t want to say it’s dead in the water. Its strongest USP is its business solution, but Windows Phone 7 has a good business solution and I think Microsoft are going to eat up RIM’s market.
How many operating systems do you think the Smartphone market can support?
We don’t mind if there are 10 as long as they are all profitable for us. To some degree, fragmentation is good for us as it is an entry barrier for competitors. I wouldn’t mind if we had to support iOS, Blackberry, Microsoft and Android at a stage where the platform is really mature. I’m not sure about Meego and Bada, these purely mobile OS platforms have a tough job convincing developers that they will last. We do that with Symbian because we have a close relationship with Nokia, and Symbian 3 still has an install base of 50 million devices. If you manage to have an F2P model game for a 50 million install base, that’s great.
What about downloadable games for the PlayStation Vita?
I don’t believe so much in these traditional, gaming focused hardware devices, that now embrace digital downloads. The install base isn’t big enough. It’s a different story with both the Xbox and the PS3 because it’s closer to PC, and with Microsoft they also have a solution to mobile. Nintendo… if you read about what Iwata said about iPhone, how he didn’t take it seriously, and now they come out with a Wii U that looks like a Fisher Price iPad. I mean, they had a great success introducing the Wii, and you should respect that, but right now everything tells me that Nintendo are not in a good way.
So everyone is chasing the casuals, but you think you should stick with the core but bring it to mobiles?
Yes, exactly. If you compare what happened in the mid 90’s, everything went 3D, and you had to buy a new PC, or at least a new graphics card, every year to play the latest games. We predicted that the same thing would happen with mobiles, and that’s why we founded Fishlabs in 2004. We had this first deal with Sony Ericsson in place and we thought that the same stuff would happen again, and that the same thing would happen with connectivity – the first people to sign up for DSL were hardcore gamers playing MMOs, playing FPSs, and we knew that they would be the first people to sign up to play the mobile. If you have a family you don’t have time anymore to sit in front of your console, but if you’re on the loo or whatever [laughs], then you’ll have time to shoot your friends.
But it took some time between when you predicted it and when it became reality, it’s only just now kicked off.
Yeah, exactly. 2011 is the year where you have multi-core mobiles, that is 7 years since we started. 7 years is one console cycle.
But did you think it would happen earlier?

Actually, we were disappointed that the business model of selling games through carriers was so unsuccessful for us, which makes sense because the operator wants to support any kind of device, or any consumer with any device. So it had to be Apple introducing a limited number of devices, with a consistent platform with a tight store behind it, to be successful. So that is something we thought might be successful earlier, selling innovative content. In terms of hardware evolution, I think it’s pretty much proceeding at the rate we thought it would – actually, it’s a bit faster now.
Do you think it will plateau at some point?
That’s very hard to say, I mean, who thought that Moore’s Law would actually get even shorter? Sooner or later anything plateaus, but who knows when that will happen? If you zoom out from a chart you never know where you are, that’s the case. 3D graphics have been around for about 20 years, so all these guys who are doing mobile now have that experience and can use better production methods to create smaller chips and dies and everything, and then put that all together. It’s… I don’t see that plateauing for 10 years.
And it’s quite amazing how mobiles have gone from PS1 almost up to PS3 quality in a few years.
Exactly, and I think the pace will go up. That is something I learned from the Intel guys - they completely missed the mobile boom – they said if you reduce the size of the die etc, you get more chips out of a die, but you don’t want the price to go down per chip, so you put more power into the chip so you can still sell it for the same price, and naturally this fuels the improvement in rendering power.
But is it a problem that, when you create a game with a long development period, technology has already advanced by the time the game comes out?
You have to anticipate a little bit, on the other hand, if you only target for the latest devices, and you don’t have an OEM deal, you go out of business. Just to give you an example, Galaxy on Fire 2, the first installment on Java was 1 megabyte, whereas the latest version we have is more than a gigabyte. That’s only in three years, and I don’t see an end there.
Apple are actually quite secretive about what they are putting in, say, their iPhone 5. Does that cause you any difficulty with development?
Not really, you can predict that. If you can’t anticipate that, you’re in the wrong business.
One thing that hasn’t changed much is the HDD size, iPads and iPhones still have the same sizes as their predecessors. Is that an issue with game size?
That’ll change. Otherwise why would you purchase an iPad with HD resolution and everything if you don’t have the content to show off the hardware capabilities, or if you can only store just one game. That’ll change.
But all these advances have to come at the same time, battery life, storage and power…
Apple wants us to buy a new gadget every year, right? I think they’re aware of that and they’re working hard on that, but having done some OEM deals with preloading games they’re really very picky on power consumption, and you really have to make sure that your game engine doesn’t drain the battery completely, if the game is suspended, then it can’t take up much power. On the other hand, though, they have 75 times more performance per unit of power consumed from Tegra to Tegra 4 or 5. So there is still a lot of potential for optimizing processing power to battery consumption.
Related Games:   Galaxy on Fire 2

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