Paul Graham’s response I felt particularly rang true, and is something to think about. Paul Graham earned his FU money from cofounding Viaweb which later sold to Yahoo.

One thing you learn when you get rich, though, is how few of your problems were caused by not being rich. When you can do whatever you want, you get a variant of the terror induced by the proverbial blank page. There are a lot of people who think the thing stopping them from writing that great novel they plan to write is the fact that their job takes up all their time. In fact what’s stopping 99% of them is that writing novels is hard. When the job goes away, they see how hard.

It sort of goes with the whole cliche that money can’t buy happiness, but it also provides some good insight for people who might see their job as an excuse not to do whatever they really want to do.

Now, it also reminded me of TED talk by Dan Gilbert on Happiness which I thought was particularly revealing. I’ve linked to the relevant moment here (14minutes, 22seconds in).

Gilbert describes a study which proves that “choice” is actually detrimental to happiness. And what provides more choice or freedom than a huge windfall (“FU money” so to speak).

Gilbert describes a study at a university. Students take a photography class and at the end have 2 framed photos of their favorite work. They are split into two groups. 1) Pick a photo, and you’re stuck with it 2) Pick a photo, but if you change your mind you can swap it out for the other one within 4 days.

Turns out the people who have a choice about their photo are less satisfied with their photo even after the 4 days is up. By simply having that choice, they are ultimately less “happy”. So, people tend to be happier when they have no choice presented to them.

I feel like this applies to those who find themselves with complete freedom in their lives. Choice means you have to actively make a decision, and generates questions of doubt about decisions you make. In many ways, not having the decision is a simpler, albeit naive existence.

Now you may ask me if I’m happy. While I didn’t have a huge windfall, I do earn enough that I don’t have to work at a real job. So, I am doing what I choose to do, not what I have to. As a matter of fact, I am very happy, but I did think about these very issues alot when I first earned my freedom. Issues that I’d never really thought of before.

Apple TV <-> Google TV
iTunes <-> Wireless Android Music Syncing
iAds <-> Google Ads / Admob
h.264 <-> WebM/VP8
iPhone OS <-> Android OS

Apple CEO Steve Jobs seemed to know this was coming and made his own jabs against Google at Apple’s town hall meeting in January.

On Google: We did not enter the search business, Jobs said. They entered the phone business. Make no mistake they want to kill the iPhone. We won’t let them, he says. Someone else asks something on a different topic, but there’s no getting Jobs off this rant. I want to go back to that other question first and say one more thing, he says. This don’t be evil mantra: “It’s bullshit.” Audience roars.

Google’s mantra is now “openness” in a refrain that might have been lifted from Microsoft’s Steve Ballmer.

“I agree that no single company can create all the hardware and software. Openness is central because it’s the foundation of choice.” – Steve Ballmer

Microsoft has always been about creating the platform and distributing it to as many customers as possible through their hardware partners. Microsoft, of course, made money through the sale of each software license. Google is eyeing the same basic plan but their plan revolves around monetizing ads on the platform. Beyond internet search, Google hopes to infiltrate mobile phones and television as well.

In all this conflict, the other PC manufacturers seem to be bystanders, perhaps hoping that a Google win will trickle down to their hardware sales. One company, however, seems to be thinking differently and trying to branch out on their own. Apple’s ownership of hardware and software has been one of their greatest strengths.

Of all the companies out there, HP actually stepped up and purchased Palm and their WebOS. And all indications seem to suggest that HP is reworking their product line to incorporate WebOS into their handhelds but also their tablets. Palm’s Jon Rubinstein told Slashgear that the Pre’s OS would be suitable for tablets “and beyond”:

With the iPad fresh to the market, and talk of a Google-branded rival running Android, we also asked about Rubinstein’s opinion on the burgeoning tablet segment. While Palm are focusing on smartphones right now, he did tell us that webOS was designed to be a “mobile device OS” rather than solely a smartphone platform, suited to a broad scale of devices up to tablets and even larger.

HP is even working on their branding. In one instance, they are following in Apple’s footsteps. HP has managed to switch Sex In the City from Apple to HP.

You see, Carrie Bradshaw, who has spent so many hours penning so much angst to so many troubled souls, has decided she can no longer do that on a Mac. The new “Sex and the City” movie, tantalizingly named “Sex and the City 2,” will see the newly married Mrs. Big stroking her fingers along the keys of something made by HP and powered–oh, yes–by Windows.

The move may seem silly, but Apple has been a staple on the television series throughout and just goes to show where HP is trying to position itself in the market.

Apple’s role, however, remains the same as always — as a staunch proponent of vertical integration and a tightly controlled user experience. Apple, however, lost the previous round when it was against Microsoft, but Apple has also never had such a strong lead before.

10 years is a long time — especially on the internet. I’ll post some more thoughts on it all later.

But, the more I think about it, the more I think there will be great hesitation for many developers (and I’m thinking mostly of game developers) to make the plunge.

Now, some apps clearly benefit from this. Comics for example is a comic book reader that sells more downloadable comics. It was $0.99 before today because they had to be. But now, they are free and will make their money on selling individual comics. Same with book readers, or other similar models. Even a game like Tap Tap Revenge 3 would benefit…. though sitting at the #1 spot at $0.99 makes me think they aren’t going to change their price anytime soon.

So are game developers suddenly going to release free games with add-on purchases? I don’t think so, and here’s why.

Lite versions aren’t always in your best interest.

I know customers want there to be a lite version of every game that exists… but, depending on the game itself, a lite version is not in the best interest of the developer. Lite versions can hurt the sales of a full version. This can be for a number of reasons, primarily that people simply didn’t like the game as much as they thought they would. For this sub-section of games, Lite’s hurt.

Now, if you release a Lite game and find it’s hurting sales. The easy solution? Pull the Lite game. But if your Lite is your Full version too, well, there’s not as much you can do about it, nor will you even likely know it’s a problem.

Lite Versions are a Good Second Push

Most games don’t come with a Lite version on Day #1. This isn’t an accident. Your game is going to get the most press on the day it launches, and you want people to buy it sight unseen.

So, instead, you wait until the game has lost momentum, and release a Lite version then — hoping for a second push up the charts.

Here’s the slow decline in ranking of Gameloft’s Modern Combat: Sandstorm game:

When did they release a Lite version? Yep. 7 days ago. Exactly when their game fell off the top 100 paid apps (dark blue line).

No Promo Codes for in-app purchases

Apple offers free promo codes for people to download full versions of apps. This is the primary tool developers have to promote their games with review sites and forums. Without these, it’s going to be harder to convince people to try your game.

Now, I don’t personally care. At TouchArcade, we pretty much buy every game we consider, but for a small time developer, looking to get the word out, this will be a major handicap.

Charts Matter

The next thing is that the Top 100 lists matter. They drive a ton of sales. Are you better off competing for a spot on the top 100 Free apps or the top 100 paid apps? I’m not sure what the answer is, but top 100 free requires some insane volume of downloads. Most people have focused on the marketing to the Top 100 paid. I’m not sure what drives sales into the Top 100 free, and most developers probably don’t either.

This also makes it strange to release both Full and Lite + DLC versions, in that you are splitting your sales across two apps. Maybe it’s not going to be a big deal, but this is uncharted waters.

Now, Apple has gotten Ngmoco to take the plunge and offer Rolando 2 as a free + DLC game. And a game like Eliminate is a natural fit for this plan.

But, unless there are some real success stories from smaller devs, I’m not sure how much this will affect most developer’s short term plans.

Years ago, Apple published a developer magazine. I don’t even remember the name of it, but it covered various topics on programming on the Mac or Apple II, but it would also occasionally have humor articles. One in particular stuck with me.

The author said that when you are getting ready to start developing your application, the single most important thing to do is you need to develop a killer icon. The desktop icon could make or break your application and it really should be your first priority.

As humorous a suggestion as it was, I think what I found most amusing was that there was a slight bit of truth to it… or at least it didn’t come from that ridiculous a place in the mind of the developer.

As much as this was a big joke for Mac applications, I think it’s a pretty accurate view of the importance of App Store icons. I’ve often been asked my opinion why certain games seem to just take off in the App Store. Some seemingly simple games just seem to rocket to the top. What could it be?

While the type of game is certainly important, it seems pretty clear that a good icon and a good screenshot are the main impact you have on casual App Store shoppers.

The same question can be asked of what causes an app to skyrocket to the top 10 when featured by Apple? Apple is basically giving you an itty bitty banner ad in the most trafficked area of iTunes and your icon is what represents your app. It seems obvious this is going to make a difference in attracting potential customers.

These suspicions were corroborated by one small focus group study of iPhone usage published late last year. Comments by this small group of individuals indicated that icon design was pretty important in deciding what app to get:

I think that many developers have already realized the importance of their icon but are they really looking at it as scientifically as they could?

I’d think that a really serious iPhone developer would spend time working on a variety of icon designs and try to figure out which has the highest click through rate when lumped on a page with other icons.

These sort of A/B testing trials are done all the time with regular banner ads. Click through rates can vary substantially between different banner designs. And the most clickable designs aren’t always immediately obvious. For example, color choices alone can make a big difference in banner ads click through rates. And when dealing with featured App Store positioning, I’d think that a small percentage increase in click through rates could make a substantial difference in sales.

I’m not sure where such an experiment could take place, but it does raise some interesting possibilities.

Well, it’s only 3 months later, and they have a top 10 iPhone app (and climbing) with Harbor Master [$0.99]. The game is currently sitting in the #6 spot of all paid iPhone apps. Now, I haven’t seen top 10 sales numbers lately, but I’ve heard the numbers have been increasing, so I’d guess they may be up to 10,000 (~$7000) downloads a day. The game seems to have sold well from the start, but Apple’s also currently featuring Harbor Master in their “What’s Hot” listing. Of course, those listings tend to only last a week or so, but from what I’ve seen games that really take off with the exposure don’t tend to drop off sharply when the listing goes away.

Hopefully, their success will sustain, but even if only for a short time, they’ve certainly proven that they have made the right decision. I don’t know the details of their development cycle and marketing, but would Harbor Master‘s success have happened the same way if Natalia hadn’t quit her day job to devote her time to Imangi? I’d wager not.

One good thing to note is that the economic conditions seems to have had no major effect on online ad revenues. It’s always hard to tell on a month to month basis due to seasonal variation, but our year-to-year numbers have been up. IAB claims across the board numbers are down 5% in Q1 2009, but that seems a marginal decline when there were predictions of 50% drops by some. In fact, one of the biggest doom-sayers, Nick Denton of Gawker Media, reports that their revenues were up 35% year over year. Anecdotal reports I’ve heard from other publishers have reflected the same experiences. While there may be more declines to come… so far, so good.

The growth of TouchArcade.com has been remarkable, and is the primary reason my time has been so occupied this past year. Keeping track of App Store releases really is a more than full time job. The time I’ve had to put into it has reduced the time I have had for MacRumors improvements and AppShopper feature progression. It also put on hold any other grand projects I might have had. That said, its success is not something I can complain about. I suppose I’m not entirely surprised that it was able to gain traction, as I feel iPhone gaming is an incredibly addictive topic… but the rapidity of the growth is surprising. In just a year, in both traffic and respect, the site has done more than could have been expected. (I even interviewed Carmack the other week — how crazy is that?)

The major goal of mine over the past year was the outsourcing of more of my work. It’s been a hard transition for me, as I have a lot of personal ownership in my projects — so it’s hard to hand over the “keys” to someone else. Obviously, no one else will do things exactly the way I would, and it’s just a matter of getting used to that. As a result, it’s taken me this long to finally hire the right people. Fortunately, over the past 6-7 months, I’ve managed to hire two people to handle the editorial responsibilities that can be so time consuming, and one person to handle programming. The transition is still ongoing, but I’m really happy with the extra time it should afford me. I may actually be able to keep up with my email now.

Looking forward, I still have progress to make on freeing up more of my time, so I can focus on larger scale issues as well as new projects. I think my difficulity in transitioning editorial responsibilities smoothly has taught me to get others involved at a much earlier stage. So, I’m not planning on ever starting another content site where I would be the primary writer again. And that’s no big loss for me. As a computer science major, it still amazes me that any sort of writing has become a major aspect of my occupation.

We’ll see what the next year holds. I think it will likely include some new hires, some major feature improvements to the sites I already have, and possibly the launch of one or two major new sites. There are a few sites that have been on my todo list for years now, so I’m anxious to get serious work done on them. Unfortunately, it will probably be a number of months before I can get caught up enough to seriously start on them. Next year’s update will be interesting.

Things have gotten even more competitive since with Gameloft and other studios drastically cutting their prices on older games down to $0.99. While this is good for consumers in the short term, the long term effects are potentially more troubling. There is a constant debate on TouchArcade as to these long term effects. One camp says that the App Store must sustain higher priced games in order to promote more quality titles. The other camp disputes this. I’m with the former camp, as is id Software’s John Carmack. In an interview, he said:

If [iPhone] games could have a reasonable shelf life at $9.99, you will start seeing multi-million dollar development budgets as the market continues to grow. But if it turns out the only way you end up being successful on the iPhone is games that cost a couple dollars, you’re never going to achieve that parity with the other handhelds.

One major effect of this $0.99 economy has been seen by EA’s announcement that they have created a micro-studio within the company to produce casual $0.99 iPhone titles. These titles are going to be in development just a short time (a month or so), presumably to recreate the success of some of the most popular games in the App Store, which also happen to be $0.99.

Let’s think about that for a second… EA is putting resources into low-risk casual $0.99 games. But imagine the flip side to this: What if EA had announced they were creating an division just to produce high quality iPhone original titles? Imagine big-budget original iPhone games with the resources of a major studio behind them.

Could it happen? If there was enough money in it, I’m sure it could happen… but it’s not going to happen at a $0.99 price point.

Now, I don’t blame consumers for buying $0.99 games, nor do I blame studios for following the money. But I do think the long term effects are going to result in a market of two types of games. 1) inexpensive casual titles and 2) inexpensive ports from other devices. Meanwhile, deep, high quality, iPhone original titles will become more and more scarce. Of course, the market will balance itself out over time, and opportunities will appear for developers to fill the gaps. I do expect downloadable content will result in more episodic apps with level packs and add-ons.

Indie developers are also going to be squeezed out further. There are only 100 spots in the top 100. Flight Control, Pocket God, Fieldrunners and Koi Pod pretty much have permanent spots. There are a few Chillingo titles that are on $0.99 sale that take up another 3 spots or so. A few major titles, a few novelty apps, and now EA’s $0.99 game of the month, and you’re down to fewer and fewer spots that you are really competing with.

Meanwhile, Apple is the only one with the power to really change the dynamics of the market through changes in the App Store rankings… but I’m not sure if they will. It’ll be interesting to see where things go from here.

In running a large iPhone gaming site, I have a somewhat unique perspective into the market, and there’s been a notable shift in the market in the past month or so.

To give some background, the iPhone app market is competitive. There’s been a lot written about what it takes to get to the top of the App Store. In the end, it’s all about exposure. Whether that exposure is through the App Store itself or through review sites, it’s a pretty key component in a developer’s success. While several small “indie” developers have been able to successfully make it big in the App Store, there are, of course, hundreds of developers who have been unable to. Some of those developers have been more vocal than others over the course of the year about issues of fairness about coverage on reviews sites, and whether indies really do have a shot.

In the past, I’ve generally dismissed these complaints, as I didn’t necessarily think they held that much merit. While there were a lot of games being released into the App Store, I felt the majority of them weren’t worthy of coverage and very few really truly deserved to be a success. In the end, I felt that most developers needed to realize that their games were not as good as they thought they were, and their lack of App Store success wasn’t necessarily reflective of a flaw in the system but perhaps of the appeal of their game. I guess I believed the cream would rise to the top.

The reason I believed this was that despite the massive number of games coming out, I felt we could actually keep track of all the games coming into the App Store. Through our forums, and by playing the games ourselves, I felt like we could pick up on the games worthy of coverage. It was a somewhat tedious process, and I think we might have played 20+ games for every game we thought was worth covering. We also would try to play every game that would be sent in to us.

So what’s changed?

Well, clearly the volume of games appearing in the App Store has increased. But that’s not necessarily an insurmountable issue. While I don’t feel I can personally play every game that comes out, this is the sort of thing that more manpower can be thrown at, and we’re making adjustments to try to address that.

The biggest change, however, is the influx of mid-sized to large developers who are invading the App Store space. Companies like EA and Gameloft are really ramping up production of their App Store games. In March, EA announced 14 games coming in 2009. That’s a new EA game every 2 and a half weeks being released. Gameloft has ramped up their production as well and seems to be releasing games at least as aggressively. And these are high quality titles.

Ignoring those big players, a number of other serious small to mid-sized development firms have turned their attention to the iPhone. Glu is a mobile gaming company that has started releasing original titles for the iPhone as well. They’ve announced 5 at GDC and are planning more. The list goes on. Ngmoco, Freeverse, Digital Chocolate, Artificial Life, IUGO etc… all have multiple titles coming to the iPhone this year.

So What’s The Problem?

Well, for the serious gamer, there might not be a problem. The number of high quality games coming to the iPhone is increasing by leaps and bounds. For the smaller developer, however, it introduces a number of issues.

First of all, the quality level for gaming has been continuing to increase while the prices of games continues to drop. Major developers have been adjusting their prices downward in order to find the right pricing. At this point, I see $4.99 as a bit of a ceiling for quality no-name brands. If you price yourself above that you’re competing directly against Gameloft and EA titles. And the problem is that margin is getting narrower.

I think the bigger issue, though, is one of exposure. There’s only so much attention that gamers are going to have, and they are going to be naturally drawn to the big name titles.

From a news and review site perspective, you’re competing for attention against some major titles. This past week alone we saw the releases or news of Boulder Dash, Need for Speed, Sims 3, Top Gun, Star Defense, Mass Effect, Tiger Woods PGA Tour, Myst, Siberian Strike and more. Those are titles that occupy the time and space of gaming sites. While story posting volume can increase to some degree, I don’t believe it can (or should) go up too high, as otherwise you’re losing the attention of the people you want to be exposed to.

That’s not to say all hope is lost. Fortunately, the iPhone gaming audience continues to grow, which means the absolute amount of exposure for a smaller game may actually be higher today than it was 6 months ago. However, since the numbers are up across the board, that may not help as improve App Store rankings as much as it has in the past.

Despite my outsider status, it was great community and a very entrepreneurial one. The explosion of the iPhone App Store has really put financial success within the reach of the indie developer. I spent a fair amount of time hanging out with Imangi Studios husband and wife team Keith Shepard and Natalia Luckyanova. Keith had quit from his day job almost a year ago, while his wife has just given notice so they could pursue their iPhone game company full time.

I think it’s a great move, even in this economy. They clearly have a growing business and have the opportunity to do what they love. There is some inherent risk involved, but the lost opportunity of not pursing it is simply too great.

Yet, it still constantly amazes me to read comments by people don’t seem to truly understand the risk/benefit balance in making such a decision, and put too much weight on the “safe” choice (which may not actually be the safe choice).

The biggest success story to date is one of Ethan Nicholas who developed the iPhone game iShoot. iShoot generated Ethan over $200,000 in one week and has since generated over $800,000. Ethan didn’t waste much time in quitting his day job as a programmer. And yet there are even people who have criticized Ethan for quitting his job, suggesting that it was not the “safe” choice.

I think in making that decision, there are a few important factors, and I think Ethan’s choice to quit was by far the “safer” choice. Factors to take into account include:

1. Replaceability of your current job
2. Income of your current job
3. Income of your side job
4. Potential income of your side job
5. Happiness

In Ethan’s case, by staying at his (est. $100,000/year) day-job, he puts at risk his ($800,000/5 month) salary. The potential income for iPhone programming business is even greater and essentially has no limit. Even given the economy, I’d say his job as a programmer is reasonably replaceable. And in the end, he is much happier for the switch. There is also a once-in-a-lifetime opportunity factor in place as well. How many iPhone developers have a successful app? Now’s the time to invest in additional updates and followup games to take advantage of the momentum.

And if you don’t agree with that, would you suggest that someone who is making over $100,000 on their own business to get a 40-hour/week minimum wage ($15,000/year) job in an attempt to add more “safety” to their income? Because it’s essentially the same argument.

Obviously, this is an extreme example, and I suspect I’m preaching to the choir on this blog, but it was a topic that has been on my mind.