The State (and Growth) of the iPhone Gaming Market

May 6th, 2009

Apple’s App Store is growing leaps and bounds with over 1 billion apps downloaded and the single largest app category is games. While Apple has not broken down the # of downloads per category, based on a quick look at the top rankings, I’d guess that the majority of downloads on the App Store are, in fact, games.

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.

Posted in The Web | 15 Comments »

The Risk and Economics of Quitting

April 5th, 2009

This year, I traveled to the Game Developers Conference (GDC) for the first time. It was a really great time and I met a number of iPhone gaming developers — many who I’d known online for many months.

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.

Posted in Business | 11 Comments »

Online vs Print, and the Evolution of Media

April 5th, 2009

Here are a few random thoughts I’ve had recently about blogging, online media and traditional print media.

Online Ads vs Newspaper Ads

Here’s a promising chart for all online-media folk published by Alley Insider.

Newspaper ads dropping, online ads keep growing… and they it looks like they’ll intersect in a few years. It’s no surprise, but interesting to see in chart form. So, good news for those who depend on online ad revenue.

Blogs vs. Mainstream

Like many, I do vanity-searches on my own name from time to time. One article that I ran across late last year was written by a journalist by the name of Amy Eagleburger. She wrote an article about how the mainstream media has been slow to adopt online and blogs. Nothing particularly groundbreaking but an interesting comment about MacRumors:

One of the many complaints from journalists is that they don’t have time to blog and write stories. So why aren’t newspapers hiring more professional bloggers? MacRumors.com is a blog Dr. Arnold Kim started as a hobby. It was so successful that he gave up his medical career to blog full time. He’s not just a guy in his pajamas but someone with a knack for news gathering. Why did that blog not start at a newspaper? I’ll admit that when I wanted to read about the new iPhone, I went to Kim’s blog before other publications.

That’s the million dollar question. Why wasn’t MacRumors (or any major blog) started by a newspaper? Or another mainstream media source?

In some ways, it seems absurd. Indeed, if you had asked the same question 5 years ago, the answer would have been simple: there’s no money in a “blogs” like MacRumors. In 2009, however, the answer is entirely different. There’s an enormous amount of money in online media which is becoming increasingly dominated by blog-like publications. And as a result, money is now being invested in these markets.

But besides money, however, I think a site like MacRumors succeeded because it was started by someone who was a genuine enthusiast of the topic and not just going for a paycheck. Especially then, there was no incentive for a traditional journalist to stay up late at night to report on the latest news and rumors. Those stories, if deemed news-worthy, would be published the following day. That fact wasn’t lost on the audience either, and MacRumors generated a reputation of frequently being the first source for news and also the place to connect with others.

Of course, there’s a million other reasons why traditional media was slow to adapt. It’s just the nature of the beast. People stick with what they know. Blog-style news simply didn’t fit into their belief system. Meanwhile, those without traditional journalism training just made it up as they went along.

Posted in Apple, Business | 16 Comments »

AppShopper.com, TouchArcade.com, Stats, and Stickiness

December 6th, 2008

So, this blog has been relatively quiet. Not because I haven’t been keeping busy… in fact, I might have been keeping too busy. In retrospect, the quitting decision was clearly the right decision. One major perk of not being a physician is that for the first time in many many years, I have the major holidays off. I’m still online, of course… but I don’t have to be. :)

What’s been keeping me busy has been two relatively new sites and also maintaining MacRumors.com. My two new projects have been TouchArcade.com (cofounded with Blake) and AppShopper.com. Both are iPhone/iPod Touch related sites dealing with the many new apps that are coming out.

For anyone who is serious about their websites, you’ll find that you quickly become a stat addict. Traffic stats, referral stats, income stats… they all become the most interesting things in the world. It’s easy to waste yourself away just examining your stats. If you’ve ever sold items on eBay, it’s a bit of the same feeling.

A bit over a year ago I decided to post public numbers about my MacRumors stats. Historically, I’d been very secretive about my traffic numbers. For no particular reason except that most people are secretive about them. I changed my mind at one point, in part due to the example of Gawker’s network of sites. For whatever reason, Nick Denton has always been very transparent about his traffic numbers. In the end, I decided it can only help a site like MacRumors, which tends to get more traffic than respect. In the long run, I think the numbers have helped, in that they’ve been quoted in a number of places including my New York Times article.

So, getting into the new sites, both have been doing remarkable well — in fact, better than I had really hoped so early on.

Here’s TouchArcade.com’s running monthly pageviews:

Going up is always good. This monthly graph gives you a running 30 day total — so the last point on the graph gives you the last 30 days. The page-views per day gives you a better look at this moment in time:

By this graph, it looks like we could approach 3 million pageviews/month in the near future, if the trends hold true.

Now AppShopper’s monthly trend:

It seems less interesting until you realize that we’re talking about 7 million page views/month already. A more interesting graph I think is from when I first “launched” AppShopper back in September (graph is in pageviews/day):

The site went from very little traffic to 100,000-130,000 daily pageviews in an instant. What’s striking about that graph is not that there was a big spike — any major exposure is going to get you a spike — but the “stickiness” of the site is remarkable. Usually there’s a substantial drop off after people hit a site in a big spike like that, but AppShopper retained a remarkable percentage of those people after the first visit. (There was recently a Black Friday spike that wasn’t nearly as sticky, but still showing a solid residual traffic).

Obviously, “stickiness” is one of those factors that will determine the rate of your success or failure. If you are gaining more users than you are losing each day, your traffic is going to grow. Meanwhile, “non-sticky” sites are going to have to keep finding new users, and it will be harder to keep them around.

Posted in Business, Mac Web | 11 Comments »

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