Revisiting mobile platform advantage

This post, which is mostly a rehash of ideas I’ve written about previously, is inspired by the following two gaming industry stories:

These two stories are very interesting when looked at side by side. On the one-hand, Overwatch is certainly one of the best new-game launches ever (for console/PC platforms), and has great potential to engage millions of players for years to come (in the clichéd games-as-a-service model). On the other hand, its impact (whether monetary or number of players or player-hours served) is completely overshadowed by Honor of Kings, and we are not talking about a small gap – it’s probably a 2-5x difference today and could grow to an order of magnitude difference (10x).

In one sense, a hardcore game having fewer players than a more accessible/casual game is nothing new (top Facebook games easily had tens of millions of players). However, compared to other popular mobile games (e.g. Pokemon Go), Honor of Kings is a much more hardcore game and it certainly serves plenty of hardcore gamers.

It is from this lens – viewing Honor of Kings as a game that’s closer in spirit and purpose to League of Legends/Overwatch as opposed to Candy Crush/Farmville – that the expert opinion in the 2nd link above is even more interesting. I have a lot of respect for the opinions voiced from the 4 industry peers interviewed – they made many reasonable points, such as concern over the average session length as a blocker for attracting players. However, I also think these opinions are founded on some assumptions about what mobile games are / aren’t which may not actually hold.

The biggest shift in perspective required is not viewing mobile as an inferior platform versus console/PC for gaming, but rather a superior platform. Mobile does have some severe constraints (such as the lack of physical feedback for input, and input often taking up valuable screen real-estate), but many commonly-cited constraints are artificial. Take average session length – Honor of Kings has easily proved that almost 200 million players in China 1 have no problem regularly spending chunks of 20 minutes for one match, which is certainly mind-boggling for anyone used to thinking of single game length of under 5 minutes as a golden rule for mobile. If you are able to suspend belief and imagine players spending hours a day gaming on their phone (which they do in China), your perspective of what games are possible on mobile changes. Another common constraint I see is somehow phone-screens “are not large enough for complex gaming”, and devs end up optimizing for tablets2.

Put another way, I see a self-reinforcing cycle – if devs don’t believe in the potential of mobile and blindly accept conventional-wisdom constraints, then they can only make games that operate under these constraints3.

I’m often reminded of phone industry experts reactions to the iPhone when it was first announced 10 years ago. A lot of very smart people made some terrible predictions, when in hindsight the conclusion was so obvious. I feel more and more that mobile gaming will continue to grow and grow, and eventually force devs that prioritize console/PC to make some very painful transitions.

  1. Based on analyst estimates in this Bloomberg article.
  2. e.g. Vainglory was clearly seen as a game intended to be played on tablets, as evidenced by its marketing videos
  3. i.e. the casual arcade / casino and async strategy games that dominate the US app store rankings

Thoughts on Top Eleven

As a casual player of football sims, I’ve been very impressed with the thoughtfulness of Top Eleven, and here are some thoughts to sum up what I found interesting.

(For an overview of the game – check out this review. This is a game that’s been around for 6 years and surpassed 100M registered players in early 2015.)

At a high level, Top Eleven‘s core design thesis appears to be “how do we take the incredibly addictive gameplay of Football Manager, and make it a massively multiplayer social/mobile game?”. This spills out into the major gameplay systems:

  • Leagues made of human player-managed teams, with a long and tightly regimented progression system using the real-world concept of seasons (every 28 days in real-life form a season, and cup and league matches are distributed throughout the season so that on average you play 1-2 matches per 24 hours)
  • A 2d match engine familiar to any Football Manager veteran, and the associated tactics and training systems
  • An real-time auction-house (much like Diablo 3′s auction house) that serves as the transfers market
  • Being a free-to-play game, a set of virtual currencies that restricts player actions and provide some amount of pay for power

My first impression after playing the past 3 months, is that this is a well-tuned set of systems, and the player experience is pretty satisfying even for someone who hasn’t monetized (my basic principle for playing mobile games is to not monetize and test the design for a non-paying player). In every season I’ve competed in I’ve won the League with the limited resources available to a free player, and I’ve won the Champions League (a more competitive tournament) once. The holy grail of course is the treble (winning the League, the Cup and the Champions League in one season), and that is challenging but doesn’t seem completely out of reach.

In particular, I’d like to call out the League progression design as simple, effective and clever. It’s effectively a cohorts based design –

  • when you join you are placed in a league with players who started around the same time as you, and therefore have similar amounts of resources;
  • Every season the top 50% of the league are promoted to the next level, while the bottom 50% stay in place;
  • For each level, there are tight restrictions on the quality of player you could acquire, regardless of how much money you are willing to spend.

These measures ensure that on average the players progress through the game at a similar pace and are always in an environment where there are worthy opponents.

Similarly, the auction house design is also simple but extremely effective. There are a few additional options for player transactions, but the basic auction house is a real-time feed of player listings with deadlines, using an English auction format:

  • Players can only see and bid on listings appropriate for their level – again, carefully segregating the player population and controling the experience, and also creating a healthy economy of auctions (a higher level player’s 3-star NPC is an all-star for a lower level player);
  • The seller sets the initial floor price, and each bid increases the price by a set amount;
  • If there is only 1 bid for a listing, the bid wins when the listing expires;
  • If there are more than 1 suitor for a listing, the suitors face off in an unlimited number of short-session follow-up rounds (starting at 1 minute, and quickly reducing to 20-second rounds);
  • Each round a suitor must place at least 1 bid to be eligible for the next round, and the auction ends when there is only one bidder or none (the highest bid from previous round wins) in a round.

The catch for this system is that each bid consumes a super-rare virtual currency called a token. (An engaged, highly active player can expect to earn 30-50 tokens for free per season; in other words, a little more than 1 token per day.) This gives each action a lot of weight, and creates interesting psychological influences on players. From players’ perspective, it’s advisable to avoid a pro-longed bidding war for a single listing, but in the spur of the moment (20 seconds to make a decision), it’s easy to be trapped in a deadlock.

This design also creates room for lots of auction strategies, which creates uncertainty and fun for players. For example a basic technique is to track an empty listing and put in a bid in the last few seconds, to ensure the token is not wasted. Sometimes though, this backfires and you will see several last-second bids, which sets up a bidding war. Similarly there’s lots of mind-games in the follow-up rounds: do you wait to put in a bid in the last few seconds of a round (which puts you as the price leader for the next round, and also can surprise a rival who didn’t put in a bid); or do you bid early each round to signal that “I’ve got plenty of tokens, I’m going to win this no matter what”?

Having said all the above, Top Eleven is not without its issues. In particular, churned players’ teams pose an interesting problem. In my 3rd & 4th seasons, a vast majority of the teams in my League were clearly occupied by churned players. This meant that their neglected teams were weak and didn’t pose an interesting challenge, and in effect the lengthy League season came down to a few matches between the active players. This may be due to the inherent high churn at the beginning of the funnel (my current season seems to have the right mix of teams), but I wonder if there are better ways to solve this.


Are mobile games disruptive?

I have written previously about the “rise of the mobile core” in China – traditional PC genres such as MOBA / MMO / FPS being fairly successfully converted to mobile.

With the launch success of Clash Royale (see my impressions here, here), I think 2016 could turn out to be the year that synchronous multiplayer games (what I will call “real multiplayer”) also come of age for mobile gamers outside of China.

If this does happen, I think it will be a big deal, as it could be an important data point to evaluate whether the mobile platform is a disruptive innovation on PC/consoles.

Minor aside: above I linked to the wikipedia entry on disruptive innovation, because the term has been used so much that its meaning is not so clear. The theory is actually quite strict as to what qualifies as disruptive innovation1:

“Generally, disruptive innovations were technologically straightforward, consisting of off-the-shelf components put together in a product architecture that was often simpler than prior approaches. They offered less of what customers in established markets wanted and so could rarely be initially employed there. They offered a different package of attributes valued only in emerging markets remote from, and unimportant to, the mainstream.”

I believe mobile games have so far followed the theory here:

  • They have focused on catering to previous non-gamers / casual gamers, and most of the early successes reflected this (Angry BirdsCandy Crush SagaFlappy Birds)
  • These games were simpler to play, and offered less complexity in the gameplay
  • These games were generally looked down upon by core gamers

What gets interesting is what happens next. The disruption theory says that from this low market position, the new entrants are able to mount an attack on the establishment thanks to both product evolution (so they catch up in product experience) and their new attributes which the power users (core gamers) previously didn’t care about.

By the way, what are these “new attributes” for mobile? The obvious ones:

  • Never before has there been a personal computer that literally everyone will own. This means that the ceiling for the network effects of a mobile game is theoretically the entire population, which previously has not been true. More concretely, this translates into benefits such as insanely fast match-making, always populated virtual worlds, and much larger social peer pressure (do you really want to be the one guy in your school not playing a particular game?)
  • Mobile devices are always on, and people are glued to them. Proximity to other mobile apps, especially social apps, means that players can stay immersed in the game communities they care about (notifications, sharing achievements etc.)
  • For developers, the app store infrastructure dramatically lowered the barriers to entry2 and made it possible for very small teams to serve 100MM+ players (think Whatsapp / Supercell)

To be clear, there are already plenty of mobile games that appeal to core gamers: for example if you have ever had a friend addicted to Puzzle & Dragons and was trying to min-max the f2p progression, odds are that friend of yours is a pretty heavy gamer generally. It’s just that to date, most of these games have shied away from experiences that directly compete with PC/console3. Some of it was due to appealing to the “casual audience”, or technical limitations (e.g. unreliable network connection).

Another way to frame this: mobile games to date can be seen as mostly complementary experiences to core games – they generally avoided head-on competition, and instead tried to capture core gamers’ downtime with bite-sized entertainment; however, I believe going forward this is going to change to a more cannibalistic/competitive relationship, where just like a core gamer today needs to choose between playing League of Legends or the hot new game The Division, he/she will increasingly need to choose between a mobile game and a non-mobile one.

Core gamers will likely continue to ridicule Clash Royale for its lack of strategic depth, but I have a suspicion it is here to stay, and we will see more real-time PVP games like it. These games will offer gameplay that may be easier in terms of mechanical complexity, but can offer similar degrees of strategic complexity to PC/console titles. They will appeal both to “retiring” core gamers (like myself) and a younger generation native to mobile, and they may eclipse and push core gaming as we know it today into a niche.

  1. Other kinds of innovation can be “disruptive” to incumbents in terms of impacting their business, but should not be labeled disruptive innovation.
  2. Initially; now the barrier to entry is in discovery, and thus marketing capital.
  3. The notable exceptions are the cross-platform titles, which is offering you the same experience – e.g. Hearthstone.

2015 Games in China – the year in review

Partly inspired by this Game Informer piece I read over the weekend, I wanted to do a quick write-up of some of the big themes I felt specific to the games industry in China this year.

Rise of the mobile core

For me the biggest thing (and I was certainly late in recognizing this, though I think it’s still not talked about enough in English gaming circles) is the rapid adoption of core PC genres by Chinese players. I only wrote about this recently (when the numbers became too obvious to ignore), but the Chinese dev/publisher efforts have been underway for at least the last few years.

To toss around some hyperbole:

  • The most played and highest revenue MMO across any platform this year may well be Netease’s Fantasy Westward Journey 1;
  • Tencent’s Crossfire Mobile only launched in December, but may already have more active players than CS:GO on Steam 2;
  • and Tencent’s Kings of Glory MOBA has already bested Dota2 in terms of PCU barely a month after launch as well 3

Obviously all 3 data-points above enjoy the benefits of China’s huge market size / population numbers, but they are certainly still very relevant comparisons. Chinese devs have brute-force migrated their core PC genres to mobile and players have largely embraced them. The thing to look out for in 2016 is will these player-bases sustain – if so they will pose some real hard questions (innovator’s dilemma) for the respective PC titles 4.

Esports/streaming bubble continue to inflate

Somewhat similar to global investor trends, in 2015 China also saw continued investment interest in esports, both on the execution front (hot money flowing to teams / tournaments / related ecosystem players like streaming sites) but also on the “story-telling for the stock market” front in a roller-coaster year for the markets.

Wang Sicong’s esports / entertainment empire building continued with the rollout of his own streaming platform, and the formation of Banana Culture which will be the operator of the 2016 LPL, amongst other things. He also recently signed a high profile sports announcer from CCTV, a number of Korean pop acts; and the PC cafe chain he owns a stake in is building esports-themed venues nationally.

He’s certainly not the only one; for example I’ve lost track of the number of .tv streaming platforms, and there’s been intense drama this year on the talent competition front (disputes over high profile streamers “breaking contract” to join competing platforms). Similarly, the rumored contracts/transfer fees of pro players continue to raise eye-brows, despite fairly lackluster results this year in various world championships.

On the “selling stories to stock market” front, start-ups / VCs / public companies seem to be eating up the esports concept and are ruthless in packaging it for boosting the valuations of whatever they are trying to sell. Companies with <$100MM annual revenue are getting multi-billion dollar public market valuations based on some esports related concept, despite having probably very little visibility with players or product control. (Better yet, make it “mobile esports”, which is all the rage currently.)

Now the hype cycle may still continue well into 2016, especially since the esports concept seems to be just getting started in the west, with the likes of celebrity investors such as Mark Cuban getting involved. But given the real-economy uncertainties in China I think there could be some quick boom / busts locally…

(If I sound frustrated or cynical about some of these developments – not really, this is really just business as usual in the “Wild East”. The games industry is not isolated from the macro-climate and a lot of this is just indicative of the broader economy.)

Console’s humble beginnings

China only recently removed the console ban, and Sony and Microsoft have been diligently seeding the market (I wrote about consoles a month ago).

In terms of competition, the early results indicate a landslide victory in favor of the PS4, with media reports of 410k units sold vs. XboxOne’s 90k units as of Dec 2015. However these numbers are certainly tiny compared to the player-base.

The big question, same as what I wrote previously, is about content. My working analogy is consoles in China is like Hollywood films a decade ago – there’s some promise, but the difficulties of operating are high (censorship / approval / quotas etc.). This will continue to be a push-pull relationship: some “questionable” content may be able to get past the reviews with enough government relationship building, and some content will be built in mind with the Chinese audience 5.

Additionally, there’s quite a number of local studios trying in earnest to fill the void – creating local console titles that can pass the government review – but the learning curve of building good console content may be high. On the flip side though, there are a pool of console devs in China, thanks to the local dev offices of big global developers such as 2K.

From the gamers’ perspective, a small but hardcore group of players will continue to be hungry for AAA console content, and with the popularity of social media / streaming some of these console franchises are starting to develop a small brand. So in sum, the trend is positive, but it’s really early days yet.

Steam’s (small) splash

In a somewhat similar vein, Steam has had a pretty good year in China, with the expansion of local pricing / payment support in November. (Even before then, China sales of some locally priced content like GTA5 were starting to show up in data analyses.) And within the local hardcore gamer community, it’s no longer a foreign concept to participate in Steam sales. In sum, they’ve had some good growth this year and some of the local prices generated excitement with players.

My personal understanding is that Steam is currently flying under the radar – they don’t have a on-shore presence, and certainly the vast majority (if not all) of their catalog of games have not gone through Chinese government approval. This means a generally degraded player-experience in terms of download speeds, but also the potential risk that they would be targeted by the government (e.g. if there’s a big PR scandal over some game on Steam, say angry parents complaining GTA5 was corrupting their kids). As a gamer, I would certainly not want that to happen, since Chinese players deserve to enjoy the same AAA experiences as players elsewhere.

  1. Chinese media recently reported 60MM cumulative registered players and PCU of 2.04MM in the 9 months since launch; my previous post quoted analyst estimates of $158MM monthly revenue in Nov 2015
  2. CS:GO PCU was around 800k; CF mobile announced 1MM PCU after 3 days of launch, and is rumored to have 10MM DAU
  3. Kings of Glory announced 1MM PCU and 7.5MM DAU recently, while Dota2 PCU on Steam is 1MM
  4. Disclaimer: including League of Legends, which I work on
  5. just like the current Hollywood blockbusters that are bending over backwards to meet Chinese tastes, now that they see the size of the market

India as melting pot for China & Silicon Valley

A couple of recent articles to frame the context for this short post:

I worked in India briefly in 2008 (a couple of months on a consulting project for a Korean consumer electronics giant – you have a 50% chance to guess correctly…). Even back then, the comparisons between India and China as the two emerging markets were numerous. My impression from that project was that India was decades behind (not scientific measure, just a figure of speech) China in infrastructure (roads, electricity, water, telecommunications) but had pockets of really strong entrepreneurship and less long-term political risk.

7 years later, though I have not been back to India, I can probably safely guess the infrastructure gap is still there, since post-financial-crisis China has been pumping vast amounts of money into big infra projects such as high-speed rail and subways across the nation. And the NYTimes article confirms that a lot of the infrastructure challenges are still there for India. However, flipping this comparison the other way, it also means that India is under-penetrated and likely to represent key future growth (“the next billion” and other headlines).

Hence all the interest from US and Chinese tech companies, and this creates a curious market to watch. The safe prediction to make is that Chinese companies will focus on the (low-cost) hardware side of things while Silicon Valley focuses on software / services. In this sense, China and SV are not competing, but rather co-existing in a growing market. And this Indian melting pot may thus create some truly interesting mash-ups. 1

  1. PS: the bolder prediction is that Chinese companies will compete fiercely with their SV counter-parts… but it’s hard to see that happening. For one thing, Chinese companies are literally decades behind US companies in terms of operating globally (Lenovo being the single exception I can think of). Secondly, Chinese companies won’t enjoy the trade-protective benefits of the Great Firewall in India, and while it’s not the only reason (nor the primary reason) why US companies “lost” in China, it was certainly a big factor. Thirdly, the closer cultural bond between India and the US (look at how many senior execs in Silicion Valley are of Indian descent, vs. Chinese) is also not in favor of Chinese companies.

Mobile gravity, and what it may mean for games (part 2)

Link to Part 1

In hindsight, a lot of my first post was about mobile gaming as the classic low-end disruption to PC&console gaming – mobile devices may be more constrained across the board (power, storage, screen size, input precision etc.), but they can compete along other dimensions (almost universal availability to play, wherever your are; hardware that’s not available to PC&console, e.g. camera, motion sensors etc. that unlock new design space; etc.). And also using the disruptive innovation analytical framework, it may very well be possible PC&console are over-servicing the player needs – e.g. it’s nice to have ever-more realistic graphics, but there’s probably a case of diminishing returns for actual player value delivered by these graphics. (The rest of the framework applies nicely after this setup – I won’t bore you with writing out the conclusions.)

I ended the first post with a quote from The Terminator series – “there’s no fate but what we make for ourselves.” In my view it is by no means a fore-gone conclusion that the PC&console product category will be sucked in by mobile gravity. It is possible they can thrive at an arms’ length. Again, to think this through we can look from the lens of “jobs to be done”. Some examples here:

  • The cinema business is thriving in the digital age, and IMHO suffering minimal to no impact from online piracy. One big reason is the industry has convinced the audience that going to the cinema is a fun and unique experience compared to other film-viewing experiences – it is the aggregate of the high-tech audio-visual hardware (e.g. IMAX screen, Dolby surround), the mood & atmosphere of the cinema, the social event characteristics (group activity with friends / family, it is almost socially unacceptable for someone to go to the cinema by him/herself), as well as any differentiating service the cinema tries to provide (e.g. adult-only viewing in laid back seats with food&drinks service)
  • The arcade business in Japan. I’ve not visited Japan yet, so this is mostly hearsay, but my impression is that there is still a rather lively arcade business in Japan, and it has been ingrained somewhat into the cultural fabric. It’s worth pondering why people still go to arcades when there’s likely a better selection of games at home on their consoles – what are the jobs being done?
  • Similarly, the PC cafe ecosystem in Korea, and other developed Asian economies (e.g. Taiwan, and the coastal area of China). As a ballpark figure there are still something like 10,000 PC cafes in Korea with probably a million PCs. As far as I understand it, it is a social norm in Korea for people to go to a PC cafe after work/school and play for a couple of hours, just like how they may go to bars / restaurants / clubs. It is a quite mainstream social activity – with emphasis on social being a primary job being done here. This is why Korea is probably the most advanced country in the world in terms of internet connectivity (fiber to the home, 4g networks etc.) and yet people still flock to PC cafes.
    • If you are wondering what effects smartphone adoption has had on Internet cafes – in China actually there’s a renewed growth of Internet cafes (largely driven by government removing stringent license requirements), and a new wave of more sophisticated cafes – WYWK for example has customized hardware/software as well as a mobile social app that generated headlines previously for being a hook-up tool (sex has consistently been a primary “job to be done” of social apps). Also if you visit any PC cafes in China, you’ll notice that the primary application (by far) are games, similar to Korea

To go on a bit of a tangent – in the specific case of PC cafes, I think there’s a strong argument to be made that a PC games developer can be financially viable by focusing on this channel. I don’t mean just using biz-dev tactics to ensure an install base / player-base in PC cafes – most competent publishers know how to do that already. Instead, I’m thinking about game experiences that acknowledge the PC cafe setting and strategically leverage them in the game design, e.g.:

  • Core gameplay that really takes advantage of keyboard+mouse input method
  • Strong multiplayer focus, if not multiplayer only. PVP or team-based PVE
  • Preferably session-based play, with minimal setup & downtime in between sessions
  • In-cafe location-based-services which also scale online, e.g. in-cafe tournaments/game-modes, local social features, local leaderboards, cafe vs. cafe leaderboards etc. Also provide incentives to repeat play from the same cafe (e.g. cafe-based reward loops – this aligns the developer’s interests with the cafe’s interests, and also makes sense for players because it creates a more stable local scene)1

The first 3 points are super generic and pretty much applies to all the top PC PVP games right now (League of LegendsDotA 2, CS:GO etc.). They can be enjoyed in any setting but they are clearly best enjoyed when you and your friends are physically sitting together. The last point has not been done well for any game developer (none that I know of)2, probably partially because PC cafes are not a thing in North America and that’s where most of these games are developed.

The above side-discussion is to illustrate one area where PC developers can use an existing infrastructure to hopefully sustain against mobile gravity. At the end of the day, players will continue to seek fun / engaging gameplay experiences, and if these experiences are conveniently available and part of an accepted lifestyle (as PC cafe gaming is in Korea), then PC gaming as we know it today can continue to thrive.

To go full cycle back to the start of this discussion series though, developers should be super conscious why they made a platform choice in the first-place. Is it because your existing skill-set / dev-tools / infrastructure are tied to a platform? Or is it because the gameplay experience you are going after are best suited to that platform’s strengths? The chances of success in the former case are much lower than the latter.

And perhaps one other take-away, for all developers regardless of their platform choices – be conscious that with regards to the general internet, the mobile internet IS the internet and to a first approximation everyone should probably be thinking mobile first when it comes to around-the-game experiences (like community forums and other social engagement).

  1.  Take note what Magic: The Gathering did for its hugely successful local play programs, and recreate that experience digitally with PC cafes as the venue
  2. Interestingly, ecosystem developers in China have made serious attempts at this space – but because of lack of integration with the core game, and sometimes malicious intent, the results are shaky from the players’ perspective

Mobile gravity, and what it may mean for games (part 1)

Ben Evans had a couple of posts several weeks ago that I’ve been chewing on:

Microsoft, capitulation and the end of Windows Everywhere

The smartphone is the new sun

In particular, his central summary/analogy that “the smartphone is the Sun and everything else orbits around it” is both elegant and provocative. Combining his two posts, you can say that he looked at it from both a platform perspective and a supply chain perspective.

From an end-user perspective (consumption behavior), there’s certainly data that supports the analogy. Especially in emerging markets, mobile share of internet consumption has been steadily rising (e.g. this recent post).

This is a virtuous & self-reinforcing cycle – because of the healthy growth and sheer size of the smartphone market (e.g. people see it as a critical personal device, replaced every 2 years), it now commands the tech supply chain; because of the userbase and growth outlook, developers are naturally shifting their attention/priority to mobile; and as there are more mobile apps that users have formed sticky habits with, and as these apps build their inter-connectivity / inter-dependency (symbiotic relationships, e.g. wechat as social identity / payment provider for other mobile apps), it becomes more and more cumbersome for users to context-switch to non-mobile platforms 1 for tasks, and hence more incentive for aspiring developers to solve these tasks on the dominant mobile platforms (and hence the cycle goes).

Another analogy (and IMO fittingly also physics related) to describe this is “mobile gravity”, the first part of this post’s title. All other hardware / software products that we regularly experience in our daily lives are encountering the gravitational pull of the mobile hw/sw ecosystem. A few obvious examples:

  • Mobile is a key enabler of the on-demand economy. Uber and its clones are forcing people to rethink our entire relationship with cars / public transportation. In this case, “mobile gravity” will likely permanently transform the auto industry, at least in the end-user service experience layer (and probably beyond that, in the supply chain & production as well, which is not a new concept if you’ve been following asymco)
  • In some smaller products / services, they have been/will be completely pulled in by “mobile gravity” and are no longer standalone categories. MP3 players (iPods) and compact digital cameras are 2 prime examples of dedicated-purpose products that have been replaced by the general purpose smartphone. Dedicated gaming handhelds are another product category that may be dangerously close to being assimilated, because the jobs they are hired to do can mostly be performed competently by smartphones
  • Some portable electronics categories will be embraced by mobile as peripherals. The Apple Watch (and wearables in general) act as extensions of mobile computing – they are kind of interesting as standalone products, but where they unlock value is when they work together with mobile platforms. And it’s not hard to imagine niche categories such as DSLRs move more of their tasks to the mobile computer and just act as “dumb cameras” that have the hardware capabilities to take complex photos2

So far I believe I have been stating the obvious. I think few people today would disagree that smartphones will likely remain the most personal computing device for the next decade3.

What I wanted to drill down further to discuss, and which forms the second part of the post’s title, is what exactly does this mean for games? (After all, I currently work in this specific sector of tech.) Though with a question so broad (and vaguely presented), there are of course many different ways to speculate.

The most obvious implication (and perhaps the most uninteresting as it’s so obvious) is the rise of smartphones as a gaming platform in its own right. Clash of ClansCandy Crush SagaGame of WarPuzzle & Dragons and Monster Strike are 5 games that were/are in the $1B/yr revenue ball-park, with millions (if not tens of millions) or players. By any traditional games-industry measure these are massive numbers4. And there will likely be more of these games (by sheer virtue of the platform sizes, and people’s intrinsic needs for amusement on the go, which is a gross & criminal over-simplification of the “jobs being done” by these games).

But as many would quickly point out, there’s a world of difference between the 5 games I listed above and “core” console & PC gaming titles such as Metal Gear Solid 5The Witcher 3, and the Call of Duty franchise, to name a few. And this is where things start to get interesting IMO…  If by “console & PC gaming” we are actually referring to the core content experience (hi-fidelity audio-visuals presented in an immersive format such as a big screen or VR in future, richness of interactivity and gameplay depth etc.), I don’t think the need for that is going away. I think people will continue to crave  these types of highly polished entertainment experiences, and the bar will continue to be raised – bigger screens, higher fidelity, more immersion (VR?).

Again, stating the obvious I think. But what’s not obvious is whether Windows / Mac / Xbox One / PS4 (which btw are all based on the x86 CPU architecture) will be the software platforms powering these core experiences in 5 years’ time.

I think one way to think about this is via the following set of questions regarding the content experience:

  • What is the desired experience? e.g. “a cinematic story set in a big & richly detailed open-world that the player is fully immersed in” (which is kind of what The Witcher 3 is)
  • How do you interact with the experience? This includes both the input method but also the presentation method, e.g. “designed for big screen (40″+ TV) viewing, and meant to be played with a dual-stick gamepad” or “designed for a VR device with a VR controller”
  • What’s required to power the experience? This is computing horsepower, storage, power consumption, network requirements (e.g. latency is a key bar for good real-time PVP experiences), and also the presentation hardware and input method hardware

It’s important to note that while from a current standpoint mobile platforms are far behind PC/console in most of the above listed requirements, things are constantly in flux and paradigms can be broken:

  • Many peripheral vendors have tried making a controller peripheral for smartphones / tablets. From what I’ve read (haven’t bought any, partly because a lack of games, which is the classic chicken & egg problem) they are mostly suboptimal, but as long as there’s continued effort a breakthrough could be coming. Similarly there are experiments like the Steam controller that’s trying to reach parity with the keyboard+mouse in the living room
  • Related to above, a well crafted game can sell the peripherals required to play the game… Rock Band / Guitar Hero is the prime example where the hardware barrier to entry didn’t matter – people wanted the experience that bad. So it’s not unfathomable a phenomenal game can sell the platform and the peripherals needed to enjoy the game
  • We may frequently over-estimate the input method lock-in. Keyboard+mouse is seen as the pinnacle for FPS gaming (much more accurate / responsive than gamepads, which is partly why multi-platform FPSes don’t support cross-platform play), but let’s not forget that console FPSes generally speaking outsell their PC counterparts by a lot (which leads to development decisions such as making Destiny console-only). Similarly, there are developers constantly pushing the limits of our imagination in terms of what’s “playable” on a touchscreen – The Executive being a recent example of a touchscreen fighting game that I had a good time with (caveat being I’m not a core fighting game player)
  • I’m skeptical about the current wave of VR devices, but again this is something that likely will be cracked one day, and when that day comes, gaming will be one of the biggest applications and you will no longer be constrained to your living room to enjoy a core experience

I’m going to take a quick break here… I feel I’ve rambled a lot. There are still a few more things I’d like to note down in a next post. As a small teaser, despite what I wrote above, it’s not necessarily all doom & gloom for PC/console – at the end of the day, “there’s no fate but what we make for ourselves”, and there are some angles that PC/console platforms can leverage to sustain their position in gaming.


  1. I’m not speaking of specific form-factors / devices, but rather software platforms, i.e. Windows vs. iOS vs. Android. I suspect iOS / Android & other mobile platforms will increasingly expand to more form-factors, just like how they’ve already done so with both the tablet and the smart-watch↩︎︎
  2. As an aside – DSLRs on-camera software generally suck in terms of their usability, and feel they belong to the feature-phone era. This cannot sustain – either DSLRs actively integrate with mobile platforms, or they will be replaced by new specialized camera peripherals for mobile platforms that can perform the tasks of the DSLR↩︎︎
  3. They will continue to evolve / extend, but the basic premise of a battery-constrained, ultra-portable computing device with built-in wireless connectivity will probably persist for a while.↩︎︎
  4. BTW this doesn’t equate to mobile gaming being a profitable field – it’s very much a “red ocean” as I understand it and these are the “unicorns” amongst a sea of “dead” games.↩︎︎

Mobile Card Games

(A sort of free-flow post that goes all over the place in my attempt to get back to blogging)

For the past couple of years, app stores around the world have been invaded with a range of casual card games. I’m not referring to card games of the poker / casino variety (though that’s certainly a major category revenue-wise, especially in western markets), but rather the “collectible card game” type which has taken an interesting evolution in mobile.

One of the earlier games to hit market success in this model was probably Rage of Bahamut, which still puts on a respectable showing today (I was able to quite easily find it on App Annie’s grossing charts). But since then tons of clones have leveraged the same underlying engine, some with astonishing levels of success – Puzzle & Dragons being the flag-bearer (it has a match-3 mechanic, but the meta gameplay is the same). Various big name IPs have also been leveraged, such as Marvel (Marvel Puzzle Quest) and Star Wars (with the horrendous Force Collection mobile game). In China, “I’m MT” reached massive success with a derivative IP (it’s based on a fan-art based on WoW), and since then there’s been literally hundreds of clones, many infringing on global IP franchises such as Naruto, One Piece, and League of Legends (disclosure: which I happen to work on).

Put aside the specific puzzle mechanics in Puzzle & Dragons etc. (which I argue add some real gameplay engagement but doesn’t explain the popularity of the overall genre, especially all the games with no combat mechanic at all), the basic formula of these games is the card “level-up/evolution fusion” mechanic, the randomized card purchasing via a treasure-box, and a cheap PVE questing system.

The “level-up/evolution fusion”  mechanic is essentially a convoluted card leveling system which dramatically extends the collection depth, obfuscates the collection cost, and acts as an economy drain for in-game items that players farm up – a card can be both “leveled up” by using other cards as source material as well as “evolved” (again using various items as material) to become a different card (usually a higher-tier card of the same character). So, say you have a Tier I warrior that is level 5, he can be leveled up to a max of level 30, at which point he can be evolved to a Tier II warrior that starts at level 1 (and the cycle repeats).

The card purchasing treasure-box functions to add scarcity (and therefore collection depth) via randomization. It satisfies a psychological itch very similar to gambling (and is often called a gambling mechanic). It’s also the same primary gameplay loop that players seek out when farming items in Diablo (the chance to get some really good item “drop”).

The cheap PVE questing system is exactly that – highly repetitive, low production cost PVE engagement, with various bells and whistles on top to drive engagement (for example, some levels are only open at certain times of the day or week). Players generally farm these PVE levels to gain items that help them pursue the card level-ups and evolutions.

The fact that this basic formula has demonstrated immense market success is also revealing in other ways. For example, the fact that a large number of these games are successful without any stimulating “moment-to-moment” gameplay (e.g. Puzzle & Dragons’ match-3 combat) shows that players are engaging with them in a very low-intensity fashion (not in terms of time/money commitment, but rather attention and focus). These games are catered towards capturing the popular “fragmented time” space pursued by many mobile apps. They can be great “second screen”/multi-tasking experiences, which a high intensity game cannot satisfy.

At the same time, it’s really hard to see these games as not a fad. The formula can be extremely sticky initially but once players experience fatigue there’s very little to prevent them from churning. Some games have tried differentiating with higher production value (e.g. Million Arthur, which leveraged famous anime voice-actors) and/or IP tie-ins to create that initial draw, but I’m skeptical that players will continue to enjoy products in this space after engaging deeply with one product and breaking from it.

This brings my rather unfocused post to the other elephant in the room – Blizzard’s Hearthstone. This game has all the signs of being a massive mobile card game, despite only beta-testing on PC/Mac so far. Ironically, I get this confidence from playing the Chinese rip-off of Hearthstone which Blizzard has just taken action against. It has the right type of session length, onboarding accessibility, and gameplay depth. And it leverages a very familiar IP. (I do think there’s a lesson or two Blizzard could learn from the Chinese rip-off, especially the small client-size which I do think is a big deal on mobile.)

In short – Hearthstone may be the first massively popular “hardcore” game that is truly achieves cross-platform parity between mobile and PC/console (I’m discounting ports like XCOM because the mobile experience still has some issues). As more and more games figure this out, it may incidentally accelerate the decline of PC gaming. Once hardcore gamers form the habit of gaming on mobile, it will be harder to lure them back to PC/console experiences (demanding even higher production costs etc., which may break economics). All of this is just speculation at this point, but dramatic gaming engagement shifts may be coming.


The Waiting Game

Reuters had an interesting article yesterday over NTT DoCoMo – Apple negotiations over the iPhone. While reports of tense negotiations between Apple and carriers are nothing new (China Mobile pops up in the news every few months about its tough stance to Apple), I thought there were a couple of juicy bits worth pondering on from the DoCoMo article.

First, one of the sticking points of the discussion is apparently DoCoMo’s dilemma over its range of value-added-services (VAS). This is not surprising. DoCoMo was revolutionary back in the day with i-mode, which was a textbook example of a successful carrier strategy in mobile internet (so much so that a MBA case is one of the first results in a google search on i-mode). What DoCoMo was able to market with i-mode (and get people to adopt) was often considered far ahead of its time, so much so that when the iPhone first launched, quite a few people used Japan to point out that the iPhone is not “revolutionary” (see this counternotions blog referencing this).

What’s interesting to me here is one walled garden (DoCoMo’s VAS) being disrupted by another walled garden (Apple’s iPhone). The point is not that Apple is more open (it certainly is, at the App Store layer), and therefore it is winning (a big part of the iPhone’s appeal is its app ecosystem); the point is how Apple is leveraging “open-ness” at one layer to succeed with a “closed” business model. Furthermore, it certainly isn’t surprising how DoCoMo is trying to leverage Android (a far more open OS than iOS) to defend its extremely closed business model; unfortunately Japanese consumers don’t seem that engaged.

As an aside, I don’t want to use this as proof that carriers can never get services right – I don’t believe in such business inevitability (similar to how I don’t believe in “Open>Closed”). But there’s a host of organizational challenges (carriers are not known more fast moving and disrupting themselves), which is why most commentators would say “it’s not in their DNA”. I do understand the carriers’ perpetual fear of becoming just a “dumb pipe” – by definition of which they will be undifferentiated, which drives profitability down – so I think some of them will just keep trying, and a few may succeed with a deeply vertically integrated model.

Second, the Reuters article had this paragraph which I couldn’t resist commenting on:

DoCoMo’s requirement that its company logo be imprinted on all its devices also conflicts with style-conscious Apple’s insistence that its products be left as manufactured.

I would argue that this has nothing (well, almost nothing) to do with style and everything to do with brand and market power. The point is not that adding carrier logos would make the iPhone ugly; the point is this is a symbolic fight over who owns the customer – as in, did the customer buy the iPhone because of DoCoMo or because of Apple, and which brand does the customer have more affinity towards? As a reminder, a couple of years ago, Verizon had the exact same argument with Apple, and this was the result.

Some final thoughts: in this big waiting game, I think it’s a lose-lose game for the hold-out carriers (DoCoMo / China Mobile) and Apple, with clear value left on the table; however, the alternative scenario is not necessarily a win-win but quite possibly a win-lose, which is why the parties seem happy to play it out.  DoCoMo is happy to bleed customers if it thinks it can extract more value from preserving its VAS with its remaining customers; and Apple does not want to budge on handset subsidies and other points (it seems happy to pay the opportunity cost in market share for unit profitability). China Mobile seems to be an even bigger hold-out (and thinks it will have a better hand the longer it waits), as recent news indicates.


Interoperability as signal of relative market performance

There were two thematically similar pieces of news today – the first, Blackberry announced that it would add the once-popular BBM messaging service to iOS and Android; the second, Microsoft announced that now supports chatting with Google accounts.

Going back a few years, both pieces of news would be bombshells, with bloggers likely proclaiming that hell has frozen over. In today’s tech scene, both are of minor note.

In grad school, a tech strategy professor had made the observation that efforts at providing interoperability usually make strategic sense for players who are trying to catch up. For market leaders, generally there is little strategic rationale to support your competitors’ platforms. The classic example of this would be productivity software, most famously office suites. Even today, there are a few competitors to Microsoft Office. Supporting Microsoft’s document formats are a core feature; it would be a non-starter to try to get adoption when you don’t support .doc / .ppt / .xls. Conversely, there is usually no reason at all for Microsoft Office to support competing office products’ proprietary formats. (Office may support some open standards, but that’s another story)

So one way to read these pieces of news today, is to see them as signal that Blackberry and Microsoft have on a strategic level acknowledged the dominance of its respective competitors. For Blackberry, even just a few years ago BBM was seen as a crown jewel, a killer app for its loyal user-base. To add cross-platform support would be like opening the floodgates for a mass exodus of users. – Well, that exodus happened anyway. For Microsoft, its web services have long offered some forms of interoperability (e.g. facebook chat support on Windows Messenger), but outright admitting that Gmail is more popular seems to be a first (just the title of the linked official post itself is revealing).

To extrapolate on the observation, Rene Ritchie made the observation that “as of today, every major mobile competitor… also makes apps for iOS“. This is obviously tied to Apple’s vertical integration business model, which is asymmetric compared to Google / Microsoft’s more horizontal play (hence, it is a much bigger deal for Apple to even consider making its software available to other platforms). And you can also make the comment that Apple doesn’t really have proprietary killer apps that would benefit from being cross-platform. But at least partially it is also a signal of Apple’s platform strength.