By Hassan Baig
“Ask not ask for whom the bell tolls, it tolls for thee.” – John Donne, Meditation 17
Every once in a while, we need to get our head out of the day-to-day rigmarole that consumes us and look around. This is the only way to get perspective on the big picture. And the big picture ought to be staple for every entrepreneur because without it, we are at mercy of outside events we can’t control.
App development in general and gaming apps in specific have seen a hastening maturity over the past 18 months. This industry – once a cornucopia for small developers – has now come to be dominated by the big fish with the kind of perpetuity which sets in over several decades in other industries. But tech space has always been much more dynamic, so typical rules do not apply.
In my career as founding and leading a social game development startup in Pakistan for over 3 years, there are many dots which I have connected over the years. I’m going to layout the bigger picture below, in the hope that it helps our industry cope better with the changing times that are now upon us. Change is inevitable, and we must be quick on our feet.
The King Makers: It was the summer of 2007 that Facebook opened up it’s platform to 3rd party developers. After release of the open platform, Facebook doubled it’s user-base to almost 60 million within 3 months. From there on, Facebook grew at an ever increasing rate (which only cooled down recently) till it hit the kind of user-base digits which now make early social networks look like a bunch of hobbyists in comparison. The 3rd party platform was the 4th biggest evolution Facebook had seen by then, coming after features like the ‘poke’, ‘newsfeed’ and ‘photo tagging’. Each change had given Facebook a lift, this last one blew it to the stratosphere.
By the summer of 2008, Apple had it’s very own open platform coming up. After much internal wrangling among the top decision makers at Apple, the App Store was finally released with an initial crop of 500 apps with around 125 of them free. Steve Jobs was specifically asked about the raison d’être for the release of the App Store. Having seen the Facebook growth model, his reply was simple: “To sell more iPhones”. The man’s words were to prove prophetic from there on out – Apple sold more iPhone units in the next 3 months than it had in the previous year.
Not to be outdone, Google, RIM, Amazon and a few others also jumped into the fray. This frenzy reached a crescendo with first the rise of the tablet, and then the fablet. In short, we stand today where we do only because we stand on the proverbial shoulders of giants, to borrow the iconic phrase from Isaac Newton.
The Kings: Big empires were made on the aforementioned platforms: Zynga, Electronic Arts, Rovio, Halfbrick, Instagram, OMGPOP, the list is far and wide. In fact, it’s still going strong with Supercell being the current flavor of the month. It was these stories that really powered the success of the platforms laid out by Facebook, Apple and Google. In other words, the rise of the kings gave their king-makers credibility. It fueled the imagination of countless developers across the world, giving the consumer app space a shot in the arm of the type hitherto unseen in tech.
Top-heavy solidification: Today a cursory look at Facebook and Apple’s app rankings reveals an extremely challenging environment for small developers. The fluidity at the top which gave everyone confidence that they too can break it into the top apps has been increasingly waning.
In its stead, a solidification is noticeable whereby the big developers have come to dominate the leaderboards with an air of immovability. Googe Play still has potential for smaller developers, but Facebook and Apple are decidedly out of reach. This is not to say that one cannot have a successful strategy based on niches, but just that the adage ‘if you build it, they will come’ has long been dead.
Whatever advantage Google Play still encompasses will soon be crowded out, for as ARPU numbers on the store catch up with Apple, here too the golden goose will soon be slaughtered. The world is changing and we must change with it.
VC money flow: Venture capital has been jumping over itself to fund startups in the consumer app space circa 2005. But a pause is now evident in this flow. VCs are asking questions they haven’t ever asked before: why give $10 million to an app which applies filters on a photo? At the same time, there are signals coming through portending a shift towards enterprise, away from consumer apps. For the uninitiated, that implies a shift of funds away from apps meant for individual users like you and me, and towards apps meant for companies and requiring CIO ratification.
This shift is at its nascent stages thus far and there’s a long way to go before the bottom gives out for consumer apps, but the signs are there. What does this mean for those operating in the consumer app space? Nothing in the short and perhaps medium term. But the long term implications are meaningful.
Zynga – then and now:
With substantial Wall Street experience at his back, Mark Pincus, the man and personality behind Zynga changed the face of gaming forever. His training at the likes of Lazard Frere & Co and a short stint at Bain Capital (private equity firm of Mitt Romney fame) gave him a novel perspective when it came to Zynga and game development.
Taking an analytics rich approach, he basically put together a huge data warehousing and user behaviour modelling operation at the heart of Zynga’s product philosophy. In the shadow of this new philosophy, Zynga would produce a game, publish it, and then A/B test it viciously to optimize it. It has been a norm for Zynga to have up to 500 builds live for a given game at a given time, all measuring analytics of what mix of features convert the best.
This approach helped Zynga trailblaze their way to the top of the leaderboards with the kind of staying power which rarely looked challengeable. It worked so well for Zynga in fact, that soon they started ‘borrowing’ promising concepts from competitors, optimizing them via A/B testing and turning them into bigger successes than they were in the hands of their original developers. Purists in the game development space abhorred this practice, but with Zynga’s mind-numbing profitability in its hey day, it became almost impossible to ignore this approach.
In short, Zynga taught the whole industry to copy their way to success. That has been Zynga’s enduring legacy, and though the company’s fortunes have subsequently been waning, the Zynga mindset is still rampant. Eventually, what caught up with Zynga was gamer fatigue on Facebook coupled with its inability to grasp mobile gaming. One can actually track Zynga’s rise and fall by studying the gaming leaderboards of the past 5 years.
Every year has seen top games to be those which followed Zynga’s paradigm and game design. But there’s been a sharp turn in 2012 – games such as OMGPOP’s Draw Something and Freshplanet’s SongPop are as different from a typical Zynga ‘Ville’ game as can be. This gives a good indication of how what used to be a hit earlier is now disappearing fast from the public’s preferences.
Path from here
So what should small game developers do from here on out? The following blueprint can help:
1) Run away from Zynga:
There was a time when Zynga was an industry leader and following its example was the way to go. Times have changed. In the world where everyone copies everyone relentlessly, all products ultimately become copies of each other. Hence evolution is stifled and the overall gene pool of creativity takes a beating.
Ostensibly, there’s nothing wrong with stifling creativity as long as profitability is not compromised. But then beware that inevitable extinction event which wipes out entire populations by exploiting weaknesses shared by all clones. That extinction event is now starting, so we need to run in the opposite direction from here on out. In short, game design smarts will play a greater role in the future than reverse engineering smarts.
2) China, China, China:
There is a mobile gaming boom happening in China as you read this. It’s fueled by a proliferation of mobile devices in the country to the point that China is forecasted by Flurry to surpass US iOS and Android install base by the first quarter of 2013. Also on the horizon is Google Play’s carrier billing facility.
Combine these two and China is an Android goldrush waiting to happen. Nevertheless, international developers would need to overcome several challenges before they can get a stake in the Chinese pie – app translation, localization and handling the often messy distribution.
The best way to do that is to get hold of a local partner in China and leverage their native knowledge of how to capitalize on the Chinese opportunity. For those who get queasy on the thought of co-existing with the likes of Shanda and Tencent, MENA also presents an opportunity worth exploring. Finding out more about these opportunities is just a Google away, so there’s no reason to not be doing it.
3) Tablet Proliferation:
The tablet is increasingly becoming the one device to rule them all. Designed – especially the Apple version – with usability in mind, the devices are providing accessibility to demographics which were hitherto unable to wield computing power. In other words, if you’re not designing apps for tablets, you’re missing out. It’s an ecosystem in its own right, and is increasingly popular with the young and old alike.
4) Carrier Billing:
Imagine the ability to pay for an app via carrier billing. That’s basically as frictionless as it can get on a mobile device, and can potentially boost conversion rates through the roof (CocoaChina is a compelling case study for this).
So here’s the good news: carrier billing is precisely what Google Play has been busy rolling out in partnership with various telecom giants of the world. What does this mean for you? Well it still doesn’t mean that the 99 cents model will be hugely successful on Google Play like it has been on the App Store – there is rampant piracy on the Google platform. But it does mean that nicely designed free games integrated with micro transactions are going to make at least some of you reading this a whole lot of money.
5) Get on quora:
Developers in Pakistan have to contend with the disadvantages of being far removed from the chatter in Silicon Valley. Where were you when Facebook was founded? Or when Zynga released it’s first game (aptly named “Attack!”)? Or when Rovio released Angry Birds? Or Kevin Systrom founded Instagram? Or for that matter, when Supercell recently released Clash of Clans?
Chances are you wouldn’t remember because never heard of these humble beginnings. Not being in Silicon Valley means missing out on the onset of global technology trends. Tech Crunch ameliorates the issue somewhat – but then TC has the tendency to rehash soundbites coming out of the Thiel-Parker-Hoffman-Arrington nexus. A much better way to track technology trends while sitting in Pakistan is via Quora – a question and answer website with lots of opinions flying around by Valley insiders.
Founded by former Facebook employees, Quora contains a lot of pertinent discussions about current technology trends (including the app development scene) straight from the horse’s mouth.
For instance, ask a question about Zynga’s future strategy and you’re most probably going to get an answer from a Zynga GM. It doesn’t get more authentic than that. In fact, Quora’s probably more useful for us instead of those already sitting in Silicon Valley (since they are privy to all sorts of chatter anyway).
6) Niche thyself:
Borrowed from Guy Kawasaki’s musings, this phrase highlights the importance of specificity over being generic. If you’re developing gaming apps today, it makes much more sense to pick a niche demographic to target than to try and appeal to the general masses. In an industry which is now replete with competitors, you can establish a better business case by narrowing the field of your potential competition via picking out under-serviced niches.
This is perhaps the most important piece of advice I can give you. Collaboration is the way to overcome weaknesses and capitalizing on collective strengths. For developers undertaking content creation in Pakistan, it should not be forgotten that their competition sitting in the West has access to tens of millions of dollars of funding and to some of the best engineers in the world today.
The most potent way to compete against them is to present a united front. Otherwise, it’s a tall order to compete with such giants from an environment where you can’t even take electricity provision for granted. Think about it.
Writer is running White Rabbit Studios – a social game development startup – for last 3 years, a student of history and an expert at negotiating the numerous travails of tech entrepreneurship in Pakistan.