How Israel’s $1B game business thrives in a cutthroat global industry

Above: Audience at Geektime Conference 2015.

Image Credit: Geektime

GamesBeat: It seems to me that gaming is always narrowing down and spreading out at the same time. On the narrowing-down front, we had our GamesBeat conference last week, and Machine Zone’s Gabe Leydon said that the pressures of making a global game are becoming so tough that within a couple of years, the best strategy for game companies will be to focus on just one game. You don’t, for example, see Blizzard making four World of Warcrafts and doing it well. How do you react to that notion, that game companies should think about a future where they focus on very few games?

Frankel: Games are all so data-heavy today. There’s a lot of actions players can take in a game. We take that study very seriously. We analyze a lot of that information, because we want to create an experience delivered through the game that’s almost perfectly suited to the player interacting with us.

When we launch a game, it’s a game we’ll be servicing for the next 10 years or more. You need to understand what you’re preparing for. Our first game launch was nearly five years ago and we see it generating significant revenue for many more years. Even so, we’re looking for the next successful game that we can grow. We believe that our future lies in finding newer and better experiences that will bring more players to join with us and stay with us for several years.

Schliesser: Our approach is quite different. We believe in consistency, not just trying to rely on the one big hit. We’re trying to build consistency with our third parties. In the kids’ area it was simpler, but now that we’re building mid-core games, we’re building a platform. Our vision is to have several games around it.

We think of things along the lines of the difference between movies and TV series. TV series are very successful over a long period of time, in multiple chapters. We’re taking the TV series approach. We believe that for us, with the technological abilities we have right now, that’s the right approach. I can understand companies that have it in their DNA to make something huge and keep building on that. For them that can be the right approach. But there are different approaches that can work.

Levy-Weiss: I’ve spoken to Gabe and people from Supercell and others about this. It’s very simple. Once you make it to the top three or to number one, it’s very easy to follow a strategy of focusing on just that one game. If you’re number one, you have about 10 times the leverage of number five. If you have the chance of bringing one of your games to the top three, you should definitely focus on that one. That’s going to build your company, just like King or Supercell.

The problem is that numbers one through three haven’t changed in the last three years. They trade places a bit, but those three haven’t changed for three years. Three companies have held those three places for three years and they’ll probably hold them for three more years to come, because they have so much money to spend getting even bigger. All the rest of us have to live in a world where we can’t assume we’ll ever get to be number one, two, or three. In that world, a single game is not a valid strategy.

You can’t aim at being in the top five. You can maybe aim at being in the top 25. This is what we’re doing at Plarium and Playtika. We aim for the top 25, which is great. You can build a billion-dollar business that way relatively easily, if you know how to do it. But if you’re just trying to make one game and get to number one or two, that’s incredibly difficult, if not impossible.

Above: Ping pong in VR

Image Credit: Oculus

GamesBeat: Given the chance to spread out, what do you think of virtual reality and augmented reality?

Levy-Weiss: I’m one of the big fans of VR and AR. I’ve played a lot with the latest gear from HTC and Oculus. That’s going to change the way we play games.

This was a bit of a grim panel at the outset, I think, and for the wrong reasons. We talked about rising CPIs and how complex and how difficult things are. But there is no other industry that’s as amazing as this industry. When you start building a game, if you get it right and you managed to build something fun, there’s nothing else in the world that grows as fast. Nothing else in the world gets you customer love like that. It’s a great industry to be in, and the next big platform in it is going to be VR.

I’ve played a few VR games and it’s totally immersive. You can’t stop playing it. If I had enough of them now, I think I’d be doing that for half of my day – if I were 15 or 16 or something like that.

Schliesser: VR is fun. But I have to see it to believe it. Someone will crack it, but I can’t do it myself. I hope that someone will be able to do it and we can follow.

Frankel: I agree. It’s very immersive. Personally, whenever I put on the goggles, I still get a little nauseated. But when I look at the history of games–You had very physical platforms like the Wii and PlayStation Move, and they had their audience. But they didn’t become a lasting part of the mainstream. Also, games where you have to wear a device to play, that’s a challenge, an obstacle. Most gamers, when you look at their play style, they don’t move that much. This is something where you have to put something on your head and walk around.

It’s a great experience. But I think of Imax. That’s a great cinematic experience, but do we watch most of our movies that way? I don’t think so. It’s going to be a very exciting platform, but I don’t think it will make it into the mainstream.