Gabriel Leydon foresees the “true dominance” of mobile games coming (interview)

GamesBeat: Will it get hard for those people who’ve gotten lucky to build a new company that grows to 100 people?

Leydon: Well, sure. Absolutely. It’s hard for anybody to do that. I would say that we’re one of the few companies that will do that. We’re an example. And there are lots of examples of people who just had one hit, and that’s all they did. But the point of it is that in mobile, having a hit from an independent developer is possible, and it’s happening on a regular basis.

And you can’t say that about any other platform at this point. You can’t say that about Facebook. I think there’s this fear that what happened to Facebook is going to happen to mobile. But people are ignoring the fact that it’s three years old and it’s accelerating, not decelerating.

GamesBeat: So, if you’re in the boat of people who have to care about user acquisition — say, you don’t have that magical hit — then how do you look back on these different events that have happened? Like Apple cracking down on Tapjoy’s pay-per-installs and the crackdown on third-party marketing services guys?

Leydon: Tapjoy was a big deal because Tapjoy worked. Apple didn’t really like it, but it was a profitable model. It really scaled. It’s scaling like crazy on Android because it works. It’s not because people don’t like it. People like it, but Apple didn’t like how it manipulated the store. But the users loved it. That’s why everybody’s been doing it; there’s a reason it works. It works because people like it. They liked being able to get courtesy for just downloading an app; that was pretty cool. They didn’t have to spend money. So you can see it on Android just scaling like nuts.

Advertising is in flux. What you’re also seeing now is Facebook’s biggest app isn’t even on Facebook. Draw Something isn’t even on Facebook, and it’s the biggest app on the platform. So that’s a first, too. Now we’re seeing the true dominance of mobile. The minute Draw Something became the biggest app on Facebook was the same day that the Facebook platform died. That’s what just happened. Draw Something killed Facebook apps because you can build a better Facebook app for cheaper off of Facebook than you can on Facebook.

That’s a really important transition that just happened. That’s a major moment in gaming — the fact that Draw Something is bigger than every game on Facebook. What I’m saying is — there you go, another example of marketing changing very fast. We had Tapjoy last year, and that’s gone. And now all of a sudden, Facebook is super important. Facebook has hit that tipping point where enough people have Facebook on their iPhone that it works. And now all of a sudden, Facebook is going to be very important moving forward for an app developer.

GamesBeat: Do you make a close connection between the success of Draw Something and Facebook on mobile?

Leydon: Yes, absolutely. That was not possible a year ago. It wasn’t possible until Draw Something came out. Because it hadn’t happened; it wasn’t happening. And all of a sudden, it’s there overnight. Facebook is suddenly the biggest marketing channel for mobile games.

GamesBeat: So is Mark Zuckerberg happy about that, or is he worried about that?

Leydon: I think he’s really happy. Look at that. He’s got the biggest app on mobile, and it’s not on his platform. He’s really happy about that. What that means is now every app developer is going to focus really hard on tightly integrating Facebook into their apps. And they should; that’s a really good idea because Draw Something hit millions of people for free. So if you look at that, and you say, “Oh, costs are rising.” Well, for whom? Who are they rising for? It depends. If you’re looking at Draw Something, they’re actually dropping like crazy.

GamesBeat: What do you think of Apple buying Chomp and this whole idea of search coming to the rescue?

Leydon: We’ll see. Mobile is a very unique and special platform. It is not set in stone yet. It changed dramatically three weeks ago, right? And this week UDID‘s going away. So it’s changing all the time.

GamesBeat: Do you have some hope that some of these social platforms will also help out, like Ngmoco?

Leydon: Twitter’s going to be a massive force on mobile. Look at it on iOS, it’s deeply integrated into iOS. I think an obvious side effect or result of that will be games that get very big because they’re tightly integrated with Twitter. All of those things are in flux. They’re going to keep changing, but I do know that what matters is a mobile-first experience. It’s the most important factor in all of this. That’s why we raised the money and that’s why we’re hiring to build next-generation mobile games.

GamesBeat: You raised $8 million. But three or six months ago, it might have been twice that. Mobile startup valuations are dropping.

Leydon: We’ve been profitable the whole time. We raised money to work with Shervin and Menlo. It’s that simple.

GamesBeat: On the Android side, are there other changes you see?

Leydon: Yeah. CPIs are dropping like crazy on Android. They are dropping fast. The exact opposite is happening there.

GamesBeat: Because of what?

Leydon: Because of the inventory being added to the platform. There are so many new devices being added every day that there isn’t enough to fill it. The exact opposite is happening there. Like I said, mobile is like Facebook 2007. It’s going to go through a lot of changes. These are very early days.

GamesBeat: Angry Birds Space was a big event this week, too.

Leydon: Yep. Exactly. It just keeps accelerating. It shows no signs of slowing down. It’s pretty obvious that it’s going to keep doubling and tripling for a while. It’s not going to slow down, it’s going to keep going. There’s so many people who don’t have a smartphone. We’re talking about a market of seven billion human beings. Everyone is going to have a smartphone, in my opinion. One hundred percent of humanity will have smartphones, and if it doesn’t get to a hundred percent, it’ll get really close. Even in America, I think only a third of the US has a smartphone. We’ve got a long way to go.

GamesBeat: Everybody’s happy and sort of beset by change at the same time.

Leydon: Well, because they get something that works, and then it changes on them. Look back. We were on Myspace when it launched — the Myspace platform. It was the same thing. The rules kept changing every day. Facebook, too. Look back on Facebook and how different it is now. Everything kept changing. There wasn’t a model at first, then there was a model; the models would change.

There was a big uproar, remember, when Facebook wanted to change the model of distribution to the feed? Everybody was complaining about that, too. And then that’s what created Farmville. That’s what enabled games to be more viral than ever. Because they were going to turn back on invites and switch to the feed, and then the feed just blew everything up. It’s just natural. “This is working — don’t change it.”

GamesBeat: Do you foresee changes to the rate at which you’re going to be making your apps, then?

Leydon: Oh, yeah, sure. But what we’re really focusing on is mobile technology. What we’re going to be doing is making games that are very, very special and unique in the market.

GamesBeat: What do you think of the Infinity Blade strategy of investing in tech?

Leydon: Oh, it’s great. What’s cool about mobile versus Facebook is that it is closer to the console business, to be honest. A console with some web components. Because with Facebook, there’s a real technology ceiling. You’re not seeing games get much better. They look pretty much how they looked a year ago. If you look at Facebook apps right now, they look the same as they did two years ago because Flash inhibits people from innovating, essentially. Which is a nice thing for big, huge Facebook companies because if they have an engine, they can just use it forever. They have to — they have to make it compatible back to IE 7 or whatever.

That’s not the case with mobile. On mobile, there’s quad core iPad 3s now. With Retina displays. So with the mobile market, it’s going to be the best free-to-play market in the world because you’re going to get high-end awesome games like Infinity Blade. There will be Infinity Blade 4 or 6 or whatever, and it’ll be amazing. It’ll look better than any console game out there. But you’ll also see really unique free-to-play experiences like ours because the games are always connected to the internet. They’re with you all the time, which is something you can’t do on PC.

GamesBeat: Ben Cousins mentioned to me that he expects to see $50 million dollar budgets for mobile games in a couple of years.

Leydon: Yep. I agree. All of that’s going to happen. It’s like the console business. This is way closer to the console business than Facebook. A lot closer.

GamesBeat: Wow. That’s pretty staggering, I guess.