The DeanBeat: The top 10 takeaways from Casual Connect

Casual Connect was a fascinating conference with more than 250 speakers last week, all talking about the leading edge of games on social, mobile, and online platforms. It’s tough to summarize the patterns in this vast and chaotic industry. But it was fun and illuminating to hear so many speakers parse the market and reveal new perspectives and strategies.

The speakers made me think about the theme of Total World Domination, or global gaming, at our upcoming GamesBeat 2014 conference on Sept. 15-16 in San Francisco. Competitors are now stepping up and realizing that they have to look at gaming from a lot of different perspectives — or get checkmated by an adversary. Is your strategy a sound one?

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Check out some of the ideas for the top ten takeaways about the future of gaming. For another view, head over to this blog post by Margaret Wallace, head of Playmatics.

1. The giants have awoken

Giants like Amazon and Google can be extremely powerful when they bring their resources to bear on gaming. Amazon executive Ethan Evans said that his company woke up to the power of games when it launched its Kindle Fire tablets and found that most of the activity was around games, not eBooks. After that, it concentrated its firepower on games, making sure it had an integrated game strategy for its Fire TV set-top box, which has a cooperative shooter game in Sev Zero, and the Fire Phone, which adds cool side-look views to exclusive games like To-Fu Fury.

Those might seem like small efforts, but Amazon is paying attention to what is happening to games across a broad number of innovation points. It is doing so through investments in its Amazon Web Services business, cloud streaming of game content, original games, tablets, smartphones, set-top boxes, augmented reality, car computing, wearables, multiplatform synchronization, voice commands, and the Amazon Appstore for Android.

Google, likewise, can bring to bear its investments in Android and the Google Play store. The Android game community grew by 100 million players in the last six months, and there are more than 1 billion Android devices in the world. Google keeps adding game-friendly platform features like gift cards in multiple countries, quests with rewards, saved games, and player sign-ins, said Bob Meese, head of games business development for Google Play.

Google’s Niantic division has seen success getting an audience above a million for its Ingress massively multiplayer mobile game. If it can monetize the game, that would make it more viable, and the company is testing the idea of doing treasure hunts with real world prizes provided by sponsors. Google is moving on to a second game, End Game, and it plans to open up the platform to third-party game makers next year. That’s a lot of progress in creating a new kind of game.

If your company is a tech giant, then the question you have to ask isn’t about why you should go into games. It’s about why you don’t already have an intentional, not accidental, game strategy.

2. The market for women requires a different kind of thinking

Jeff Tseng, cofounder of Crowdstar, acknowledges that his company fell into making games for women. He was a former console game maker, and when Facebook came along, Crowdstar jumped on the opportunity to make lightweight games for broader audiences. As the market has transitioned to mobile, Crowdstar has doubled down on making games for women.

In his talk at Casual Connect, Tseng said his team, now led by a woman, had to rethink its philosophy of game design at a high level. They call it “rhythmic design,” or games that are designed to fit into the way people live. Most other games demand your attention all of the time. You sacrifice other parts of your life to play games. The games demand your skill and strategy.

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On the other hand, casual titles like FarmVille didn’t demand any of that. They give you a little joy or fun during a break at work. Such games work in the “in-between time” of your lives, like when you’re waiting in line or about to go to bed. Making games that fit into life were critical to Crowdstar’s success. The company also had to design games that fit into the state of the mind of players, particularly busy people who want a little relaxation or escape. Kim Kardashian’s Hollywood is a success, Tseng said, because it makes a player feel like a star, not an ordinary person.

Lastly, Tseng believes if you make a game engaging, the monetization will come. And the key to making something engaging is to create a community where players recognize the accomplishments of others and share their own. There’s a lot less zero-sum competition, where one player wins and the other loses.

“You have to reinvent a lot of things you thought were canonical to make a hit for women,” Tseng said.

3. Games can be used to create powerful brands

Playmatics has made a name for itself creating games for brands like Redbull. That has given Nick Fortugno, cofounder of the New York company, a lot of time to think about brands and games.

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Fortugno pointed to Disney’s Where’s My Water, a game that stars an alligator, Swampy, who likes to stay clean. The title worked well on mobile devices, as you had to slice through dirt to create channels for water to reach the alligator. The game was a big enough hit on mobile to justify further investment, prompting Disney to launch a line of cartoons and toys around the brand. It hasn’t set the world on fire, perhaps because the adults playing the game weren’t big cartoon watchers, but the thinking behind it was solid.

For Disney, the Where’s My Water franchise started as a very cheap investment in a small mobile game. That means that games are a great way to test a new intellectual property, Fortugno said. And those games can be one part of a larger story and extensible brand. The goal with the game is to reach a lot of people, not make a lot of money, resulting in a lasting brand.

Activision has gone big with a similar strategy with its Skylanders titles, which are toy-game hybrids. Disney has done the same with its toy-game hybrid Disney Infinity. And Nintendo is following suit with its upcoming Amiibo toy-game characters. Fortugno noted that LucasArts and LucasFilm, now owned by Disney, started over the Star Wars franchise. Disney is investing heavily in the next set of films, but it shut down its independent LucasArts game studio. Now Disney is hiring more game people, but they are experts in transmedia branding efforts and could grow new games based on the new Star Wars movies. That’s a sign of bigger things to come with inventing new brands in the game market.

4. Why diversity pays off in game design

When Terry Redfield was a girl, she was a tomboy and like video games. She was told she wasn’t supposed to be. But Redfield’s mother told her she could be whatever she wanted to be. Against the odds, she became a game designer and a startup founder.

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Her training for that job included running a 300-person guild in Everquest, the massively multiplayer online fantasy role-playing game. In her first job, she worked on a game called Uprising, which was too hard to play. She said so, but she was told she was just a girl.

Then she worked on Psychonauts at Double Fine Productions and had a great experience, carrying out roles without facing gender stereotypes.

She started startups like Real Life Plus, working on games like Gardens of Time for Playdom/Disney. She also plays hardcore games like League of Legends, where she plays a healer. Her interests in games are diverse and broad, and she’s tired of seeing stereotypical female game characters. As a modern woman, she sees how she has changed through her life, but game characters that focus on just the outside, and not the person inside, don’t capture that. One observation: older women have stressful lives, and many of them don’t want stressful games. They may want something relaxing instead.

Her lesson in making Force of Elements, her newest game at startup Wicked Fun, is to create a diverse team with both men and women. The result is characters who are more believable.

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5. Game deals are getting bigger and more global

The pace of acquisitions and the amount of money companies are paying to buy companies is on the rise. Alina Soltys, analyst at The Corum Group, calculated that the number of game acquisitions in the first half of 2014 was 78, or the highest in the past couple of years. The number of deals hit record levels in both the first half of 2014 and the second half of 2013, based on an analysis going back to 2009.

Not counting billion-dollar transactions, the value of merger and acquisition deals was $2.27 billion in the first half of 2014, and it was $3.05 billion in the second half of 2013. And, excluding billion-dollar deals, the average deal size is increasing significantly. In 2009, the average deal value was $42 million. By the first half of 2014, it was $84 million, up 98.9 percent over five years. Google’s rumored acquisition of Twitch, which we confirmed has been signed, was just one of a number of deals that was in the works. Alibaba’s $120 million investment in Kabam was another confirmation of the industry’s momentum.

In 2013, Asian game corporations accounted for nine of the top ten acquisitions of game companies. The Corum Group said back in February that 60 percent of acquisitions are now cross-border deals as big companies try to expand their geographic reach to new regions and move to consolidate markets. Overall, the game market is expected to increase from $70 billion to $100 billion by 2017, according to estimates by entertainment investment bank Digi-Capital.

As I watch the frenzy of ChinaJoy, a game business and fan expo that will draw 250,000 attendees this week, I can only nod my head. Gaming is getting bigger. Everybody wants to be part of it. And the center of gravity is moving to Asia.

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6. Protecting kids is a good thing

Regulators in the U.S. and the European Union are moving to protect kids by enforcing laws that prohibit deceptive practices. Platform owners like Apple can no longer call games “free” if they have built-in monetization systems such as free-to-play, where a player can start paying for free but has the option of buying virtual goods. We’ve seen a lot of stories about children who run up huge credit card bills buying goods that they thought were free. Too many monetization schemes seem like get-rich-quick scams built on the naiveté of young gamers.

This is creating opportunities for kid-friendly companies like Oink, which has created a system for parents to authorize purchases by their children in approved games, and AgeCheq, which enables game companies to verify the age of players and take the necessary actions to police what minors do online.

While Facebook may be aware of the age of the people using it, platform owners like Apple have a harder time figuring that out. But Oink’s technology allows parents to allocate an allowance for kids to spend in games that are pre-approved by the parent. If the kid overspends, the parent will know it.

“Technology gives us a way to protect kids online,” said Jo Webber, CEO of Oink. “We should take advantage of it.”

7. Appearances can be deceiving

Simple social casino and real-money gambling games seem easy to design. How hard can it be to create a slot machine game? They’ve been around for decades, either as real-money gambling games or games where you play for fun.

But the laws of the land make the distinction between gambling and social casino games an important one to get right. Louis Castle, head of Castle Production Services and seasoned designer in both hardcore games and casino games, said that gambling is defined as a game where you have consideration (something wagered), chance, and a prize. A sweepstakes isn’t gambling because you don’t wager anything up front.

And while that seems clear, there’s some innovation that blurs the lines. Playstudios, a maker of the MyVegas social casino game, has a deal with MGM where it can offer real-world comps such as discounts on Las Vegas hotels as rewards in the MyVegas game. But Monty Kerr, cofounder of Playstudios, noted that the company doesn’t give comps to winners and deny comps to losers. Rather, if you play for a certain amount of time, you get the comps. So there’s no chance involved. On top of that, there’s no wager involved, as everyone can play for free.

Other games might say they have consideration and chance, but no prize, and therefore should not be considered gambling games. But regulators may someday decide that the little things you give away in a game may actually have real-world value. That’s going to make the legal debate more complicated.

Some of the best game designers like Larry Demar, president of Leading Edge Design, have been creating such games for decades. Demar said in a panel session that slot games are like rollercoasters with high spills and thrills. But the math behind random number generators, which ensure that a gambling slots game is a real game of chance, is so tough that you have to design the game with a mathematician helping you out. Still think slot machines are easy to design?

8. Find new territories for your game

Mag Yang told a story of his new game studio, Geoe Game. Although it’s based in Beijing, the new studio with 15 people found it couldn’t get an audience in China, one of the biggest mobile markets of all with more than 190 app stores. Big publishers weren’t interested in an unfinished game when Yang showed it to them. And when the company self-published the free-to-play title, nobody downloaded it.

But a surprise came when a publisher in Taiwan agreed to publish the game. Next, they found willing publishers in Singapore and Malaysia. The company operated the game itself and kept adding content. Although it had no investment and no experience in making mobile games, the game generated enough money to keep the company afloat.

“All the Chinese companies are going abroad, moving into the U.S. and Western Europe,” said Si Shen, CEO of Papaya Mobile, creator of the AppFlood global ad network. “They’re also focusing on developing countries in places like Indonesia, Brazil, and the Middle East.”

While revenue per user in those countries isn’t as good as in other countries, the cost of acquiring those users is lower as well, Shen said. Moving into new territories or platforms with less competition can sometimes be a move that makes all of the difference when it comes to survival.

If you think this is a game that the little guys play, look at Microsoft’s move into the Chinese video game market with the upcoming launch of the Xbox One. While Sony has the jump on Microsoft elsewhere, Microsoft is moving faster into what could eventually become one of the huge markets for traditional game consoles.

9. New platforms and technologies are also ways to outmaneuver competitors

Innovating on new platforms or with new technologies makes a lot of sense if you want to escape the race to the bottom. Facebook was late to mobile, but it bought Oculus VR for $2 billion so that it could leapfrog to the next cool platform for virtual reality.

That’s why companies like Plantronics are investigating the market for games on wearable devices. The maker of headsets for gamers is exploring cool game-related users for technologies like voice control or drop detection on devices such as Google Glass. You might think of Plantronics as a boring company in a commodity accessory market. But Plantronics sees itself as a pioneer in new kinds of wearables, sensors, and platforms for making games.

The interesting thing is that these two technologies are moving in different directions. Virtual reality aims to immerse gamers even further in game worlds, while wearables are all about giving you opportunities to play in quiet moments like when you’re walking on a beach.

“There’s a lot more to wearables than slapping something on someone’s wrist,” said Corey Rosemund, business development director at Plantronics, in a lecture. “We’re at the tip of the iceberg for this.”

10. The line between winners and losers is a thin one

Some game companies make it look easy to come up with big hits in mobile games. Supercell has three games, and they’re all hits. Electronic Arts has more than 800 mobile games, but it has a handful of hits, like The Simpsons: Tapped Out, that really move the needle for the big company.

Tommy Palm, a key figure at King in the creation of the mobile game sensation Candy Crush Saga, knows just how thin this line is. He said in a fireside chat with game maker Arseny Lebedev of Signus Labs that he almost quit the game business because he endured six months without a paycheck in his early days as a game designer.

“I remembered this really vivid memory back in 2000,” Palm said. “I was considering taking a job at McDonald’s to support myself.”

Then his small company managed to get a contract with Nokia to continue doing mobile gaming work.

“I was almost in tears because it saved the company for another two years,” Palm said. “The low point can be really terrible.”

He stayed on the path of game design, and by November 2012, helped King launch Candy Crush Saga. The rest was history, as the game enabled King to go public on revenues of $1.8 billion last year, most of it generated by Palm’s game.