From backwater to blockbuster: The lessons that games can teach mobile companies (interview)

SAUSALITO, Calif. — Games used to be a backwater. They were viewed as being too violent. They appealed to boys. They were addictive. They were for nerds. But now everyone wants to learn from them because it has become one of the hottest sectors on the hot platforms of social, mobile, and online content.

The switch from backwater to blockbuster has happened as the mobile audience for games has skyrocketed. Games account for a third of mobile usage. Accidental or intentional, the biggest game companies now include platform makers like Apple, Google, and Amazon. As far as game platforms go, it’s not just Sony, Microsoft, and Nintendo anymore.

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At VentureBeat’s Mobile Summit, we interviewed two game experts about the lessons that games can teach other industries. Our speakers included Maria Alegre, the cofounder and CEO of the monetization platform Chartboost; and Diana Moldavsky, chief revenue officer at Cut the Rope-maker Zeptolab. Here’s an edited transcript of our conversation.

GamesBeat: We’re going to talk about what works well with games. Please introduce yourselves. And as an opening question for both of you, what are the lessons that come from games that everyone else should learn?

Maria Alegre: My name is Maria Alegre. I’m the cofounder and CEO of Chartboost. My background is in making games. I was part of the early team that became Disney Mobile. At Chartboost, we’re building the biggest games-only business engine.

What we mean by that is we’re building technology that helps game developers build a business behind their creations. Right now we work with 60,000 game developers. At any given point, we’re working with more than 70 percent of the top iOS and Android games. We’re three years old, based in San Francisco.

Diana Moldavsky: Zeptolab is the company behind Cut the Rope. We’ve been around just a bit more than three years. To date, we have more than half a billion downloads and more than 60 million monthly active users playing our games.

Alegre: So, what can nongaming business learn from games? I could give you a big list, but I’ll focus on one thing, which is both the challenge and opportunity of interacting with users many times during the day. They always have their phone with them, and you’re interacting with them in these one-minute-long sessions. Games have been the first to figure this out.

Games have had to master the transition from console gaming to web and then to mobile. On console, you had one-hour-long sessions or longer. Web is in the middle. Mobile, at the other extreme, has 1 minute play sessions. What [developers] have done is change their formula, creating games that work in a shorter session, and they’ve mastered instant gratification – focusing on one game mechanic at a time and delivering fun in a short amount of time. Then they give you a good reason to come back.

Any nongame business that figures those things out — change the formula, deliver instant gratification, and give a good reason for the user to come back to the app — can be successful building a business in mobile.

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Moldavsky: One thing to consider [is that] many companies start with brands. Their goal is creating brand awareness and an engagement with their story. As a gaming company, we do all that as well. We can work together with other brands, because we’re a brand ourselves. Cut the Rope and the character it’s built around – this green monster Om Nom – have become a recognizable brand. We can help other brands reach this huge audience that we’ve discovered on mobile.

It’s not necessarily just about advertising, although we’ve all been doing that. We have new things that we’re ready to do for brands now in our games. We’re looking at more involved integrations and partnerships where — say you’re a fashion brand. Om Nom could wear hats from your brand. If you’re a candy brand, he could be eating something specific instead of the generic candy he’s eating now. Today, in just our ad-supported versions, more than 200 million candies are eaten every month. That could be any brand of candy.

Every year, on holidays, we have a holiday-themed app. We could as easily do a themed version of the app with any brand that makes sense. It’s just a matter of having that exposure and that relevance and targeting an audience.

Alegre: Games have created a big engagement with users. We’re talking about 60 percent or more of users coming back every single day. Games create a big connection with consumers. We see that in the real world in music and celebrities, how music and celebrities are used with brands to promote products. There’s a big opportunity for any product in the world, even if they have nothing to do with a game, to leverage a new form of entertainment in mobile games that have created a deep connection. It’s a new form of partnership.

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Moldavsky: Music is a great example. Just like music, games have an emotional connection with the consumer. For our character, Om Nom, people write us letters about how much they like him, how they want to dress up their children as Om Nom for Halloween. Or we have kids writing us letters about how they want us to add their idea for a monster to Cut the Rope 2, sending us pictures and ideas. There’s a deep emotional connection. People want to take care of this monster, to feed him, to have him as a pet. This level of emotion is a big thing.

GamesBeat: You’re starting to get into something that leads to the next question here. Games have something that many apps and brands don’t have, which is hardcore fans. They build their own communities. They get in arguments with each other. How do you make something like that happen outside of games, this passion around the product?

Alegre: Going back to partnership, it’s about finding a game that speaks to your audience, that’s created that connection with your audience. For example, if you’re a Disney movie, you can partner with a game built around creation, because they’re attracting that audience. If you’re a movie like The Hobbit, you can partner with Kabam, because that’s their target audience. You need to find games that create a connection with the audience your product is targeting.

You have the option of going to Facebook and figuring out exactly your audience and targeting with data, or you have the option of finding a brand that’s the perfect partner and doing that deal.

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GamesBeat: There are some limitations here. We can’t be entirely cheerleaders for games. Some things have not set the world on fire, like the gamification of things like the enterprise. That’s not necessarily living up to the expectations people attached to it. What would you say to people who are skeptical that there’s anything relevant, something that games can teach?

Alegre: One thing I would do is just use the numbers that show the size of gaming. Apple paid $10 billion to developers this year, twice what they paid the previous year. That’s only half the market, because Android is by many metrics bigger than iOS. Of that money, more than half of it is spent on games. Gaming has been the first industry to figure out how to build a business on mobile.

As for gamification, yes, the word has been overused, but there are many examples of nongaming businesses taking things from gaming. We were talking earlier about how Microsoft’s Siri competitor, their personal assistant, they’ve used a voice from [the hit sci-fi shooter series] Halo, their top game, to engage with consumers.

GamesBeat: Yeah, the Cortana character.

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Alegre: Another good example is how the App Store on the iPhone, it creates the same experience when you’re buying hardware as when you’re buying an in-app purchase. You’re pressing the same kinds of buttons when you buy a 99 cent virtual good as when you’re buying a $2,000 computer. They’ve taken that interaction with the user from gaming, from the App Store, and applied it to e-commerce. Suddenly they’re selling hardware.

Moldavsky: The numbers definitely speak louder than words. Right now, we have just under two billion smartphone users around the world. It’ll reach five billion in the next few years. Today, about 85 percent of time spent on mobile is spent with apps, and the biggest category among apps is gaming. To make a comparison, the next-biggest category as far as time spent is Facebook. That gives you an idea of how big gaming is and how much can be done there as far as reaching the consumer – every day, in their own time, through their device. You can create a meaningful connection with the consumer.

GamesBeat: What would, say, supermarket chain Safeway learn from games?

Alegre: A Safeway app — well, like I was saying before, when I go grocery shopping, I need to be able to get what I want in that first minute there. They need to deliver that instant gratification. They need to give me a reason to come back.

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Apps like Instacart have figured out how to sell groceries through smartphones. Instacart is helping me figure out what I need in real time, during the day, with interactions of about 30 seconds. I can finish the shopping experience while I’m at home and just pick out a time for delivery. Being able to interact with a user during the day and then let them check out while they’re at home — that’s something grocers can learn from mobile. Clash of Clans has the same sort of pattern. I collect my coins during the day in 30-second bursts, and then I go home to go to battle with the other clans, spending about 10 minutes in the other loop of the game that takes longer. That’s one parallel you could draw.

Moldavsky: Geo-location is something that a lot of games and other apps have used. Imagine you’re walking by Safeway and you get some sort of special promotion in a partnered game. As soon as there’s a Safeway store within 20 feet of you, you can get some sort of offer. Companies out there do these kinds of integration with games, working with retail to create realtime geo-location offers for consumers.

GamesBeat: What might the New York Times learn from games?

Alegre: That’s a different kind of business. Their main business model is advertising, combined with subscriptions. They deliver content that they want you to come back to every day. Gaming has gone through this transition from selling $60 console games to understanding how to make money with advertising and transactions involving smaller amounts of money. Newspapers have gone through that same transition, from selling a newspaper in the physical world to selling an article at a time for a small amount of money, or making money through advertising by delivering new content. It’s the same challenge that games have already figured out. It’s taking the New York Times a little bit longer to navigate that transition, from the physical world to the digital world.

GamesBeat: How about Ford?

Moldavsky: A gaming company could take their latest product and integrate it into a game. Popular characters could be driving Ford in their game, and Ford could bring some special deal for users to make it more meaningful to them. They could face some kind of challenge in the game, brought to you by Ford. A lot of times, instead of trying to get into gaming from the brand side, it’s better to work with gaming brands and see what you can do with them together.