GDC China: Ngmoco's Yu Talks iPhone's Social Future

In a talk at GDC China in Shanghai, Ngmoco VP Alan Yu discussed the formation of the iPhone-focused studio and the state of the App store, suggesting that social-focused, microtransaction based Apps are the way forward. iPhone is different to many other systems, said Yu as he introduced the subject to the Chinese audience, because it's "bringing about an era of frictionless development and distribution." There are 85,000 Apps in the App Store and "that's a lot, by any measure". He admitted that "this is a very challenging marketplace." Frictionless distribution has some massive advantages, but, as Yu notes, you need some way to differentiate. His magic three criteria? Concept, quality, and price. Some other notable takeaways -- iPhone game piracy is a big issue, with 50%-90% piracy estimated in the first week of release on Ngmoco games. For awareness drivers for iPhone games, Yu believes that #1 is word of mouth, #2 is Apple promotions, and #3 is cross-promotions with other games. He particularly noted that price dropping your game was "not necessarily good, and not necessarily bad either". But overall, the average iPhone game price is decreasing over time. Yu cited stats -- sourced from iPhone App info aggregation website Apptism, which Ngmoco recently acquired -- explaining that, over the past few months, the average price of the Top 100 in the iPhone App store game charts is dipping. The Top 100 average price is getting much closer to $2, and the average of the Top 5 is getting closer to $1. A Q3 2009 analysis for the App Store cited by Yu had an average $2.27 price for the Top 100 in July-September 2009, compared to $2.47 in April-June 2009. So the market on iPhone continues to change. Although premium iPhone games for $10 "would have been a nice business to have", Yu doesn't believe this will be the predominant model going forward. Yu believes that free games with incremental payments is where things may be going. He cited Eliminate, a first-person shooter deathmatch title that Ngmoco is about to release, with incremental payments for energy upgrades in the game. In addition, the upcoming Touch Pets: Dogs from Ngmoco, which has also just been submitted to Apple, makes use of microtransactions to allow you to purchase in-game elements to make your virtual dog happier. Finally, Yu also outlined the Plus+ Publishing label, which is a social platform for the the iPhone that's open to third-parties and also runs on first-party Ngmoco games. It allows integrated logon, high score tables, cross-promotion, and a number of other notable features. As well as third-parties signing up to use Plus+, Yu indicated that more co-publishing deals with notable IP will be announced soon from the Simon Jeffery-run division that has already signed to bring MumboJumbo's casual hit Luxor to iPhone. Alongside Ngmoco's first-party titles using microtransactions, this multi-pronged approach is the company's attempt to tackle the complex, ever-shifting iPhone game market as a larger, VC-funded company.