The Huffington Post covers the issue of Apple blocking and/or delaying apps with political satire.
Business
April 15, 2009
January 16, 2009
January 10, 2009
November 06, 2008
iPhone Apps ... and you know it don't come easy.
The iPhone Application store has created a Meritocracy for mobile apps and the rewards can be great. The problem is that the market has many many titles. Over 7000 applications at last count. There are over 20 Blackjack Games alone (make that 21, we just released one).
Kenny Rogers Announces Casino Games on Apple App Store
Do the math. There have been over 200m downloads of iPhone apps. If we assume that one out of ten have been paid and half of those are games than we have 5m paid game downloads. There are over 1400 paid game apps in the store. This would imply that the average game sells a bit over 3500 copies. However, in a typical market HALF of the sales (or more) would be sold by the top ten titles. According to some sources, 80% of the sales would be sold by the top twenty titles. So an 'average' title might only see 1500 sales or so.
I have argued that the key to success here is to have extraordinary efficiency combined with excellent quality. That isn't easy, as reflected in the recent news from GLU on their iPhone efforts:
http://www.casualgaming.biz/news/27895/Glu-gloomy-despite-Q3-gains
However, despite the gains seen in Q3 the firm has issued a gloomy outlook for the upcoming Q4 - and president and CEO Greg Ballard has blamed the company's failure in capitalising on the iPhone phenomenon as the cause. To date Glu has released just one title for the platform.
"In truth, we were less disappointed about Q3 than we were about our outlook for Q4," Ballard told Pocket Gamer. "We missed our numbers, but only by about $150,000. But the slowdown that we see in Q4 is what's causing more uncertainty. Q3 was not as calamitous as the numbers might have suggested.
"We know that games are typically purchased in the first 90 days of owning a handset, so if people are buying fewer handsets, then fewer games will be sold. And in the US, when people did buy new handsets, a lot of them bought the iPhone.
I have blogged on how the cost structure of a venture backed game company can be a problem. It seems it is also a problem for established companies as well.
Predicting hits is a tricky business. Best to have a model where you can profit from even minor hits in this saturated market.
November 01, 2008
October 24, 2008
How I Learned to Stop Worrying and Love the Crash
(With apologies to Dr. Strangelove)
They say every cloud has a silver lining, here's this one's.
For some businesses it MAY be very good. Here's why.
Let's take two iPhone game companies as an example, Company A and Company B.
Company A manages to get a few $million or so from a VC in the summer to build games for the iPhone market. They setup offices in Silicon Valley, driving distance from Sand Hill Road, and put one of the VC guys on the board. They hire people, start working on iPhone games. Last week they ship two very nice titles, one is free, one is around a buck. My guess is they will be lucky to see 10,000 unit sales, or gross receipts of $7000 on that paid title, and that is optimistic. Honestly, they will probabily make less (based on what I have heard from other developers). Knowing salaries, rents, overheads ... the paid title has a burdened cost of $50k to $100k. I'm sure the plan is to continue production but not be cash flow positive for a number of years. Spend the raise, put out titles, build I.P., get to a 'hit'. The typical B, C, round scenerio.
Company B doesn't raise $$$ from anyone. Instead it uses the profit from development projects to fund title development. They ship their first title when the iPhone app store opens, modest sales. The title acts as a showcase allowing them to secure more development deals. They don't move to Silicon Valley, they don't hire a bunch of people, they run off cash receipts. The development deals improve the skills of the team as well. Because of this they build an efficient system that produces quality titles at a fraction of the expense of Company A. They begin releasing a stream of quality titles for the iPhone that become profitable with even modest sales. As long as they maintain cost control they are profitable on every title and maybe even get a hit or two. Cash flow positive.
Fast forward several months.
Maybe Company A doesn't get round B (see Sequoia Presentation). They have to cut staff, expenses, try to make a profit on their highly burdened titles.
Meanwhile Company B just continues the flow of products, still brings in dev deals ... people get paid.
Who just benefitted from the Crash?
Let's take two iPhone game companies as an example, Company A and Company B.
Company A manages to get a few $million or so from a VC in the summer to build games for the iPhone market. They setup offices in Silicon Valley, driving distance from Sand Hill Road, and put one of the VC guys on the board. They hire people, start working on iPhone games. Last week they ship two very nice titles, one is free, one is around a buck. My guess is they will be lucky to see 10,000 unit sales, or gross receipts of $7000 on that paid title, and that is optimistic. Honestly, they will probabily make less (based on what I have heard from other developers). Knowing salaries, rents, overheads ... the paid title has a burdened cost of $50k to $100k. I'm sure the plan is to continue production but not be cash flow positive for a number of years. Spend the raise, put out titles, build I.P., get to a 'hit'. The typical B, C, round scenerio.
Company B doesn't raise $$$ from anyone. Instead it uses the profit from development projects to fund title development. They ship their first title when the iPhone app store opens, modest sales. The title acts as a showcase allowing them to secure more development deals. They don't move to Silicon Valley, they don't hire a bunch of people, they run off cash receipts. The development deals improve the skills of the team as well. Because of this they build an efficient system that produces quality titles at a fraction of the expense of Company A. They begin releasing a stream of quality titles for the iPhone that become profitable with even modest sales. As long as they maintain cost control they are profitable on every title and maybe even get a hit or two. Cash flow positive.
Fast forward several months.
Maybe Company A doesn't get round B (see Sequoia Presentation). They have to cut staff, expenses, try to make a profit on their highly burdened titles.
Meanwhile Company B just continues the flow of products, still brings in dev deals ... people get paid.
Who just benefitted from the Crash?
October 22, 2008
MyNuMo is now PlayScreen, the next generation social entertainment company.
PlayScreen to bring casual social games and entertainment to iPhone, Google Android, and other advanced mobile platforms.
SAN DIEGO, CA - Oct, 22nd, 2008. The company that launched the first iPhone web-based games and the social network that enables independent artists to sell mobile content across all major carriers is now PlayScreen (www.PlayScreen.com), a new worldwide social entertainment brand.
"PlayScreen is the culmination of our acquisition of advanced social gaming technology and the successful launch of game titles for the iPhone" said William Volk, president and CEO of PlayScreen. "The mobile entertainment market has evolved tremendously during the last year, with the launch of the iPhone and Google Android, making the time right to launch a new brand. The imminent launch of our 2nd round of iPhone native games, titles for the new Google Android T-Mobile G1 phone and other new technology initiatives are well reflected in the PlayScreen name."
PlayScreen is creating high quality iPhone and other advanced social games” commented PlayScreen President Sherri Cuono. “With over a year of experience in iPhone web and native apps as well as advanced social games, PlayScreen will be building the next generation of mobile entertainment applications.”
“You can expect major innovations on our independent artist social network as well” added William Volk, “We’re going beyond the current offering of ringtones, wallpapers, and videos to enable independent developers to market their mobile apps on a wide range of hardware platforms.”
PlayScreen and the PlayScreen logo are trademarks of MyNuMo, LLC. All other trademarks are the property of their respective owners.
About PlayScreen: San Diego based PlayScreen is a social entertainment company delivering mobile social games, ringtones, wallpapers, videos, and text services on all major US Carriers. More Details about PlayScreen at www.PlayScreen.com. (PlayScreen is a trademark of MyNuMo, LLC.)
October 13, 2008
Web 2.0 = Dead 2.0? The Financial Crises As An Extinction Event
Let's get this over with at the start. I believe most Venture backed startups will not survive this crises.
First let's begin with some background. A few days ago a presentation was 'leaked' from Sequoia Capital on the financial crises. You can view that here (yes, this is the opening slide):
The summary? This isn't like the dot-com crash or earlier slow downs. This is systemic and it will last a long time.
Here are some choice quotes from a recent Forbes Article:
"If you are not cash-flow positive you are in a tough spot right now"
"To the extent you haven't figured out your business model yet you are in trouble, because it's going to be hard to get another round," ... "You aren't going to get a second life this time."
So, why am I such an expert on this?
Well I saw this happen to a far smaller extent during the dot-com crash. I've even heard the same sort of nonsense that I heard eight years ago.
"Web 2.0 and Silicon Valley is still in a bubble"
"Good ideas will still get funded"
"Mobile is growing, it won't slow down"
I'd advise EXTREME CAUTION here. In hindsight the dot-com boom/bust looks almost insane but if you were in it, it seemed rational at the time. The mind loves to rationalize events. Come up with metrics that in hindsight look foolish. Some choice ones:
"The valuation of a dot-com is the number of subscribers x $20" (this was for a free service)
"Forget revenue, the number of eyeballs is what matters"
So here's what will happen.
The "next round" ... maybe not. Don't count on it.
The funding you are waiting on to get started? Think of the wealth destroyed in the last few weeks.
I am so reminded of the summer of 2000. People were still attending these events where you would network with potential investors. I myself won a major venture event that summer, one that NPR covered.
The result was one investor who basically offered a small investment ($50k) backed by home equity.
THIS IS WORSE.
Now is the time to get cash flow positive. Better to be one of the small mammals that survives than a large dinosaur who starves to death.
This isn't going away in a few months or a few years.
