Eyes on to mobile as video game expo starts in LA

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For free games, companies make money when gamers pay a few dollars here and there for optional virtual items and more in-depth experiences. Paid games typically cost less than $7.

Even if relatively few people end up paying, it’s often enough because mobile games cost less to make and distribute than traditional games, which can cost tens of millions of dollars to develop.

Games for the iPhone, the iPad and Android devices are more popular than ever. Of the 10 most popular paid apps on iTunes, five are games.

By contrast, brick-and-mortar retail sales of video games discs, consoles and accessories declined in the double-digit percentages in the first four months of 2012, compared with a year earlier, according to the latest numbers available from market researcher NPD Group.

That said, the majority of the industry’s revenue is still generated from traditional games. About two-thirds of the roughly $1 billion that people spent on games in April went to new, physical retail games, according to NPD.

That’s one reason companies are still making new blockbusters. At E3, EA is showcasing games such as the shooter “Battlefield 3,” “Need for Speed Most Wanted” and “Dead Space 3,” for example.

But mobile games offer the potential to tap into a new audience.

“Revenue is rising, but the number of players is rising faster,” Gartner analyst Brian Blau says of the overall game software market. “Not all players are being monetized to the fullest extent.”

Zynga, for example, has some 250 million people playing its games on Facebook each month, but only a small number of them pay money for the virtual cows, poker chips and other digital items.

Zynga partly makes up for it by releasing games and updates every couple of months rather than once or twice a year, as traditional game companies do. Its popular titles include “FarmVille,” “Zynga Poker” and “Draw Something.” Zynga has also bought Bettner’s “Words with Friends” and employs him to create more titles.

If companies such as Zynga can get more people to pay, it could mean big opportunity for a genre that is still in its early stages.

For small-time game developers, the fact that it’s much easier to create an iPhone game app than a blockbuster shooter for the Xbox is spurring new job prospects.

“A few years ago, independent developers couldn’t support themselves making mobile games,” says Joe Minton, the president of Digital Development Management, a talent agency for video game developers.

But mobile games are becoming so popular that now they can. He notes that in the U.K., most of the large console game companies are gone, and smaller mobile game developers have sprung up in their place.

One remaining hurdle might be attracting the most dedicated gamers.

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