What Are Mobile Game Publishers Doing With Facebook Apps?

Dev Rank = developer's rank in terms of MAU across all Facebook apps. MAU = monthly active users. DAU = daily active users.

In light of all the insanity about Zynga and lots of rhetoric from mobile games publishers about diversifying into social gaming online (er... Facebook games), I decided to take a look at what the mobile guys were actually doing on Facebook. First, let me tell y'all that after spending far too long digging through titles, it's abundantly clear that that platform is jam-packed with even more cr'apps than Android Market. Fortunately, consumers clearly ignore most of this junk... but I'm sure it's damaged overall perception of the product on offer. Many of these are blatant infringements on other folks' IP... which makes me wonder if corporate grown-ups at content owners/creators are really paying enough attention. Also, I've gotta mention that the two sources of Facebook application information, AppData & Facebakers are pretty shoddy (but free). The former seems to have better data, but a super-clunky interface (e.g. search is useless), while the latter is slicker, but with more questionable data. The data here comes from AppData.

So what did I learn? Well, Zynga is still the undisputed king of gaming on this platform, with 49.5mil daily active users of its titles and 217.5mil monthly active users... and despite all the blah-blah not much is happening with the mobile games guys. The only once pure-play mobile publisher that appears to be creating a meaningful presence on Facebook is Digital Chocolate. EA, GameHouse (RealNetworks), PopCap & I-play are probably running these initiatives more as a function of their established online casual businesses, than what they do in mobile. Glu Mobile, which launched its first Facebook title, Atom Blast, last Fall has now apparently bailed entirely from the platform. Meanwhile Hands-On is leveraging its last piece of premium IP, under a pseudonym no less, to try make of a go of it. Is anyone aware of anything else going on out there with the mobile publishers?... let me know. The next question, of course is how much money D'Choc et al are making from this platform... any thoughts? I'm sure it's billions :-P

DeNA's Path To Ascendancy

Revenue by calendar quarters, $mils, $/¥=85.26

Japanese powerhouse DeNA reported fiscal Q1/calendar Q2 2010 operating results earlier this month. This company is on a revenue rocket ride... fueled by the home market popularity of its Moba-ge-town mobile social gaming platform. The only mobile entertainment company in the world who purports to be in the same league as DeNA, in terms of revenue, is the private Spanish personalization publisher Zed... who bragged to the press that they'd realized $870mil in turnover during 2008. I must say I was typically skeptical at the time, and Zed has been dead silent on the earnings front for more than a year. I'm confident, based on their current trajectory, that DeNA will have a significantly bigger business than Zed by the end of this year, if they don't already.

The Good The Bad & The Ugly In The Mobile Content Ecosystem May 2010

This segment, which covers my current perception of the state of select companies and business sectors in mobile entertainment, will be a recurring feature on Cabana Mobile. You'll notice dynamism in terms of the companies covered and where they fall within these categories, over time, as my inputs change. Let me know if you agree or disagree with my opinion... and tell me what other companies/categories you'd like to see on this list.

THE GOOD

• DeNA - Japanese powerhouse, fueled by the uber-successful Mobage-town social mobile games portal, has over $500mil in annual revenue, $125mil in profits and over $350mil in cash. These guys could roll-up several major western games publishers in a heartbeat if they were so inclined.
• Gameloft - the French publisher, always a high quality player, has been on its iPhone game from the start and now derives a full 21% of their revenues come from the AppStore... which is (for better or worse) the only game in town in terms of paid mobile content. Gameloft is proof that you can turn a super-tanker in rough seas.
• GAMEVIL - South Korean game publisher has 2 things going for it... great capabilities with micropayment model games in its home market and a focus on high-quality builds that are conducive to smartphones. These guys regularly deliver solid profits and have a market cap that must make many of their bigger competitors very envious.
• Millennial Media - It's no secret that I've always had a healthy level of skepticism about the value of the mobile ad networks. That said, there ain't no denying that the biggest, and one of the best managed, of the independents is in a super-sweet spot in light of Google's $750mil acquisition of AdMob and Apple's $275mil acquisition of much smaller Quattro. Rumors have been swirling for months that Microsoft is in the hunt.
• Firemint - smart, lean Australian games developer, turned iPhone publisher, is one of my favorite content success stories of the smartphone revolution. Flight Control and Real Racing have been true phenomena on both the iPhone & iPad. The big question is, of course... what's next?

THE BAD

• Glu Mobile - this quality mobile games publisher, that I once called the "barometer of the health of the mobile entertainment space", has been struggling to evolve from a carrier-focused, licensed IP based company, into a smartphone savvy developer of original game franchises. They're currently going through a painful right-sizing process and experiencing declining quarter over quarter revenues. Cash is a severe pain point and their market cap (under $40mil) is currently 11% of rival Gameloft's.
• Carrier Decks - remember way back when (2years ago) when Get It Now! and MEdia Mall (and their ilk) used to be like WalMart and Target for mobile content? Well unfortunately the smartphone revolution and Apple's retail smarts have shifted that paradigm... big time. Publishers now routinely report alarming declines in their carrier-based revenue. I doubt the tide will turn back, unless operators focus their efforts on curating and facilitating billing for paid Android apps... 'cause that's a growing mess they're in a position to fix.
• Motricity - back in January this veteran, Bellvue, WA based, carrier content platform management company made its intentions known to the SEC that it wanted to go public. Lots of folks in the industry were shocked by the timing, considering the the general state of the IPO market, current conditions in the carrier deck business, the very substantial losses Motricity has racked up over the last few years and the fact that 74% of its revenues come from 2 companies.

THE UGLY

• GetFugu - when your stock price is under a penny, you have to take a bridge loan for $170k & after 6 months your one app has only 333 mostly poor ratings in the AppStore, that's kinda ugly. Even the micro-cap day trader crowd is way over it. It's hard to believe that this company will survive the summer.
• NeuMedia (f/k/a Mandalay Media) - the owner of Twistbox & AMV has always had an identity crisis; is it an adult entertainment or a games company? Recent exec & board defections and a cash-balance triggered notice of default indicate to me that they may not have to struggle with this issue too much longer.
• Off-Deck Mobile Portals - before the smartphone revolution this was a red hot space, with power-players like Thumbplay, Flycell & Jamba/Jamster vending recurring ringtone & graphics subscriptions, to under-supervised kids. After paying $120 bucks over a year for those 3 Young Jeezy tones and a blingy pot leaf screensaver, most suckers (or their parents) got a clue.

THE QUESTION MARKS

• Zed - the Spanish personalization giant has been like The Borg for the last couple of years, sucking up companies left & right, and diversifying into myriad content plays... including TV production. Though privately held, they used to brag about being the biggest mobile content company in the world, claiming revenues over $800mil!... but I haven't heard a lot of bragging recently.
• Buongiorno - this Italian mobile personalization & services goliath still has revenues in the $300mil range, but their revenue has been on a downward trajectory as the company's content offerings get a little long on the tooth and it tries to figure out how to be relevant in a smartphone world.
• Index - this longtime Japanese content powerhouse, whose mobile group is perennially in my Top 5 by revenue, seems to be faltering a bit. Their one time bid to be a global player, by virtue of a North American & European buying spree, flamed out and now they're fighting to stay relevant in a home market where the iPhone and Android are gaining traction.
• Android Paid Apps - as I alluded to earlier, this is a mess. Considering how quickly Android handsets (and soon to be tablets) are proliferating across carriers, this should be a huge opportunity. However, Google's disinterest in managing their store & consumer resistance to setting up Google Checkout accounts, have really stifled Android's paid app potential. I think it'll be up to the carriers to fix this problem.
• Ovi - Considering Nokia's 2.7% marketshare in the US this won't be a factor here for a long time. In the rest of the world there's more hope, especially considering some recently promising download numbers, and the appointment of industry vet Bryan Biniak (a guy who I know understands content) to run Ovi Publish. Frankly I'm more bullish on Ovi now than anytime in the last year.
• Augmented Reality - Boy, I was really excited about this space for awhile, particularly apps like Layar... but I'm definitely not feelin' it right now. AR still seems more like a novelty than a necessity.

Wha'ppen At CTIA Spring 2010?

Hey guys, sorry for the extended hiatus... lots of traveling, lots of projects... all good stuff, except that it has meant that I've neglected the blog.

So what the heck happened at CTIA in Las Vegas last week... besides some age inappropriate behavior fueled by Vodka-Redbull? Here are some highlights, that I'll add to throughout the week as I think of more...

Stinkin' Badges. In a somewhat pathetic attempt to stay cool with the kids, CTIA created a purple-carpeted Apps World zone on the show floor, complete with a "Developers Clubhouse"... which turned out to be a good place for suits to adjust their insoles. As you can see from the exhibitors list there were very few top tier mobile content companies participating... weak sauce. But of course this has been the trend for years now at CTIA. As usual most content related meetings happened at suites in the Venetian or the Wynn... and maybe some in the maze of soul-less conference cubes in the convention center. Bottom line is that the show isn't really a content show at all, but it does provide a convenient, strategically located opportunity for mobile content types to see the carriers, technology providers and OEMs that the show is built around. For many, show badges are optional.

iPad, slates and tablets, oh my! Continuing the theme from CES, everyone was talking about these devices and the market potential they may create for content creators. Some OEMs were showing product publicly... some more secretly. I think App creators need to be a little cautious here. While I think some of these devices will become consumer phenomena, I don't believe that the consumer entertainment wallet is expanding. Dollars that flow into this segment will be be met with decreases in other areas... for instance, I think iPad owners will purchase Apps, games, books, subscriptions, etc. for their devices, but those same consumers will offset these costs by spending less on Apps for their iPhones and iPod touch devices. The biggest beneficiaries will be the e-publishers, who previously only had two viable distribution outlets, and the ad networks that have created products optimized for the platform. That said, early iPad sales buzz will surely help continue to fan the flames of hype.

WDA Keepin' It Classy. The venerable East Lansing, MI based mobile marketing and distribution agency Wireless Developer Agency (WDA) held one of their signature matchmaker dinners at Lawry's last Monday evening. CEO Konny Zsigo & crew put on a 1st class event, as usual, with free-flowing drinks, lots of great hand-picked, high level contacts to meet, a steak dinner, eye-candy, door prizes, transportation, etc. I've been attending these truly unique events since 2002 and I have to give WDA credit for facilitating introductions to many of my most important contacts and friends in this space. If you haven't been to one of these things before you should check it out, if you're given the opportunity. Basically it's a dance-card format, where attendees are matched up with contacts WDA believes would be valuable/interesting connections (they're usually right). An assigned, not-hard-on-the-eyes hostess makes sure you stay on task, and that everyone has plenty of beverages. Simple idea, well executed, super-effective, fun and useful.

Bad-Ass Android Devices. Best in show were the super-sexy Samsung Galaxy S, with its 4" super AMOLED screen (see image below), and the HTC EVO which Sprint is launching as the first US 4G handset. From a device perspective Android is kicking ass... particularly Microsoft's. The boys & girls from Redmond must seriously be regretting their decision to push of Windows Phone 7 to the end of the year about now. Speaking of competing operating systems, I'm not sure what Samsung's decision to release their coolest phone on Android, as opposed to their self-hyped, proprietary, bada smartphone platform means... but it should definitely give developers and publishers some pause about supporting bada.

Android Ecosystem. There continues to be a lot of vocal concern from content developers and publishers, particularly on the paid side, about anarchy on this platform. Google is doing nothing to manage the quality of the apps in Android Market, billing through Google Checkout is considered non-optimal at best, Google is putting all the customer service burden on publishers and they haven't mitigated OS fragmentation. Everyone is excited about the growing install base on Android, but as I've said before and as recent data about Nexus One sales reveals, Google has no track record as a merchant. This is a non-trivial matter when you're trying to sell physical or digital goods, and frankly Apple has set the benchmark. Google had better ramp up its capability in this area quickly. Meanwhile those operators who have created a curated, carrier-billed, store-within-a-store on Android Market are claiming they are outselling the broader store by multiples of 10 or more. Perhaps this is the path forward, and Google has no plans to sell direct in the longterm.

PUSH N900 Mod. Nokia wins most creative award for a display they put together highlighting contestants who participated in challenge to use modded N900s and its Maemo open source software to created unexpected innovations. This results (see example below) demonstrate how a connected smartphone really can be a remote control for both the virtual and physical world. This made me think a lot about the potential for a connectivity protocol that would give users the option to control his/her environment from a smartphone. Imagine if you were prompted to connect your phone to your hotel room when you walked in the door and you could use it control temperature, lights, shades, etc... or if when you walked into fast-food restaurant you could immediately order and pay from your device. The possibilities are endless.

Sausage Fests. I must say that ever since the music labels scaled back their participation in, and extracurricular events at, the show (you know, since the ringtone market crashed) it seems that CTIA's parties are more male-skewed than ever. I'm not exactly sure why this is, but I do know that it takes the dancing option off table at most of these events... transforming them into cocktail mixers with music loud enough to prevent you from hearing what anyone has to say. Just nod and smile. I spent one night running around with a crowd, chasing something cooler all over town. It was a fool's errand... but we had some fun trying. That said, props to Zed, DivX and whoever threw that party at Tao on Tuesday night for top parties of the week.

Top 25 Companies In Mobile Entertainment

As always I welcome feedback and dialogue! Please let me know if I'm missing any companies or if you think that my numbers and/or rank order are incorrect. btw - revenue numbers for private companies, or divisions of companies, that haven't publicly disclosed numbers have been left blank intentionally (for now).

Some Predictions For 2010

• The Nexus One and myriad other Android devices will launch with varying degrees of fanfare, but the Google devices in aggregate and the Android Market will continue to pale in the shadow of iPhone/iTunes as a consumer event due to inconsistent marketing, klugy app billing and OS fragmentation

• Mobile marketing will graduate from the experimental stage, and become a core strategy component for several enlightened global brands

• Several established mobile games publishers will either be acquired or file for bankruptcy protection... companies that could be in play during 2010 include: Hands-On Mobile, I-Play, Twistbox, Digital Chocolate and perhaps Glu Mobile

• Apple will finally strike a deal with Adobe that will allow iPhone users to access content built in Flash through the browser, creating a boon for Hulu, Vevo, YouTube, MovieClips, et al

• Apple will make eBooks and eMagazines available through iTunes for their upcoming tablet... but they will also be available for iPhone and touch

• Nokia will scrap it's Comes With Music offering, will continue to struggle to make Ovi a meaningful consumer proposition and will see declining market share as it gets squeezed by Apple, RIM and Android devices on the smartphone front and by low cost Chinese manufacturers in developing markets

• LTE & WiMax services will continue to roll out slowly, but 4G won't be a significant consumer event during 2010

• Google Googles will move beyond Android and quickly establish itself as the world's most popular augmented reality application... leaving companies like Layar & GetFugu in its dust

• The current Top 5 companies in my Cabana Mobile Entertainment Top 20 by Revenue (Zed, Index Mobile, UMG Mobile, MobiTV & Buongiorno) will all see mobile revenues decline during 2010. Smaller App-focused publishers will see the greatest revenue gains

• Carrier-based App stores will make consumers yawn, but on a positive note they'll benefit the coffers of several advertising and identity/design agencies

• An application developer, a credit card company and a major retailer will collaborate to launch the first commercial in-store mobile transaction service in the US

More to follow throughout the day...

Mobile Content Scamsters On Notice

It hasn't been a good couple of weeks for shadier side of the mobile entertainment business. On Tuesday the European Commission announced the results of an 18 month investigation into 301 mobile content websites, that were allegedly targeting kids, in "direct response to hundreds of complaints coming in from parents and consumers from many different EU countries." You know the sites, the ones that promote free ringtones, graphics or games on TV and the web, that when downloaded opt unsuspecting, undiligent consumers into expensive sleeper subscriptions. 159 of the EC investigated sites had to be "corrected" (shady) and 54 of them were completely shut down (scumbags). As a result, Italian authorities have already imposed $3mil fines on a broad range of perps, including big operators like TIM, Vodafone and Wind and web-to-mobile distributors Dada.net, Zed, H3G, Zeng, Jamba and Tutto Gratis. Congratulazioni!... but unfortunately that's tantamount to 40 lashes with a post al dente spaghetti noodle if you consider the $1bil European ringtone business that these companies dominate (Zed alone claims $870mil in annual revenue). Hopefully other countries will follow with their own, stiffer, penalties.

The European announcement comes 1 week after the approval of a settlement by a judge in Cook County Chancery Court in Chicago of a series of class-action lawsuits against mBlox, 2WayTraffic, Dada.net, UPOC, Playphone, etc. that alleged unauthorized sales and billing of mobile content. Same scam, different continent. The deal struck between the plaintiffs and defendants entitles each claimant to a $10 refund from a settlement fund capped at $63mil... now that's more like it.

The really good news is that based on rhetoric from European consumer advocates and the references within the Chicago settlement, it's clear that vigilance over this unsavory sector of our industry is elevated, and that more investigations, suits, settlements and fines are imminent. It can't happen soon enough. Companies involved with these tactics have seriously harmed the perception of mobile entertainment products in the minds of many consumers, and I'll go as far to say that they meaningfully contributed to the delay of broader adoption of mobile content in the pre-iPhone era. They've also hoodwinked other stakeholders in the ecosystem, notably content owners. These distributors regularly use premium entertainment products as a lure to create subscriber revenue streams that primarily inure to their own benefit. When I was on the content side I never once saw meaningful revenue from these distributors despite often having my publishers' content prominently featured.

Just to be clear, this isn't the first time that these distributors have been the subject of regulatory, media or legal scrutiny. Frustration with these tactics reached a boiling point in the UK in mid-2005 as memorialized in this Daily Mail article... which eventually led to some firms making disclosure and cancellation protocol changes. But clearly the punitive stick brought to bear wasn't big enough to put a stop to this bait and switch crap altogether. Hopefully this next round will be and these practices, that have been shamefully tolerated within the industry for the last 10 years, will be brought to their inevitable end sooner than later.

Cabana Mobile Entertainment Top 20 by Revenue

€/$=1.4849

? = best estimate

Monty Munford Leaving Player X

Our old friend Paul "Monty" Munford resurrected his dormant (and sorely missed) Gaming and Wireless Outlook newsletter to announce, in inimitable style, that he's leaving his longtime employer Player X. The London content publisher and aggregator was acquired by The Borg... oops, I mean Zed, back in May. Monty is one of the reasons that I once characterized Player X as "the new cool kid on the block of mobile publishing" and he'll be indelibly associated in my mind with an exuberant (sometimes irrationally so) era of mobile entertainment. I greatly anticipate hearing more about his future endeavors... some of which are teased below.

Monty's Gaming and Wireless Outlook - Leaving Player X After four years, three months and 21 days, Player X and I have severed our ties and are going in separate directions, both richer and wiser for the experience; so where better to announce this than in the newsletter that defined me. Some marriages don't last that long and it was only as I stripped out my emails did I remember how hard we all worked to get Player X out there. We did a good job, I reckon. From start-up to a multi-million sterling sale wasn't bad at all. I'd like to thank Tony Pearce and Ari Honka for giving me a job at Player X when others were unsure of employing a maverick and I'd also like to thank innumerable people over their years for their help when I was new to the business. You know who you are. As for the occasional twat, you too know who you are. Fortunately there weren't many of them. Most of you know that I relocated to India 13 months ago and have been writing for UK broadsheets including The Sunday Times, The Guardian, The Telegraph and this weekend I have my first piece in the Financial Times. I have also published more than 50 issues of my Indian newsletter, Monty's Indian Outlook. But writing today for a living is impossible, so while I like to keep my eye in, I have been concentrating more as a fulcrum between UK and Indian companies; a vocation that is working very well... although Hindi isn't easy and driving here is even worse. I'm also heavily involved with a project that is OFF-THE-RECORD but means working personally with one of Hollywood's most successful film directors on taking the portfolio of his films to mobile. Unbelievably exciting but you'll hear more about that later I'm sure. I am also off on location this month as a speaking 1930s British officer in a Bollywood movie being filmed by an Oscar-nominated Director in Goa about the 1930s Chittagong uprising (long story). Very David Brent, but life continues to be interesting, and that's how it should always be. For those who'd like to keep in touch my email is montysmobile@gmail.com or I'm active at www.twitter.com/montymunford. Thanks for listening and see you from time to time... I thought I'd give Nokia one last plug for all their previous love. Cheers Kamar. Monty

Cabana Mobile Entertainment Top 20 by Revenue

All numbers are in US$ based on annual reports or last 4 quarters.

As usual, please comment with any suggested changes.

Buongiorno Earnings Q2 2009...No Surprises

Italian personalization and services giant Buongiorno posted Q2 earnings just before the US markets closed today...actually they reported consolidated H1 2009 earnings, which always seems like an obfuscation tactic to me (and required me to do some extra math). Anyway, here are some highlights:

• Revenue declined 17% from the same period last year & 2% from Q1 2009.
• Net increased $5.17mil from a small loss in the same period last year and & 65% over from Q1 2009
• B! claims 7.6mil subs on its BlinkoGold graphics, tones & games D2C service & 300k subs on their nascent "peoplesound" mobile social network
• B! claims that its carrier services businesses....which includes CRM tools, contest management & hosting a games portal on TIM made positive contributions to earnings in Q2
• The company is now generating 90% of its revenue outside of its domestic market, Italy
• Marketing Services extended a contract with Orange UK & picked up a deal to sell ads on mobile sites owned by the Espresso Group... and contributed $5.6mil (6%) to Q2 revenue
• B! is still trimming the fat following their July 2007 acquisition of iTouch (for $185mil)...and has reduced headcount 21% in 2yrs to 994, reduced the # of legal entities in the company from 100 to 77, closed offices in 13 countries and moved customer care to South Africa

Basically the concerns I've raised about Buongiorno in the past stand. This is a Mobile Content 1.0 company trying to stay relevant in a 2.0 world, with mixed (limited) success...it's a dinosaur. My guess is that we will continue to see their quarterly revenues erode as consumers seek more sophisticated content for their more sophisticated devices (and bail on sleeper subscription services), and that they will need to keep cutting costs to maintain profitability. Buongiorno could reverse the path to extinction if one of its new ventures really takes off (it won't be peoplesound, btw) or it buys its way into relevance. If not, the good news is that the process will be slow, since they've just about achieved a worldwide personalizaton duopoly with Spanish rival Zed.

Updated Cabana Mobile Entertainment Top 20 by Revenue

Cabana Mobile Entertainment Top 20 by Revenue

Revenues are in US$ and are based on latest annual reports or industry estimates. The range of revenue on this list goes from a low of ~$50mil to a high of ~$550mil. Total revenue for the Top 20 is ~$4bil.

Please let me know if you think I'm missing a company or if you think I might have the order wrong.

Are These The Top 20 Mobile Entertainment Companies By Revenue?

I think so...but I could be wrong. Who am I missing? Anyone on this list who shouldn't be there? Any issues with the order? I'll adjust and re-post based on feedback.

btw -- this list obviously includes mobile entertainment divisions of companies that are not exclusively involved in mobile or mobile entertainment. Also it does not include the mobile operators or divisions of traditional entertainment companies, such as the studios, networks & music companies.

Player X, Why Zed?...$15mil is the Answer

Mobile Entertainment is reporting this morning that the giant of all mobile entertainment companies Zed ($545mil 2007 Revs...self reported) is purchasing London-based publisher, distributor and on-carrier hosted portal provider Player X for £10mil ($15mil). Soon after Player X (backed by Arts Alliance & Nordic Venture Partners) emerged back in 2004 I called them "the new cool kid on the block," and they have been able to stay cool/relevant by (as you must do in this space) evolving their business model over time. They initially focused on games, but as that space became more commoditized and the carriers aggressively searched for video services to show-off their 3G networks, they created a groundbreaking made-for-mobile video channel offering called GeekTV or ZapperTV (depending on the market). Later they leveraged excellent distribution relationships with European operators to create a 3rd party distribution business and a hosted games portal called 100% Mobile on O2 & Telefonica. There is no word on how Player X will exist going forward within the growing universe of Zed...whose previously acquisitions include Monstermob, 9Squared, Mobitween, etc...but consensus is (and I agree) the Player X team will play a key role in Zed's continuing diversification away from D2C personalization.