Wednesday, November 4, 2009

Artificial Life Issues Artificial iPhone Hype

Artificial Life (ALIF) put out one of those classic, cryptic mobile entertainment, performance-oriented, press releases on Wednesday... trumpeting their great success on iPhone. You know, the kind of document that despite the intention of the issuer, ultimately prompts many more questions than it answers. If this business is ever going to be taken seriously there needs to be much less of this sorta hype-massaging nonsense and much more transparency about numbers. For goodness sake Artificial Life, just tell us how much money you've made on iPhone in the last year.

The biggest problem with these releases is that they selectively blend Free App and Paid App download numbers. Our friends at D'Choc are masters of this form of obfuscation. If one wasn't paying attention, and assumed Artificial Life was only talking about Paid App downloads, one might determine that they made $6mil (after Apple share) from iPhone/iPod touch Apps over the last 12 months... based on their 21 Apps being downloaded an average of 220k times each, at an average price of $1.86 (based on their current US Paid App iPhone assortment). That would be about 22% of their $27.5mil of 2008 revenue... impressive, right? Unfortunately, that's preposterous considering Glu Mobile (which has 75% more Paid Apps live currently) disclosed on their quarterly conference call yesterday that they only made 2.5% or $500k of their Q3 2009 revenue from all new distribution channels, including Apple.

You'll notice in the release that Artificial Life uses variations of "download" and "sell" interchangeably to yield maximum dramatic effect. My favorite example is, "The number of iPhone game downloads is approximately equivalent to 37.8% of the overall number of games sold by the Company so far in 2009." I think what this actually means is that the combination of all Free and Paid App downloads of Artificial Life titles on iTunes is equal to 37.8% of total paid game downloads on all platforms during the period... which is much less impressive, but much more meaningless ;-). I'm also pretty confident that Artificial Life's claim that its "best selling game was downloaded close to 1.8 million times" on iTunes includes both downloads of the Paid App and the associated free teaser App. Btw - if anyone thinks I'm wrong, please let me know.

I think there are only three valuable pieces of information to take away from this release: 1) high quality iPhone App development takes Artificial Life 3 to 4 months, 2) the US is still the biggest individual iPhone App market by far for these guys, but overall the World ex US is bigger, and 3) this industry needs to stop with all this thimblerig reporting, and embrace the disclosure of real, comparable performance metrics, so that cynics like me don't assume everyone's business is smaller than they're making it seem.

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