Store Wars: The Clone Wars

The pre-Mobile World Congress buzz is that everyone and their mother is going to make some kind of application store announcement at the show. I think that many of these companies are going to learn the hard way that D2C mobile content retailing is not for the faint of heart...and that it takes real merchants (not engineers) to pull it off artfully. The best outcome may be that this trend keeps pushing Apple to enhance their offering. Anyway, keep posted to Cabana Mobile for more details on announcements that may or may not come from:
1) Google/Android
2) Samsung
3) Nokia
4) RIM/BlackBerry
5) Qualcomm
6) Palm

Vivendi Vets Grant & Fasulo Bring Game To Sonic Boom

Pocketgamer.biz is reporting today that mobile games industry veterans and Vivendi Games Mobile alums Josh Grant and Lou Fasulo have joined the New York City based publisher Sonic Boom (fka Sonic Branding, fka mH20.com) as COO and SVP of Publishing respectively. The move signals a more aggressive push into the mobile gaming space (their strength has been in music apps) and an initiative to further ramp distribution beyond the US carrier channel. The combination of (one of my favorite) larger-than-life personalities, Sonic Boom CEO David Danon, with the proven operational discipline of former banker Grant and carrier vet Fasulo (two other great guys) will undoubtedly create one of most interesting companies in this business. I expect great things...and I better be invited to all of their parties.

1.8mil YouTube Views of Nokia N97 Demo

This is a crazy amount of traffic/interest in a non-iPhone handset demo video, right?...AND btw, there are more than a few other N97 videos with pretty decent traffic on YouTube. Someone (not me) should put together a regression analysis of the correlation between demo/fan videos of handsets and sales, or perhaps the time would be better spent watching the many random quasi-sexy & RickRoll'd videos tagged with popular handset names.

Do They Call Facebook Faithbook or Libro De La Cara in Barthalona?

Crunch Gear is speculating that Facebook is on the verge of announcing some major preload/WAP linking partnerships with the handset guys (notably Nokia & Palm) at the Mobile World Congress (fka 3GSM) in Barcelona. I guess the Facebook crew is beginning to take the mobile space seriously, now that 13% of their 220 mil users (~30 mil users) log on to the site via their handsets. Actually if they were really serious about mobile (or making money in general) you'd think they would be trying to monetize all that traffic with some advertising on their decent WAP site or their sucky downloadable app.

The Guardian Recommends 5 Java Games...Wait, There's a Platform Other Than iPhone?

Keith Stuart at The Guardian in the UK recommends the following games for the hundreds of millions who don't have an iPhone:

1) PacMan (Namco)
2) LuxorQuest (I-Play)
3) Tropical Towers (Real Arcade)
4) Metal Slug 4 (I-Play)
5) Chuck Norris: Bring The Pain (Gameloft)

Mobile Content = $23.9 bil in 2008...Really?

Mobile Entertainment cites a Portio Research study that claims the 2008 market for mobile content worldwide was $23.9 bil and will rise to $47 bil in 2013. Here's the breakdown by geography and category:

APAC = 42.5%
Europe = 34.2
North America = 16.9%
ROW = 6.4%

Music = $11.7 bil (tones & tracks)
Video = $6.7 bil
Games = $5.5 bil

None of this seems right to me. Which companies are recognizing all this revenue from content in APAC? Who is successfully monetizing mobile video, anywhere? I'd love to hear readers' thoughts.

Frankly I've always been interested in trying to reverse engineer these analysts' numbers by looking at the revenue of firms involved creating and delivering mobile content. To that end, I would like to solicit Cabana Mobile readers to help me put together a database of the revenues (or best estimates) of mobile content firms worldwide. I've got a preliminary list built...once it gets a little more scale I'll post it.

Gameloft Breaking Blox with Twistbox

According to a Mandalay Media (MNDL) press release the company's non-adult Twistbox Entertainment division has reached a deal with Gameloft (GFT) to create a version of the French publisher's Block Breaker Deluxe using Twistbox's proprietary play-for-prizes platform (which it acquired from Infospace in January 2007). The platform will allow users in the US and Europe to play against other subscribers and win prizes from retailers including Starbucks, Amazon, Best Buy, Target, and Apple.

Glu Mobile 2008 Earnings...Hoping For a Less Sticky 2009

I look forward to Glu Mobile's (GLUU) quarterly earnings calls like kids look forward to Christmas. Because they are one of the larger public mobile pure-play companies the calls are a great barometer of the overall state of the mobile games business and always feature lots of valuable mobile business data points. Moreover, I think all of us vested in the health of the market for mobile games based on entertainment IP desperately want to Glu Mobile to succeed. Here are the key take-aways:

2008

• Q4 2008 Rev = $21.6 mil Net Loss = 37.8 mil
• FY 2008 Rev = $89.8 mil Net Loss = 107 mil (ouch!)
• 34% increase in Revs over 2007
• Top 4 carriers = 42% of Revs, Verizon was a whopping 23%
• Non-carrier business (iPhone, Android, N-Gage) was insignificant in 2008
• 54% North America 27% EMEA 19% Rest of World (10% China)

2009

• Q1 2009 Estimate Rev = $18 mil to 18.5 mil Estimated Net Loss =$6.7 mil to $7.1 mil
• FY 2009 Estimated Rev = $76 mil (15% decrease!) Estimated Net Loss = $16.6 mil to $19.6 mil
• $19.2 mil in cash on hand at end of FY 2008
• Plan is to be Cash Flow Positive in 2009 (Profitability is clearly off the table)
• 75% - 80% of IP for 2009 games will be licensed...big movie titles for 2009 are Watchmen & Ice Age 3
• Glu Mobile will release fewer titles in 2009 than 2008 (more like 2007 volume)
• The Dark Knight: Batmobile (co-Published with WB) got as far as 8th place in the iTunes App Store giving Glu Mobile the ability to model Rev potential of a Top 10 title in that channel
• 30% to 40% of Glu Mobile's development capability is focused on iPhone, N-Gage and Android
• Headcount is currently 560

DATA NUGGETS (all this is from Glu Mobile's perspective)

• The global economic downturn is hurting mobile games business as consumers curtail new handset purchases (most games purchases happen in first 90days of ownership)
• Consumers are migrating to Smartphones (see Cabana's Trend Watch)
• 17 mil iPhones Worldwide (additionally iPod Touch is a factor in App Store games). iPhone has the highest tie ratio to games purchases of all handsets (2nd is BlackBerry Pearl)
• Richer merchandising environment in iTunes App Store means non-established brands can flourish
• iPhone App Store is allowing smaller publishers enter the business, but ultimately larger companies that stay focused on the platform will consolidate market share (as happened on carrier decks)
• Executives at the carriers are paying more attention games due to there success on iPhone, but this is not yet being reflected in marketing initiatives

Nevermind What Haters Say...They're Just Living Their Artificial Life

Failing to heed Rihanna's call LA-based (HK production) mo'games and mo'apps publisher Artificial Life (ALIF) chased major paper in 2008 and grew revenue 287% to $22.4 mil according to their earnings release today. Net increased a whopping 945% to $10.6 mil. 57% of revenue came from games. The company which does a lot of work with studios, networks and brands only launched their first iPhone game in December. I must say this and some other recent mo'games publisher announcements might force me to remove "Flat Mobile Games Market" item from my Trend Watch.

France 24 Partners with Actimagine to Launch 1st Live Broadcast App for iPhone

The French newscaster launched its free France 24 Live application in the iTunes App Store over the weekend. The App streams using the Mobiclip software video codec created by Paris-based Actimagine. Users can watch the live broadcast in French, English or Arabic on either the iPhone or iPod Touch and view popular segments VOD. Currently the service works exclusively on WiFi, but 3G certification is on the horizon. I predict that live streaming broadcast applications for iPhone will quickly become a trend amongst news, weather, business and sports broadcasters worldwide.

Blogosphere Specularumorizing About Nokia App Store

According to this Techcrunch post citing sources, that cite other obscure Russian sources, there is some thought that Nokia (NOK) will announce a Symbian-based applications store for its devices at the 2009 Mobile World Congress (Feb 16-19) in Barcelona. This doesn't seem too far-fetched given their overall Ovi strategy which already includes a music store (launched in UK late 2007), N-Gage 2.0 (opened April 2008) and a planned movie store. Oh yeah, and the fact that some California outfit is said to be having success with something similar. If this is true, the success of the initiative will be, as it always is with Nokia, all about executing on the user interface, marketing and device integration. If they do launch this applications store it's critical that they find a slick way to integrate all the Ovi experiences so it makes sense to real human, consumer folks beyond the walls of the Powerpoint Palace in Espoo.

So Now How's A Schlub Like Me Supposed To Get Invited to Playboy Parties?

Playboy's LA based digital media VP, mobile guru and all around good guy Chris Petrovic announced yesterday in an email to friends and colleagues that he is leaving Playboy Media after 3+ years. The move is a result of the consolidation of digital media operations to Playboy's Chicago HQ.

Petrovic was Playboy's first dedicated digital media hire and during his time there he greatly expanded the global scope of the business, introduced new business models and exec produced the original digital series "Playboy Show and Tell".

Petrovic, who is a lawyer by trade, was previously at American Greetings Interactive and at one time played briefly for a New York Mets farm team.

Google Makes 1.5 million Books I'm Never Going to Read Available for Mobile

Google announced on it's Inside Google Book Search (yawn) blog that it will make all 1.5 million public domain books that it has made available for it's web search product available for iPhone and Android devices through a downloadable application service. Apparently optimizing the scanned text for easy mobile reading was a non-trivial engineering task. Cool I guess...but other than those interested in enhancing their nerd cred by claiming to have read a 300pg Sherlock Holmes mystery or an old textbook about silkworms on a G1, why would anyone want to do this? Is there an economic model here, or is this just a Google "Do Good" initiative?

EA Mobile Still Top MoGames Publisher

EA Mobile's revenues initially look somewhat positive within the bleakness of Electronic Arts' (ERTS) fiscal Q3 09 earnings announcement yesterday. GAAP revenue for the quarter (calendar Q4 08) was $48 mil, which is 23% growth year on year and 3% from the previous quarter. The release did not break out profitability by platform. EA Mobile continues to face stiff competition from Gameloft (GFT) which last week posted Q4 08 revenue of just over $43 mil with 31% year on year growth. For calendar 2008 here's how the competitors stack up:

EA Mobile = $181 mil

Gameloft = $143 mil

Notably, Gameloft has far more games available for the fastest growing gaming handset - the iPhone. Currently they have 28 titles in the iTunes App Store, while EA Mobile only has 10.

NBCU Grabs 11% of US Mobile Video

According to Wireless Week the recently released Nielsen Mobile Video Report (featuring lagging data) reveals that the NBC Universal television group's aggressive push into mobile video seems to be paying off. The net more than doubled its share from 5% to 11% of the total US mobile video viewing market during the first half of 2008. Nielsen attributes the growth in market share to a comprehensive channel offering and a large volume of content from premium shows. 60% of views came from smartphones.

Digital Mouse Droppings

Nikki Finke is reporting that Disney (DIS), in an after hours release of its Q1 earnings, broke out numbers for the Disney Interactive Media Group for the first time. The group is home to the console, online and mobile games businesses for the studio.

Revenue = $313 mil
Operating Loss = ($45mil)

According to the accompanying Disney press release the loss was attributable "to a decline at Disney Interactive Studios as higher sales volume was more than offset by an increase in unit cost of sales and higher marketing expenses in the current quarter."

MOTASTROPHE!

Q4 earnings released today indicate that the once mighty handset division of Motorola (MOT) continues its sad and spectacular free fall.

· Sales plummet 51%
· Marketshare is down to 6.5% (from 12.4% a year ago)
· Q4 Operating Loss of $595 mil
· Moody's cut Motorola's debt rating to Baa3 - the lowest investment grade level
· Dividend suspended

...but the analysts quotes sum it up best of all:

“They better hurry and fix mobile devices or it will become irrelevant” Mark Sue (RBC Capital Markets)

"...their luxury line-up is a hot mess” and "gruesome" Tero Kuittinen (Global Crown Capital)

“I feel their position in handsets is awful and will get worse” Simona Jankowitz (Goldman Sachs)

“Their handsets right now are stagnant, and there’s no sign of a new product cycle coming until maybe the end of the year” Samuel Wilson (JMP Securities LLC)

Crazy Facebook Getting Crazy Mobile Traffic

4 mil people access Facebook daily through it's mobile applications and 25 mil users access the mobile website per month according to AllFacebook - which is amazing! The crazy part is that neither the application nor the WAP site feature any advertising, so they are obviously not monetizing all that traffic. Perhaps this is another component of their strategy to realize the greatest negative ARPU of any company in history.

THQ Wireless Almost Finnish?

THQ Wireless (a division of struggling THQ) is going to focus exclusively on games for smartphone platforms and will move all its production to its Universomo studio in Finland according to IGN. The move will result in 100 layoffs in the US, UK and Germany. Currently the division generates about $20mil in revenue and is not profitable. The frenzy to jump on the smartphone bandwagon is becoming worrisome...and it makes one wonder how many games publishers those platforms can sustain and whether some companies stand to benefit by continuing to support Java & BREW platforms.

2 More Reasons For iPhone To Dominate Industry & Consumer Mindshare

1) Information Week is reporting this morning that Apple is planning video conferencing applications for the iPhone. Cool...if this is true it'll be like Japan 4 years ago! Wonder what the monthly tariff from AT&T will be on that service?

2) Consumer adoption of the iPhone and other smartphones (one of my TREND WATCH items) is apparently behind a 17% increase in downloads of mobile games in 2008 according a ComScore release last Friday. The iPhone accounted for a whopping 14% of all mobile games downloads in November 2008 with 32.4% of iPhone users having claimed to have downloaded at least one mobile game in that month...which is pretty impressive since the average across all device users is still a paltry 3.8% in a month.