Followup on the State of iPhone Gaming: The $0.99 Economy

Posted on July 10, 2009 by normalkid

A couple of months ago, I wrote about how the state of iPhone gaming was changing with an influx in bigger studios with smaller and smaller pricing margins.

Things have gotten even more competitive since with Gameloft and other studios drastically cutting their prices on older games down to $0.99. While this is good for consumers in the short term, the long term effects are potentially more troubling. There is a constant debate on TouchArcade as to these long term effects. One camp says that the App Store must sustain higher priced games in order to promote more quality titles. The other camp disputes this. I’m with the former camp, as is id Software’s John Carmack. In an interview, he said:

If [iPhone] games could have a reasonable shelf life at $9.99, you will start seeing multi-million dollar development budgets as the market continues to grow. But if it turns out the only way you end up being successful on the iPhone is games that cost a couple dollars, you’re never going to achieve that parity with the other handhelds.

One major effect of this $0.99 economy has been seen by EA’s announcement that they have created a micro-studio within the company to produce casual $0.99 iPhone titles. These titles are going to be in development just a short time (a month or so), presumably to recreate the success of some of the most popular games in the App Store, which also happen to be $0.99.

Let’s think about that for a second… EA is putting resources into low-risk casual $0.99 games. But imagine the flip side to this: What if EA had announced they were creating an division just to produce high quality iPhone original titles? Imagine big-budget original iPhone games with the resources of a major studio behind them.

Could it happen? If there was enough money in it, I’m sure it could happen… but it’s not going to happen at a $0.99 price point.

Now, I don’t blame consumers for buying $0.99 games, nor do I blame studios for following the money. But I do think the long term effects are going to result in a market of two types of games. 1) inexpensive casual titles and 2) inexpensive ports from other devices. Meanwhile, deep, high quality, iPhone original titles will become more and more scarce. Of course, the market will balance itself out over time, and opportunities will appear for developers to fill the gaps. I do expect downloadable content will result in more episodic apps with level packs and add-ons.

Indie developers are also going to be squeezed out further. There are only 100 spots in the top 100. Flight Control, Pocket God, Fieldrunners and Koi Pod pretty much have permanent spots. There are a few Chillingo titles that are on $0.99 sale that take up another 3 spots or so. A few major titles, a few novelty apps, and now EA’s $0.99 game of the month, and you’re down to fewer and fewer spots that you are really competing with.

Meanwhile, Apple is the only one with the power to really change the dynamics of the market through changes in the App Store rankings… but I’m not sure if they will. It’ll be interesting to see where things go from here.

Posted in Apple | 26 Comments

The State (and Growth) of the iPhone Gaming Market

Posted on May 6, 2009 by normalkid

Apple’s App Store is growing leaps and bounds with over 1 billion apps downloaded and the single largest app category is games. While Apple has not broken down the # of downloads per category, based on a quick look at the top rankings, I’d guess that the majority of downloads on the App Store are, in fact, games.

In running a large iPhone gaming site, I have a somewhat unique perspective into the market, and there’s been a notable shift in the market in the past month or so.

To give some background, the iPhone app market is competitive. There’s been a lot written about what it takes to get to the top of the App Store. In the end, it’s all about exposure. Whether that exposure is through the App Store itself or through review sites, it’s a pretty key component in a developer’s success. While several small “indie” developers have been able to successfully make it big in the App Store, there are, of course, hundreds of developers who have been unable to. Some of those developers have been more vocal than others over the course of the year about issues of fairness about coverage on reviews sites, and whether indies really do have a shot.

In the past, I’ve generally dismissed these complaints, as I didn’t necessarily think they held that much merit. While there were a lot of games being released into the App Store, I felt the majority of them weren’t worthy of coverage and very few really truly deserved to be a success. In the end, I felt that most developers needed to realize that their games were not as good as they thought they were, and their lack of App Store success wasn’t necessarily reflective of a flaw in the system but perhaps of the appeal of their game. I guess I believed the cream would rise to the top.

The reason I believed this was that despite the massive number of games coming out, I felt we could actually keep track of all the games coming into the App Store. Through our forums, and by playing the games ourselves, I felt like we could pick up on the games worthy of coverage. It was a somewhat tedious process, and I think we might have played 20+ games for every game we thought was worth covering. We also would try to play every game that would be sent in to us.

So what’s changed?

Well, clearly the volume of games appearing in the App Store has increased. But that’s not necessarily an insurmountable issue. While I don’t feel I can personally play every game that comes out, this is the sort of thing that more manpower can be thrown at, and we’re making adjustments to try to address that.

The biggest change, however, is the influx of mid-sized to large developers who are invading the App Store space. Companies like EA and Gameloft are really ramping up production of their App Store games. In March, EA announced 14 games coming in 2009. That’s a new EA game every 2 and a half weeks being released. Gameloft has ramped up their production as well and seems to be releasing games at least as aggressively. And these are high quality titles.

Ignoring those big players, a number of other serious small to mid-sized development firms have turned their attention to the iPhone. Glu is a mobile gaming company that has started releasing original titles for the iPhone as well. They’ve announced 5 at GDC and are planning more. The list goes on. Ngmoco, Freeverse, Digital Chocolate, Artificial Life, IUGO etc… all have multiple titles coming to the iPhone this year.

So What’s The Problem?

Well, for the serious gamer, there might not be a problem. The number of high quality games coming to the iPhone is increasing by leaps and bounds. For the smaller developer, however, it introduces a number of issues.

First of all, the quality level for gaming has been continuing to increase while the prices of games continues to drop. Major developers have been adjusting their prices downward in order to find the right pricing. At this point, I see $4.99 as a bit of a ceiling for quality no-name brands. If you price yourself above that you’re competing directly against Gameloft and EA titles. And the problem is that margin is getting narrower.

I think the bigger issue, though, is one of exposure. There’s only so much attention that gamers are going to have, and they are going to be naturally drawn to the big name titles.

From a news and review site perspective, you’re competing for attention against some major titles. This past week alone we saw the releases or news of Boulder Dash, Need for Speed, Sims 3, Top Gun, Star Defense, Mass Effect, Tiger Woods PGA Tour, Myst, Siberian Strike and more. Those are titles that occupy the time and space of gaming sites. While story posting volume can increase to some degree, I don’t believe it can (or should) go up too high, as otherwise you’re losing the attention of the people you want to be exposed to.

That’s not to say all hope is lost. Fortunately, the iPhone gaming audience continues to grow, which means the absolute amount of exposure for a smaller game may actually be higher today than it was 6 months ago. However, since the numbers are up across the board, that may not help as improve App Store rankings as much as it has in the past.

Posted in The Web | 15 Comments

The Risk and Economics of Quitting

Posted on April 5, 2009 by normalkid

This year, I traveled to the Game Developers Conference (GDC) for the first time. It was a really great time and I met a number of iPhone gaming developers — many who I’d known online for many months.

Despite my outsider status, it was great community and a very entrepreneurial one. The explosion of the iPhone App Store has really put financial success within the reach of the indie developer. I spent a fair amount of time hanging out with Imangi Studios husband and wife team Keith Shepard and Natalia Luckyanova. Keith had quit from his day job almost a year ago, while his wife has just given notice so they could pursue their iPhone game company full time.

I think it’s a great move, even in this economy. They clearly have a growing business and have the opportunity to do what they love. There is some inherent risk involved, but the lost opportunity of not pursing it is simply too great.

Yet, it still constantly amazes me to read comments by people don’t seem to truly understand the risk/benefit balance in making such a decision, and put too much weight on the “safe” choice (which may not actually be the safe choice).

The biggest success story to date is one of Ethan Nicholas who developed the iPhone game iShoot. iShoot generated Ethan over $200,000 in one week and has since generated over $800,000. Ethan didn’t waste much time in quitting his day job as a programmer. And yet there are even people who have criticized Ethan for quitting his job, suggesting that it was not the “safe” choice.

I think in making that decision, there are a few important factors, and I think Ethan’s choice to quit was by far the “safer” choice. Factors to take into account include:

1. Replaceability of your current job
2. Income of your current job
3. Income of your side job
4. Potential income of your side job
5. Happiness

In Ethan’s case, by staying at his (est. $100,000/year) day-job, he puts at risk his ($800,000/5 month) salary. The potential income for iPhone programming business is even greater and essentially has no limit. Even given the economy, I’d say his job as a programmer is reasonably replaceable. And in the end, he is much happier for the switch. There is also a once-in-a-lifetime opportunity factor in place as well. How many iPhone developers have a successful app? Now’s the time to invest in additional updates and followup games to take advantage of the momentum.

And if you don’t agree with that, would you suggest that someone who is making over $100,000 on their own business to get a 40-hour/week minimum wage ($15,000/year) job in an attempt to add more “safety” to their income? Because it’s essentially the same argument.

Obviously, this is an extreme example, and I suspect I’m preaching to the choir on this blog, but it was a topic that has been on my mind.

Posted in Business | 11 Comments

Online vs Print, and the Evolution of Media

Posted on April 5, 2009 by normalkid

Here are a few random thoughts I’ve had recently about blogging, online media and traditional print media.

Online Ads vs Newspaper Ads

Here’s a promising chart for all online-media folk published by Alley Insider.

Newspaper ads dropping, online ads keep growing… and they it looks like they’ll intersect in a few years. It’s no surprise, but interesting to see in chart form. So, good news for those who depend on online ad revenue.

Blogs vs. Mainstream

Like many, I do vanity-searches on my own name from time to time. One article that I ran across late last year was written by a journalist by the name of Amy Eagleburger. She wrote an article about how the mainstream media has been slow to adopt online and blogs. Nothing particularly groundbreaking but an interesting comment about MacRumors:

One of the many complaints from journalists is that they don’t have time to blog and write stories. So why aren’t newspapers hiring more professional bloggers? MacRumors.com is a blog Dr. Arnold Kim started as a hobby. It was so successful that he gave up his medical career to blog full time. He’s not just a guy in his pajamas but someone with a knack for news gathering. Why did that blog not start at a newspaper? I’ll admit that when I wanted to read about the new iPhone, I went to Kim’s blog before other publications.

That’s the million dollar question. Why wasn’t MacRumors (or any major blog) started by a newspaper? Or another mainstream media source?

In some ways, it seems absurd. Indeed, if you had asked the same question 5 years ago, the answer would have been simple: there’s no money in a “blogs” like MacRumors. In 2009, however, the answer is entirely different. There’s an enormous amount of money in online media which is becoming increasingly dominated by blog-like publications. And as a result, money is now being invested in these markets.

But besides money, however, I think a site like MacRumors succeeded because it was started by someone who was a genuine enthusiast of the topic and not just going for a paycheck. Especially then, there was no incentive for a traditional journalist to stay up late at night to report on the latest news and rumors. Those stories, if deemed news-worthy, would be published the following day. That fact wasn’t lost on the audience either, and MacRumors generated a reputation of frequently being the first source for news and also the place to connect with others.

Of course, there’s a million other reasons why traditional media was slow to adapt. It’s just the nature of the beast. People stick with what they know. Blog-style news simply didn’t fit into their belief system. Meanwhile, those without traditional journalism training just made it up as they went along.

Posted in Apple, Business | 18 Comments

AppShopper.com, TouchArcade.com, Stats, and Stickiness

Posted on December 6, 2008 by normalkid

So, this blog has been relatively quiet. Not because I haven’t been keeping busy… in fact, I might have been keeping too busy. In retrospect, the quitting decision was clearly the right decision. One major perk of not being a physician is that for the first time in many many years, I have the major holidays off. I’m still online, of course… but I don’t have to be. 🙂

What’s been keeping me busy has been two relatively new sites and also maintaining MacRumors.com. My two new projects have been TouchArcade.com (cofounded with Blake) and AppShopper.com. Both are iPhone/iPod Touch related sites dealing with the many new apps that are coming out.

For anyone who is serious about their websites, you’ll find that you quickly become a stat addict. Traffic stats, referral stats, income stats… they all become the most interesting things in the world. It’s easy to waste yourself away just examining your stats. If you’ve ever sold items on eBay, it’s a bit of the same feeling.

A bit over a year ago I decided to post public numbers about my MacRumors stats. Historically, I’d been very secretive about my traffic numbers. For no particular reason except that most people are secretive about them. I changed my mind at one point, in part due to the example of Gawker’s network of sites. For whatever reason, Nick Denton has always been very transparent about his traffic numbers. In the end, I decided it can only help a site like MacRumors, which tends to get more traffic than respect. In the long run, I think the numbers have helped, in that they’ve been quoted in a number of places including my New York Times article.

So, getting into the new sites, both have been doing remarkable well — in fact, better than I had really hoped so early on.

Here’s TouchArcade.com’s running monthly pageviews:

Going up is always good. This monthly graph gives you a running 30 day total — so the last point on the graph gives you the last 30 days. The page-views per day gives you a better look at this moment in time:

By this graph, it looks like we could approach 3 million pageviews/month in the near future, if the trends hold true.

Now AppShopper’s monthly trend:

It seems less interesting until you realize that we’re talking about 7 million page views/month already. A more interesting graph I think is from when I first “launched” AppShopper back in September (graph is in pageviews/day):

The site went from very little traffic to 100,000-130,000 daily pageviews in an instant. What’s striking about that graph is not that there was a big spike — any major exposure is going to get you a spike — but the “stickiness” of the site is remarkable. Usually there’s a substantial drop off after people hit a site in a big spike like that, but AppShopper retained a remarkable percentage of those people after the first visit. (There was recently a Black Friday spike that wasn’t nearly as sticky, but still showing a solid residual traffic).

Obviously, “stickiness” is one of those factors that will determine the rate of your success or failure. If you are gaining more users than you are losing each day, your traffic is going to grow. Meanwhile, “non-sticky” sites are going to have to keep finding new users, and it will be harder to keep them around.

Posted in Business, Mac Web | 11 Comments

50% of Primary Care Doctors Planning on Cutting Hours, Retiring or Quitting

Posted on November 18, 2008 by normalkid

CNN reports on the results of an interesting survey of primary care doctors which found that nearly 50% of them are looking to quit or reduce hours. Many of the reasons cited dealt with too much red tape surrounding insurance and government.

Obviously an interesting statistic given my recent departure.

The breakdown is as follows (PDF):

– 11%, or more than 35,000 doctors nationwide, said they plan to retire
– 13% said they plan to seek a job in a non-clinical healthcare setting, which would remove them from active patient care
– 20% said they will cut back on patients seen
– 10% said they will work part-time

Posted in Business | 7 Comments

Citizen Journalism Follow-Up Notes

Posted on October 4, 2008 by normalkid

My post about the the false Steve Jobs Heart Attack rumor has gotten more traction than I expected. And while I pointed the finger at Silicon Alley Insider, it wasn’t really a personal attack. SAI is still amongst my favorite sites.

SAI just happened to be the vehicle in this very prominent example, and I can defend some of their actions. Mostly, I believe that this is a constructive conversation, and I hope SAI’s Henry Blodget realizes that.

Blodget wrote a response as to why they linked to the rumor. I don’t want to nitpick, but thought I’d write a brief followup.

So first note: I am perhaps more “defensive” in my publishing of news than most publications. The reason is that the percentage of intentionally fake stories is very high in the Mac rumor world. This means that if I take a given rumor submission, the chance of it being fake is greater than it being true.

In Defense of Publishing

In SAI’s defense, there is a point at which a story has too much momentum to ignore, regardless of its content. The exact point at which that happens, however, is up for debate.

The Steve Jobs story was climbing the ranks of Digg and already being talked about on Twitter. While I don’t think it would have made Digg’s front page, it may have only been a matter of time before the story was reported somewhere. Though, I suspect that it could have been originally reported as a debunking, or with more skepticism.

In the Future

I disagree with Blodget’s claim that they wouldn’t do anything differently in the future. So will SAI really publish another rumor from iReport of the same magnitude and say “it could be true or false. we’re working on verifying it”? If so, I can have an iReport story ready for you in a few minutes.

Clearly, if another major but unverified story is published on iReport (or similar site), people will report on it far more skeptically. This degree of skepticism is perhaps that little bit that makes the difference.

Posted in Mac Web | 3 Comments

Citizen Journalism Not a Failure, Blogs a Failure?

Posted on October 3, 2008 by normalkid

This morning a rumor about Steve Jobs having a heart attack started circulating. The person who started the rumor submitted it to MacRumors using an anonymous proxy IP address. I saw the report right when it was submitted and after some brief research dismissed it. The story was also posted to CNN’s iReport (citizen journalism site) and also appeared on Digg with a large number of diggs (but not yet on the front page). I tracked back and found the story was being promoted by a semi-coordinated effort by members of the 4chan message board.

So, I chose to ignore it, since we get fake rumor submissions daily.

Digg users also figured out that this was likely fake, and despite the concentrated efforts, the story was kept from appearing on the front page due to a corresponding number of Digg users burying the story. This is how it’s supposed to work. Most digg users are apparently knowledgeable enough to know that a post on a site like iReport is as legitimate as a random forum post… which is to say not that much.

But here’s where it got real. As best I can tell, Alley Insider — a site that I like and has a relatively large readership — posted the story as possibly true. Here’s an excerpt from their original report before they corrected it:

Apple’s Steve Jobs Rushed To ER After Heart Attack, Says CNN Citizen Journalist

“Citizen journalism” gets its first real test. A story of major consequence that, thus far, no one else has reported.

CNN’s iReport:

Steve Jobs was rushed to the ER just a few hours ago after suffering a major heart attack. I have an insider who tells me that paramedics were called after Steve claimed to be suffering from severe chest pains and shortness of breath. My source has opted to remain anonymous, but he is quite reliable. I haven’t seen anything about this anywhere else yet, and as of right now, I have no further information, so I thought this would be a good place to start. If anyone else has more information, please share it.

We’re making calls, but as yet we have no idea whether it’s true. Confirmation/denial the moment we get it.

Meanwhile, very interesting that this report appears on CNN’s site. If it proves correct, CNN will look great. If it is wrong, CNN’s credibility will likely be significantly damaged–and we wouldn’t be surprised if this caused them to pull back from “citizen journalism.”

From here it seems the story kept growing, and Apple PR even issued a denial. The story’s been picked up by numerous sites as a failure of citizen journalism.

It’s nothing of the sort.

Citizen journalism (which is a stupid term) works as it always has. People post random crap — much of which could be fake or made up — but you know this when you read a site like that. You know that digg submissions that make outrageous claims are likely self serving posts. You do not take these reports at face value.

But, if you run a prominent and influential site, the moment you publish something, you are giving it some credibility. You have filtered it from the mass of information on the internet as something worthy to post. You may not believe it, but just by posting it, you add credibility to it.

If you want to blame someone for dropping Apple’s stock price today, you can point fingers at the individuals on 4chan or the person that originally submitted it, but the real reason it gained traction is the reporting of it on mainstream blog sites.

I don’t expect everyone to adopt my personal approach to publishing, but those are my thoughts on today’s events.

Posted in Mac Web | 29 Comments

Ah the Irony, Tiernan Ray Misreports My Misreport

Posted on August 14, 2008 by normalkid

Tiernan Ray of Tech Trader Daily posted a piece the other day about what sounds like a great story: a rumor site confirming one report by using the same report!

Now, this sort of thing has probably happened over the years (though I hope not by MacRumors), and is in part the reason I generally dislike analysts reports. Analyst reports frequently seem to reflect the circulating rumors and when they consolidate and publish their reports, it frequently results in somewhat of an echo-chamber.

The MacRumors story in question cited a PCWorld article this week which described a new analyst report. The report, however, was actually not new and was a re-reporting of one published one week prior.

Without access to the reports, I took PCWorld’s word on it, which I think is a forgivable mistake, though it didn’t really change the meat of the story.

Now, Ray claims the following:

Even more hilarious, in the Macrumors post, the author says that the phantom report from today about updates to the Mac laptops and iPods is “consistent with whispers we’ve heard.” And he cites … ta da! A post from AppleInsider last week commenting on the original August six note. Oy vey.

The problem with this is that it’s clear that he followed the “consistent with whispers” link but didn’t actually read it.

I understand where the confusion might have come, as it does link back to our first reporting of the same analyst report. But that story also included an original source from us, which is what I was referencing:

While rumors have focused on new iPod nanos, we [MacRumors] have heard whispers that an iPod Touch update is also likely in the same timeframe.

So, obviously, this is a rather minor point and I initially just brushed it off, though after seeing it picked up elsewhere, I felt I had to respond.

I know some of you might think that it’s not that big a deal since these are all rumors, but I’ve said before, I take rumors very seriously. And MacRumors, as a rule, takes a particularly skeptical look at most claims.

Posted in MacRumors.com | 1 Comment

On Starting a Blog

Posted on July 27, 2008 by normalkid

Based on the news that I was pursuing a career in “blogging”, I naturally got a lot of emails from individuals who asked about how to start in blogging, how to build traffic, and similar plans. I promised them I’d post some thoughts here.

I guess the first thing to note is that describing what I do as “blogging” isn’t entirely accurate — in that it’s not all I do. It’s the accepted term, of course, and one that I adopted because it best describes my business.

The “blog” term has become so broad that it now encompasses a small site like this, but also applies to MacRumors.com. The act of blogging is simply writing a story and posting it to your site. Just by filling in a few blanks and clicking on a few links, you can easily set up your own blog on WordPress.com.

The trick to being profitable in blogging, of course, is a combination of finding a large enough audience and being able to make money off that audience. Trying to extend your blog into a business will require you to become familiar with ad sales and ad networks. As traffic in your site grows beyond the confines of your current web hosting account, you may have to become familiar with the intricacies of web hosting and dedicated servers.

These problems, though, are good ones to have, because it means you’ve grown large enough that they matter. Most hobby blogs won’t ever have to worry about these issues.

For those of you who are already blogging or have established sites, this advice is not for you. Once you are familiar with the markets, you can make strategic decisions to start a site on whatever topic you want.

For those of you who were inspired by the story about someone who was able to turn their hobby into their career but don’t know where to start, here’s my advice on starting a blog:

1. Pick a topic you care about. I’m not the first person to say this, but it really can’t be emphasized enough. I’ve been running MacRumors for eight years. Eight years is a long time. The first three years were immediately after the .com bust. There was no money in sight. I was doing it purely for my own enjoyment.

Things change over 8 years. I moved apartments/houses four times. I went from medical school, to residency, to fellowship to private practice. I got married. Had a child.

Few things stayed constant during those 8 years, but my interest in the site did. If you choose a topic you don’t really care about, the first time you take a break from it, you may never come back.

2. Pick a topic other people care about. This should be obvious. You need an audience. Seemingly “niche” markets are ok as long as there’s a loyal following. In many ways, I got lucky that Apple has done so well over these past years, but it was no accident I chose a topic so seemingly addictive. Apple rumors were already a phenomenon prior to MacRumors.com

3. Get a domain name. Buy a domain name. Pick a good one. You can get one for $9/year. Your domain name is your brand. It’s ridiculous to not get a name from day one. You can read my previous thoughts about it.

4. Just Start. There are always reasons not to do it. There are always bigger and better plans just on the horizon. But you may never get started if you keep planning.

I think I’ll stop there for now. I’m sorry if it seems like such a basic and obvious list, but I think those are the essentials.

I also don’t think people should be discouraged by my 8 year figure. I’d said before I think many people could and would have made the switch after 3-4 years. Recently some blogs have been able to rise to prominence over the course of only 1 or 2 years. Of course, competition can be tougher these days with the many corporate-backed blogs.

Posted in The Web | 13 Comments