Consoles and mobile devices merging, says Nexon CFO
Owen Mahoney says the power gap is closing fast, talks about the wrong approach to free-to-play
Nexon CFO Owen Mahoney isn't terribly interested in going into the console business, perhaps because the console business may come to him. Speaking at the GamesBeat 2013 conference today, Mahoney downplayed the idea of the Xbox One and PlayStation 4 sparking a lasting resurgence in the set-top box business.
"My sense is that consoles will do a lot in the first one or two years, but we're not thinking much about consoles," Mahoney said.
He then asked the audience to think back to five or six years ago and the types of gaming experiences that were possible on mobile devices and consoles. Differences in the power and capabilities of those platforms meant that mobile games were very different beasts than console games, and generally inferior ones at that.
"If a console is sitting on your hip, you don't really need a device that's attached to your TV set 100 percent of the time."
"Today the difference between those two is largely defined by the difference between a MacBook Air and an iPad," Mahoney said. "They're very close, very similar devices....When you project out merely two years, they're pretty much the same device."
The effect that parity in power and functionality will have on the way people play games will be profound, Mahoney believes. And signs of a shift are already surfacing.
"If a console is sitting on your hip, you don't really need a device that's attached to your TV set 100 percent of the time," Mahoney said. "When I look at my kids play, most of the time they're playing off a laptop or a tablet in front of a dead 60-inch screen with a couple consoles attached. They're just not interested."
Another shift Mahoney is anticipating deals with the way game makers perceive the free-to-play market. He's been particularly dismayed by a number of companies that he sees as "latching on" to the free-to-play concept.
"They think free-to-play means [average revenue per user (ARPU)], and ARPU maximization," Mahoney said, without naming names. "Really, free-to-play in the immersive game space is about creating a really great experience and keeping users in that great experience for a long time."
That's a key part of Nexon's approach, with Mahoney noting that only about 10 percent of the company's 70 million monthly active users ever pay anything. But the ones who do so give them money consistently, leading to an average revenue per monthly active user of $20.
However, that sort of return doesn't happen overnight. Mahoney said Nexon launches games early and then invests in building them up over time. With rare exceptions (such as Nexon's Korean EA co-production FIFA Online 3), new titles that debut may not have any significant impact on the company's bottom line until 18 months after launch. It's almost the opposite of the traditional gaming market, where the game debuts with a jolt of revenue and then quickly trails off in the weeks and months after launch.
Mahoney also sees a lot of resistance to paying for free-to-play games in the West, something he largely chalks up to the way many games here have been monetized, where developers essentially put a significant chunk of content behind a paywall.
"If you make a game where you can't realistically progress in a game and still have fun without paying money, that's not a free-to-play game. That's an ersatz free-to-play game," Mahoney said, adding, "We made that same mistake 10 years ago. It was a big mistake, and we stopped doing it."
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