Casual gaming's triple threat

We basically consolidated all of publishing around the idea of cross-platform conversion. The company has been structured around this idea, and basically we've structured the entire publishing organisation around this idea.

The idea of moving forward is unified portfolio management as well as unified licensing negotiations.

It's been interesting. It's been exciting. The industry has grown up quickly.

Previous to Oberon, I was at Microsoft for 15 years. I did, you know, MSN Messenger Games, Xbox Live Arcade, and then eventually went on to PC and Xbox games.

Xbox Live Arcade was actually the first amazing step for me. It turned into a success beyond even what any of us had imagined. Our whole theory - which is very much in line with the I-Play theory - was that casual is really a mindset.

There is the traditional casual gamer who is older and mostly female, but there is a really ravenous appetite for quick play, one thumb-type opportunities in the younger and mostly male demographic as well.

To have that happen, and then see everybody create their own casual division - you know, Kathy Vrabeck...That, to me, was interesting. Everybody has gotten into it.

Until recently, they were treated as separate divisions, but the intention was to integrate them. The step that we've taken recently is to fully integrate them around this idea that there are three core markets and we are trying to address those.

The reason I say three...One of them, that we haven't addressed fully on mobile and online, is more of a kids market that we do have on [interactive] TV. We focus on these two principle platform markets - mobile and online.

When we looked at PixelPlay and we looked at I-Play...We chose [them] specifically for their casual content in Jewel Quest and their action-casual content in Fast and the Furious and the whole positioning of the company.

Ultimately, we really view it as these communities first, and distribution mechanisms or devices second. And that's how we've arranged our whole publishing organisation - how do we get the right content to the right community with the right device?

This idea of building communities using our Web assets is kind of key. I don't know if you are aware that Oberon and its collection of partner sites is ranked number four worldwide for reach of online games. That's about 33 million uniques, and that's before you add on some of our partner sites like MSN that isn't counted in there. We're eyeballing about 50 million monthly uniques that we address directly through our partnerships.

So you take that audience, which is obviously highly-qualified casual users, and you combine them - a very high percentage of them have mobile devices and ultimately would be interested in experiencing their favourite casual game or genre on the go. We think there are very exciting synergies.

Well, when you add the television component in there - which I agree with you that it hasn't caught on yet in the United States - but when we saw what was coming down the line, we got very excited about investing now.

I just moved from Seattle to New York and I'm seeing it now - there's a service that is built right into my screen. So we see a lot of exciting opportunities to connect that audience back to a community, and then have that community linked to the Web.

Ultimately, that is going to be the first easiest step for folks in having mobile game content, building a community around that content, building a longer-term community around that mobile game content, and then being able to leverage either with cross-platform play or at least cross-device access to community stats, rankings, in some instances chat if that's allowed. So there are a lot of exciting opportunities there.

You're going to see the same thing happen on TV. Ultimately it's the same collection of products, the same audience there at home. I'm not saying someone is going to leave their PC and play Bejeweled on the [TV] screen, but what I am saying is that, as part of a family pack...

Just like on Xbox Live Arcade, I was beat up to no end. "Why do you want Bejeweled on your TV screen when you can have it on your PC?" Well, it was a different experience because you had achievements, you were linked with friends, it was viral with a whole different series of people that experienced it that way.

Ultimately, that's what you'll see in this connected day and age - almost community first, then content gets layered on top of that, and then people start to talk about the different access devices to that. I think that will continue to get stronger and stronger over time.

That's true. You have this gargantuan potential, but there are only a small number of people accessing that. Fundamentally, merchandising and discovery is the major issue.

I've been a games industry professional for many, many years, and I really want to do it, so I'm highly motivated, and it is still a pain to find it. It is still a pain to buy it, and it is still a pain to find it after I buy it.

I literally stopped buying games on this [phone] for about a month and a half because I couldn't find the darn games. It wasn't in my games folder. It wasn't in my applications folder. It was buried somewhere in my Java folder, and I had to have some technical person tell me - maybe it is more obvious for other people, but I was expecting it to be in the games folder, you know?

So, there's that aspect, which is - how do you fix the user experience on the phone, make it better and more targeted, and make it much easier? Especially for the casual consumer - they don't have time to search.

When I ran MSN games we had this theory: "15 minutes of fun." We didn't want them to spend the first fourteen minutes rooting around looking for something. It's even worse on mobile phones. You've got to get them in, get them out. You want to have a "quick bite" experience.

The thing that you have to realise about Oberon - our uniqueness in the industry - is that we have three business lines. We have a publishing business line, so we're building games and trying to have people sell our games. Also, we distribute games, aggregate games. And we're also a professional services company with a platform component.

So, if you go to MSN Games, you'll see their entire digital distribution of games powered by Oberon. If you go to EA's Pogo, all their direct download business is powered by Oberon. If you go to France Telecom, their entire community offering is powered by Oberon. If you go to NHN, to Comcast...

Comcast we actually did a fantastic thing where we drove their Web users to a mobile landing page, allowed them to enter in their phone number, pushed the game to their cell phone - try before you buy. Because of our ability to have custom solutions for partners, we can help them try and solve some of these problems.

While we are concerned, we try not to gripe about it - there's a lot of griping about it. Fundamentally we think that, because we are a solutions provider platform company as well as a publisher, we can help carriers in a consultative fashion get better and better over time. So that's one way to fix the problem.

The other way to fix the problem is to go to where the casual gamers are. Go to where the users are. A lot of users don't even know that mobile games exist, so they wouldn't even know to go search for services.

Like the Comcast example, another example that's been talked a lot about in the conferences...We did the same thing. We took a Bubbletown application, we put that on Facebook, so virally it gets around that there's this application. Right underneath that, built into it is "Hey, you like this? Got a mobile phone?"

The overlap of the demographics is very tight with Facebook. We have a fantastic partnership with My Space - we actually power all of MySpace game solutions. So, you'll see more of this innovative cross-platform solutions coming forward.,

But again, it all comes back to this idea that, if you're an IP owner, then you don't just want to plug one game. You want to build a community of users that want to consumer your content over time. It's the idea of a loyal devotee to a television show - you want to build an audience.

You can use that then...Leverage is a bad word, but you can demonstrate the larger audience to the carrier, which gives you some advantage in terms of getting additional promotional opportunities.

Ultimately, the reason there is such a bottleneck at the carrier, and the reason there is a mismatch between the number of mobile users and potential casual gamers and the skew of the deck placement being towards core games is because the carriers tend towards branded properties.

The branded properties tend to be more action-oriented games, movies and so on. And then that tends to be younger. And the reason for that is they have a built-in marketing engine - 10, 20, 30 million dollar marketing campaign. Put your little text code there. It's free marketing.

And ultimately if companies like ours can create innovate solutions where we can drive demand using all the assets at hand, and we can develop "brands" - casual gaming brands like we've managed to do with Jewel Quest - then I think you'll see the equilibrium start to happen.

We'll also continue to sell off-deck directly to casual gamers. We can't bypass the carriers completely. We still have to go back to the landing page because they have the phone, which just grows their audience for them.

So, what you're seeing is that they are embracing more of these solutions to drive growth. And you are going to see more and more of that.

We're super excited to see folks like Apple taking the lead on building devices that are easy to use, that are encouraging experimentation with services. And then ultimately you'll see more creative product offerings, more targeted product offerings, that are easy to navigate.

Once you get to that stage, then I think you're going to see a very large [audience] - you're already seeing it - for 3G and some of the advanced handsets, I think the quote is 138 per cent - some enormous amount - more consumption of digital media.

That trend is going to continue. We're trying to position ourselves as a company with the publishing wing - with the distribution wing, with the professional services wing - to attack the problem at all the different linchpins.

I don't want to go into detail about discussions, but I will say that, absolutely as a publisher we are going to approach all markets at that size. Especially working with creative companies such as Apple trying to push the edge. Those are the types of partnerships that very much interest us.

I think we'll have an announcement for you upcoming on that.

In general, what I can say is, direct investment in certain platforms for us as a publisher, ultimately what we're going to try to concentrate on are a few sets of core platforms, then we'll partner with people for expanding the distribution of our intellectual property across other platforms.

Just like any publisher who is focused, we are going to identify potential franchise extensions and find people who are just as excited about our IP for those devices. We don't have any plans to internally, first-party, build WiiWare games, as an example. But we are certainly talking to folks about taking our IP - our original IP or even licensed property in some cases - and trying to exploit them in lots of different ways.

Do you consider the PS2 a casual gaming device?

Exactly. That's the point. The console price curve, which I'm sure you know - as soon as the price point gets down to USD 99, it becomes a casual device.

So I agree with your general premise in that, if I'm a single mom that really likes puzzle games, I'm not necessarily going to go and buy a PlayStation 3 to come home and download Bejeweled.

When we designed Xbox Live Arcade...That's the reason it had a retro-arcade tilt to it. We knew that we had to have the rabid owner of the box completely engaged. So, you know, the Geometry Wars and the rest of it.

Then, what happens, underneath it you have this nice foundation of Hexic, Bejeweled and Astro Pop. There was a discovery that the actual user of the device and the person who paid for the service, were different. So we knew that it was more of a family-oriented experience just from a few hints of the data and then actually thinking about how people consume it.

What we tried to do was, again, segment into these two core audiences, with some content bridging - puzzle games always bridge, especially action puzzle games - and link them to the community.

And what ended up happening is exactly what we thought. "Hey, I'm familiar with that. I know how to play that! Get out of my way. Oh, I beat you!" And then the competition kicks in...

My experience at MSN and Xbox Live is that women are as competitive if not more competitive than men, except that they just don't want to spend or have the time or learn "up-down-X-X-Y-Y"...They don't want to deal with that. You give them one button, they'll kick your butt.

That's why our whole mobile strategy about one-thumb gaming, it's really about not having the device get in the way of the experience.

So, ultimately, what you are going to see for the PS3, the Xbox 360, as the price curves comes down you are going to see more and more casual content.

It still amazes me, even to this day, that Xbox Arcade One - the disk-based version that existed for the 360 that had diddly-squat distribution - is still going. That's the content that's available, and people continue to feed off it.

If you go down the lists of challenges for mobile, on the publisher's side in terms of keeping costs contained...Just like in any of the hardcore publishing businesses, customer expectations are rising, costs are rising.

In mobile you have this extra wrench in that you have to port to lots of different handsets and because of the carrier control of the distribution pipe - they don't care if you have to port to unprofitable handsets or not. They want the "full meal" deal or else. So you really have to be careful how you approach it.

Now, how we're mitigating that is we consider the ability to have a very special relationship with carriers in that we are a solutions provider. We can power their online games solution and then tie it all back together again.

And, ultimately, with our experience in analytics and optimising the shopping car online, we can come in and help people fix their carrier deck. So, we see it as a challenge and an opportunity at the same time.

We see aggregation as a challenge and an opportunity because we can provide those aggregation services support. We see the various different handsets as a challenge and opportunity - we've built an infrastructure and a team and an organisation that can turn around custom solutions very quickly. Because of that, we can get better promotion and placement with carriers.

Because we are a top tier mobile developer, we consider ourselves special partners. And then in terms of scale, we already have the front cost - the fixed costs of the factory. So, as far as we are concerned from an economic perspective, that's a huge barrier to entry. I'm fine with that as long as we can make all the numbers work out.

Ultimately, this is going to boil down to - just like online - a few providers. The carriers are already limiting the number of people they are dealing with. I think somebody had said in a conference, when you talk about distributive games, you're not talking about carriers - you are talking about publishers. Which publisher are you going to go through to get it to market.

The benchmark for everybody is market share and sales. Were we able to drive sales? Were we able to build long-term franchises that worked cross-platform? If we made this initial investment, did those synergies pay off? Were we able to have deeper, closer relationships with carriers and really leverage our professional services. Those are definitely some of the key metrics.

We also look very carefully, as everyone does, in terms of deck placement and promotion - the overall share. That's something we track carefully, as there is a direct correlation with sales.

We've had five acquisitions since I've been here in the last year and a half. We are at the stage this point in time where we have to make this all work and fulfill the vision. I'm very enthusiastic about it. I'm very bullish about it. We're seeing great initial signs of this all coming together.

We'll go from there. We're always searching for new opportunities.