Established by former EA Blueprint boss Neil Young, ngmoco is one of the few publishers setting up its own distinctive space in the iPhone games market. With a portfolio of titles titles such as Maze Finger, Topple, Word Fu and Rolando, the company is experimenting with various price points and business models within a market still in flux.
In the first part of this exclusive interview, Young takes us through the genesis of the company, how it managed to secure millions of dollars in funding for a start-up despite focusing on an unproven platform, and why the iPhone is here to stay as a legitimate games platform.
Q: This time last year you were still at EA where you'd been working for 11 years. Why did you decide to go from a huge company working on every gaming format there is, to a small start up, dedicated to a new and completely unproven format?
Neil Young: I emotionally started getting committed to the iPhone around late February, early March, 2008. My founding partner is Bob Stevenson, who ran a game developer called Planet Moon - they did Armed and Dangerous and were the original team on MDK. When I saw the SDK for iPhone announcement I said, "You need to watch this right now, stop making the games you're making and focus on this. Because these opportunities just don't come along that frequently. You're expanding your company and growing and trying to do more and more big games, but the reality is there's an opportunity here to participate in something that's truly disruptive." So I flew out to Hong Kong to meet with Bob's father who's also an advisor in the company, and he said "Neil, I completely agree with you, but you should be participating in this, you should be the CEO, and the two of you should start something fresh." That was the genesis of the company. And around April 20 I called Frank Gibeau (president of EA Games) and said “I'm going to leave.” He, John [Riccitiello] and I talked for about a week or so and it basically culminated in me deciding this was what I really wanted to do.
Q: So you saw the potential in it straight away, that the iPhone could become a genuine new format for gaming?
Neil Young: The reason I wanted to do it was I grew up in the games business, I haven't had any other job apart from working in Little Chef when I was at school. I have either watched as a customer, or as a person in the games industry, every single one of these inflective moments, and after a while you can smell them. You know that something has changed. That doesn't necessarily mean it's going to be an easy ride, that you'll put your rocket ship on this new wave and you'll take off, but you know something has changed with the iPhone and iPod Touch. Just look at the adoption rate, look at the number of games available, look at the number of people making games. It's almost like back in the UK when the ZX Spectrum came out and there was this huge influx of kids programming in their bedrooms and making games that were everywhere and became part of culture. That's sort of what's happening here, and that's ultimately why I decided to do it. We raised a round of money with KPCB, which Bing Gordon [founder of EA] is a partner in and we just went at it as hard as we could.
Q: How many staff do you have at ng:moco, what are the main roles and how do they operate?
Neil Young: We have 26 staff, which grows everyday. It breaks down to producers, the people who are working with indie developers and micro studios that we work with. And then we have an R&D team that provides technology to the developers. When you start working with us you get this library, a set of APIs and access to our platform. Those APIs are pretty extensive – WiFi multiplayer, asynchronous email challenges, hosted multiplayer libraries where we can run servers on a hosted infrastructure, that sort of thing And the idea is to basically enable game makers to get up and running as quickly as possible. We like to try to work with people who are coming from the traditional videogame space and help them get up to speed as quickly as possible on the iPhone.
Q: How quickly do traditional videogame makers adapt to the different rules of iPhone gaming and iPhone development?
Neil Young: Pretty quickly. If you think about how most game teams are structured it becomes impossible to manage 60 or 80 person teams unless you sub-divide them down into smaller teams, and they are focused on a feature or a level or a part of a game. Really, what we do is put our arms around people who might have worked like that, on a specific section of a game, and give them the opportunity to build something more complete. They get up to speed pretty quickly.The biggest thing with the device is that it's got a unique set of functionalities and interface. The first place people go to is "let's put some buttons on the screen." We're always trying to encourage ourselves and others we work with to not think that way. I don't think Nintendo would go that way. They would think about making a Zelda game that entirely uses touch. We have to think the same way if we want the games to truly take advantage of the iPhone. That means some games that just require buttons are less likely to be dominant on this platform. But hopefully there are going to be game that you can't do on another platform. That's one of the challenges that people need to get their head around.
Q: Did you have to rethink the way in which you run a games business when you started ngmoco from scratch?
Neil Young: No, not from scratch. There are some wonderful things and processes that companies like EA have in place, and there are some other things we didn't want to adopt. I did not want to build a big studio. We specifically configured the company to not be that way. To basically be a creative management and support company. My day job was to work as Electronic Arts and be a EA executive, but all of my friends are independent developers and I know the mindset of the indie developer and there's this little spark of magic there. You can't replicate that very effectively when you bring everybody over into a larger organisation.I felt this gave a wonderful opportunity to help stimulate these developers and at the same time have a company that was fun to manage. When you've got a 400 person organisation – and maybe one day ngmoco will be that big – but I hope it's not 400 people in internal product development, because you lose site of the thing that's important when you're dealing with managing the careers of lots of people. What's important in games is not so much the career of the individual, but actually the user experience and the quality of the game at the end of the day. The customer, the person who's buying these games, and he doesn't know whether someone working on the game was promoted, or how they work with others in the team. All they care about is playing the game. That's what we tried to keep, that sense that there are people out there who deeply love making games and we can help them make better games than they could on their own and help them cut through the clutter of development.
Q: You've raised USD 15 million in two different rounds since the launch of the company. Was that in any way difficult to raise as the format was completely unproven at the time you started up?
Neil Young: In all fairness it wasn't that difficult to raise the first round of funding. The common wisdom is that we went with KPCB because Bing Gordon was with them. That definitely had something to do with it, because I've never started a company before and I wanted people on my board that I knew and trusted. But it was also because they had the iFund [a USD 100m fund dedicated to iPhone and iPod development, backed by Apple]. We knew that if we didn't go with KPCB they would be investing in another games company, so we'd have another competitor out there.It wasn't hard because we were raising money in this window of time where everybody was excited about the arrival of the iPhone. We literally had the final partner meeting when the investment decision was made the Monday after the App Store first opened. The mood in Silicon Valley is different. If you said I'm going to start a traditional mobile games publishing company, I think it would be a difficult proposition. We said that we think there is an opportunity here to build a company that is as impactful from this point forward as companies like Ubisoft or EA or Activision have been in the prior generation. That's what we set out to achieve. People got that, especially given what Apple was doing, and then the general vibe around open mobile, that the carrier control of the economic model was starting to fall apart.
Q: And what about the second round of investment, what's that earmarked for?
Neil Young: The second round also wasn't particularly difficult either. We weren't raising the money because we needed it. We have a very variable expense structure, we have 26 people but the average since inception has been about 12. A lot of our development is done externally so we don't have this fixed overhead. We were really raising money because we wanted to double down on the opportunity and we were looking at data coming out of the holiday season looking at numbers. It boils down to; there's a lot of people downloading stuff. We, and probably everybody else, miscalculated how impactful the iPod Touch is on this business. And there are a lot of applications out there that are not going to get airtime, and those developers are going to think twice about whether they should self-publish games, or whether we can combine forces together and help make great things. We need to be sure we have the capital to take advantage of as many of those opportunities.
Q: It wasn't long ago that the common thinking was "Everybody carries their phone with them, but they don't always have their DS or PSP," so mobile handsets are the future of portable gaming. But that didn't help mobile phone gaming go anywhere significant. How do you know the iPhone isn't going to fade as a games device?
Neil Young: You never really 100 per cent know for sure. One stat that I find very encouraging is how people are playing games. We have pretty extensive analytic software that we built to help us try to make the best games, frankly. We don't share that information with anyone, it's information that only we see in aggregate on how people are playing. We can see that people are stuck in Topple on world four, for example, and so we can change the level so players get to see world's five, six and seven.
Q: So you tweak gameplay, and over night the developer has stepped in and made something a little more accessible...
Neil Young: Exactly, exactly. In Rolando we know the position of every single enemy in the world, every block, every moveable object is tunable. We make little tweaks and tunes when we see people get stuck or a drop off in usage, and it's possible to take a look at it. But one of the other things we measure is session duration. The session duration of traditional mobile games is measured in the low minutes because they tend to be used when someone has a break, or a spare moment. Average play session is in the five or six minute realm. For our games, at one of the end of the spectrum we've got something like Maze Finger, a free game. With that game the average play session is about six minutes, which is like a mobile game. Then you look at the other end of the spectrum with Rolando and the average play session is 22 minutes. The average player is playing the game ten times. That's a very different type of behaviour. That's the type of behaviour you'd expect to see from a DS or PSP or a traditional console gameplay experience. Why do I believe this is different? Because I believe people are playing the games differently. And that's enabled by what the device is able to do. And you can also see the trend. We know that this is not the only touch screen media capable phone coming to market over the course of the next few years. And it doesn't necessarily mean the PSP or the DS will go away, but I do think there's a real opportunity here.
Neil Young is CEO and founder of ngmoco. Interview by Matt Martin. The second part of the interview, where Young discusses the company's relationship with Apple, the iPhone killer App and how the hardware can be improved, will be published next week.