Top of the Pops
PopCap CEO Dave Roberts on diversifying platforms, channels and geography in the casual space
PopCap Games is certainly one of the major publishers when it comes to the casual games sector. Buoyed by the success and enormous popularity of its Bejeweled franchise, the company specialises in web games; games sold as downloads for the PC, iPhone and mobile phones; and sells a few retail, boxed titles for the PC, and some of the console and handheld platforms including the Nintendo DS.
GamesIndustry.biz spoke with Dave Roberts, CEO of PopCap, about how the casual gaming market is faring in these economic times, the continued viability of selling game product on store shelves, and what went wrong for them with Amazon's casual games download store.
Q: There's been a spate of news since the year started about the challenges that the major game console publishers are facing in these trying economic times. So how is your side of the industry, the casual segment, doing thus far?
Dave Roberts: We're cautiously optimistic. Things are still going pretty well. A lot of it has to do with price points. We're a lot cheaper than the USD 80 console games that some of these guys are releasing.
All the retail partners are being a lot more cautious than they were. They're focusing on bigger brands, trying to be a little more conservative in their buying. That affects the bigger companies, the EAs of the world, a lot more than it does us.
So far the business has been good. We're still seeing growth. I do attribute a lot of it to the broad appeal of the games, as well as the price points. It's a good combination.
Q: What are the challenges facing the casual games sector - and PopCap - this year?
Dave Roberts: In a world where our traditional distribution partners are selling bulk-purchase stuff, there's always a question of how do we participate in that appropriately? That's a big challenge for everybody. We have a group that does games really well with the portals because they basically got the game that is the fad of the moment, and they've got lots of them.
We also invest in "big" casual games, relative to what other people do. One of the products we're shipping next has been in development for three years. To do new IP still takes a lot of time. So a challenge for us will be how we make sure that those products don't just become the release-of-the-day on some portal and disappear into obscurity. We have to make sure we have something that's going to go beyond that.
Q: What have been the major business trends about the casual games sector in recent years?
Dave Roberts: A few years ago, people thought casual games were the gold rush. There were a lot of little companies trying to throw lots of content out there. That's what the distribution sites were asking for - lots and lots of all-you-can-eat content to give customers infinite numbers of choices and charge them recurring, either monthly, quarterly or annual, fees. The net result of that was some of the smaller publishers weren't making money.
The trend in distribution has been to really focus on "game club" bulk-purchase plans that serve a certain customer set very well, but I think it does ignore a larger customer set.
For PopCap, the business has been about diversifying platforms, channels and geography. Everybody thinks of the casual games business as a USD 20 download out of Yahoo! or Real. That, as a percentage of our business, has been declining dramatically over time. Not because that business is shrinking, but because the rest of the business is growing.
Q: PopCap has only a few titles that are sold in retail outlets. Is your company actively seeking to sell more boxed, retail store versions of its games in the near future?
Dave Roberts: Yeah. Our retail business is growing dramatically, actually. In fact, last year, for NPD we showed up as one of the top 20 PC publishers in North America, which was the first time we'd ever done that.
As a category, PC gaming is shrinking at retail. But what you're seeing is it's really moving to more casual stuff than it used to four to five years ago. Bejeweled has been a top seller at Wal-Mart for a long, long time, and continues to do really well there. So we actually continue to increase our retail presence.
Q: What's your feeling about the future of selling games on store shelves, as boxed products? There's been a lot of talk about the industry moving towards selling most games as downloads, but PopCap is expanding its retail-selling side of its business.
Dave Roberts: When I first started PopCap, if I had a nickel for every salesman who told me he's going to get us into Wal-Mart... and, lo and behold, here we are four years later.
I think, for certain products, there's a lot of comfort for buying a disc and having it. We kind of all forget about that. A large percentage of Wal-Mart customers don't even have credit cards. This whole idea of putting in your credit card and downloading something is a little bit foreign to a lot more people than we'd like to think.
I think retail is going to try to figure out how it can participate in online stuff in much the same way that Blizzard with World of Warcraft figured out how retail could participate in that game's success. They've managed to prove that there's a way to work in a partnership with retailers, where each party can do what it does best. And I think that's incumbent on us as developers to figure out how we work with our retail partners. What Blizzard does is certainly a model that's pretty interesting.
Q: The iPhone has certainly become a serious mobile gaming platform, especially for the kind of games PopCap publishes. What are your thoughts about it... for example, has the iPhone game market already become too crowded?
Dave Roberts: Bejeweled has been doing really well. We were surprised at how well it's done on that platform.
We've been in the mobile business for a long time - a quarter of our business comes out of mobile. To a certain extent, the iPhone is an opposite extreme from what the traditional carrier decks were. A lot of the carriers and handset manufacturers are obviously trying to make app stores work like Apple's. I'm encouraged that the whole ecosystem will get better, because Apple did something that's making this business more successful.
That said, there's this worry that Apple will eventually have to curate its store a little more or change the way discovery works because there's just too much stuff for people to find effectively. Presumably, it will tip itself over if they don't figure that out.
At the end of the day, they did prove if you think about the merchandising experience a lot more carefully than had been done in the past on mobile gaming platforms, you can be a lot more successful. Just that very factor has been awesome and great for us, and great for the industry, as we see everybody else trying to figure out ways to learn from that.
Q: PopCap doesn't have any titles for the Wii, the console platform most associated with casual gaming. Is there any reason why your games haven't yet appeared for the Wii?
Dave Roberts: The Wii offered such a whole new UI that ports become less interesting on that platform. So it has to do less, frankly, with the business of the Wii than can we create the right kind of game for that platform.
Q: So you do intend to make a game specifically for the Wii?
Dave Roberts: Yeah. We've had some efforts on the Wii for a while. We haven't announced anything yet. I wish we could have been there earlier with a great game, but I'd rather be there with a great game than a crappy game.
Q: Regarding the controversy that erupted over Amazon's fixed price point of USD 9.99 for its new casual games download service, your company declined to sell its titles through their service. Where does your company now stand on this? Is it simply a matter that PopCap doesn't have any titles it wants to sell at that price?
Dave Roberts: We actually do have a few titles we sell at ten bucks. But it was a contractual issue, frankly. They weren't willing to agree to the terms we have with all of our distribution partners, and we weren't willing to change our terms just for Amazon.
It turned out the reason they wanted different terms was because they wanted to have a lot lower price than anyone in the industry. It's a conflict with channels. We sell lots of games for USD 20 at retail, and Wal-Mart's not going to be too happy when the game they're selling lots of for twenty bucks, Amazon is selling for ten. One of the things we try to do as a vendor is make sure we're being fair to all of our distribution partners. If Amazon doesn't want to play by the same rules as everybody else, then that's their prerogative. I'm optimistic at some point they'll figure out a better way.
Dave Roberts is CEO of PopCap Games. Interview by Howard Wen.