ngmoco boss Neil Young

On the DeNA deal, Mobage in the West and why Zynga's the competition

Former EA exec Neil Young broke away from the publisher in 2008 to found his own developer, smelling great opportunity in the then-impending App Store. Over ngmoco's short history, he's led it through two dramatic pivots - firstly to free to play, having predicted a collapse in traditional business models, and then last month to focusing on a mobile social network. This latter involved selling the business (for $403 million) to Japanese mobile giant DeNA, which dominates its domestic feature phone market with the Mobage Town social platform.

Last week, caught up with Young at Evolve In London, and quizzed him on plans for Mobage in the West, who ngmoco's competitors in that space were, and whether the now DeNA-owned company would be able to pivot once again if the climate changed.

Q: Have you been selling the idea of Mobage to European studios while you've been over here?

Neil Young: To some degree. It depends on who you're talking to. We've got essentially two parts to the business, right? One is the games that we make ourselves and the other is the platform that we're building and the games that we want to have come to that service. So for the games that we make ourselves, we do some of those internally, we do some of those in collaboration externally. So those conversations are much more focused around 'what shall we make together, why do we think that's going to be great, what will we learn, what mistakes don't we want to repeat.

Then obviously around Mobage it's 'what's the vision for the platform, what are we trying to accomplish, and what's the benefit to a developer'. Which I think is at the end of the day, most developers from a business standpoint want audience and monetisation and I think Mobage gives them a great opportunity to get that, and to learn also from the lessons that we've learnt and the DeNA has learnt in Japan.

Q: What kind of reaction are you getting to it, given there's a sudden confluence of social gaming layers on mobile - are people clear on how this differs and what the opportunities are?

Neil Young: Well, I think we have a fairly clear proposition and I think there's really two pieces to that. One is target this platform and you'll get carriage on the network, and the network will be the only global network with a lot of users on an aggregated basis. Two, we have some pretty proven monetisation against that audience, both in Japan and here in the West. So when developers get exposed to that it's exciting. Because the big challenge as a developer is how do I make enough money to keep going. I think the expertise and experience that collectively the companies have is exciting to a lot of developers. In general, the reaction is good and we've got a lot of work to do to educate people on what the opportunity is, but it's good.

Q: In tandem with that you're pursuing some big licensing deals, like Star Wars Imperial Academy with THQ. How straightforward is it to have the company doing these two quite disparate things, or is it likely you'll start to lean more towards one or the other?

Neil Young: We built a pretty scalable first party product development organisation, which really was the core of the company for a long time. So we don't fear being able to do a lot of those games - great development teams, great producers, the infrastructure required to do those things. The strategy is all around how do you go from an affiliate network to a platform proper, that can be a destination as well as an active community as well as a disaggregated set of applications. There's undoubtedly a lot of work to do there, but the benefit we have is a company that's already done that, and then our own learning on the Plus+ network, which is not a trivial undertaking. The 50+ million minutes a day that I quoted [in a talk earlier that day] are just for ngmoco titles - that doesn't include games that are in the Plus+ network in general.

So operating a service that's doing hundreds of millions of minutes of gameplay every single day is in and of itself a non-trivial undertaking. So the gap between that and delivering a social game network that's a destination is measured in the types of features that you need and the global monetisation methods that you need. So that's at least a discrete set of problems.

Q: You talked earlier about how ngmoco's ability to pivot has been key to its growth - does the DeNA partnership, and being tethered to Mobage, affect your ability to do that?

Neil Young: I don't think so. That's just a function of whether you choose to or not. I think we've been able to find a partner in DeNA that has the same... Have you ever met Tomoko [Namba, DeNA CEO]? She's a remarkable woman. In your head, you have a picture of what a Japanese CEO is like - she's the opposite of everything you're thinking of. She founded the company, she's one of the few female CEOs of publicly traded companies in Japan, she's very entrepreneurial, educated in the US, from a consulting background... She's proven, I think, through the life of running DeNA, that she could pivot the company through various transitions. I think we've got a partner with a really like mind. Both sides of the pacific are motivated to build a big, global company. The only way you get there is by continuing to iterate and evolve your business.

Q: Do you feel that doing that is in co-operation or competition with the mobile platform holders?

Neil Young: I think you have to approach each ecosystem differently. There are rules of operating in those ecosystems that differ between the two devices. So, for example, in iOS there are two very important considerations. The first is the business consideration, which is you're not permitted to provide and aggregated service, unless that's launching directly into a website. So you have to have a system that can function in a disaggregated environment, where you're downloading individual games that are connected together through the community services, much in the same way that Plus+ works today.

The second consideration is an Apple consideration: they have a wonderful device with wonderful user experiences, and the people at Apple are very, very focused on making sure that the games that come onto that platform are as good as they can possibly. That's the starting position, can you do great stuff that shows off our platform? So they've taken positions and on services and systems that they do or don't allow really around that - 'will it be a great experience for our users?' When you're building a service like this, how do you make sure that goal is upheld and that the games that come through this service and system are the very best they can be on that platform? That's the consideration there.

The Android ecosystem is much more open, and so you've got a very different set of considerations, and an opportunity to build a destination service much in the same way that DeNA has been able to build Mobage Town in Japan as a destination service. So what you want is the games and the community to be able to span across those ecosystems and then you want the distribution mechanisms to adhere to the different considerations of each platform. And then in Japan we've got Yahoo Mobage, a partnership with Yahoo, which internally we call Yabage... games use that same community, and they exist on the web.

There's an opportunity I think over time to basically build a game service that is almost device-independent. Phones, tablets, televisions.... What we're trying to do with this pivot that we're going to is something that's analogous to the last one. Last time we said 'okay, we see where this is going, and that's not going to be a big enough business for us' - at that time, really for survival reasons. So we pivoted, now we see the direction that free to play games go. That's actually a fine business from a commercial standpoint, but there's a bigger opportunity in front of us and I think we'll be able to tackle that effectively over the course of the next few years.

Q: You haven't had a pivot that hasn't worked out yet, however, so you're speaking from a position of success - what would you be saying about that method if something had gone wrong?

Neil Young: We have done many, many smaller pivots in many parts of our company. The idea of a pivot is institutionalised into the idea of the company. A major pivot is just something that changes everything, but you also do pivots on products where you go 'hey, we know where this going, y'know? We'd better change it.' And you also know sometimes those things work and sometimes they don't work. There's inherent risk whenever you change, but I think that we're fortunate in that we've always been able to and tried very hard to understand the market and the customers, and then make changes that serve where we see the market going based on that knowledge and insight.

Q: With Mobage, does that have to work as-is because of what's been laid down and successful in Japan, or do DeNA give you relatively free reign to alter it as much as you need to for the West?

Neil Young: No, it has to change. It has to. Because it's different, because it's for the feature phones... The feature phones in Japan, they're not the old Motorola Startac or something, they're actually quite powerful devices. So the gap between that and smartphones isn't that big. But there are differences, and there are differences in how applications are distributed. You have to be considerate of those things, and it does it require Mobage in Japan to go through a transition and a transformation. Whenever new technology comes out, there's an opportunity to disrupt. I think the challenge for the incumbents is to be able to manage through that disruption as effectively as possible.

When I think about DeNA's approach versus its competitor in the local market, Gree, DeNA has a strategy, it has a global strategy and it has a smartphone strategy. It also has a web strategy. Gree doesn't have a smartphone strategy, it doesn't have a global strategy, it doesn't have a web strategy. Right now, we're in the lead in terms of going through that transformation phase. In Japan, we're going to have to work really, really hard to make sure that when we come out of it we come out of it in an even stronger position than when we went into it.

Q: Did you hear the news this morning about the anti-monopoly suit filed against DeNA by Gree? Do you think there's a case there?

Neil Young: I did hear it, yeah. Look, whenever you're in a competitive marketplace, I would say today we're ahead of Gree - DeNA and Gree have been fighting it out for dominance for a while now. I'm sure those two companies would try hard to beat the other.

I saw that news this morning too and spoke to Tomoko, she's in Paris right now, this morning, and she kind of gave me her context on it. I think it's interesting and understandable. It's not the first time that I've seen a large company being either investigated for or being attacked for being anti-competitive. I think it's happened to Microsoft, Apple and Google. I'm sure it'll happen to Facebook at some point... So maybe DeNA's moving into the league of being targeted. Maybe that's a good thing! [laughs]

Q: Could it affect your plans for the West?

Neil Young: No. What I read is the question is whether or not DeNA or Gree have prevented developers from doing things on their platform if they signed up to the other person's platform. That's not really a consideration here. I don't think we would ever say to a developer "hey, be on our platform but if you have the game on our platform you can't have it on A.N.Other platform, in the same way that Apple probably couldn't or wouldn't say that about a game being on iOS or Android.

Q: I could imagine it happening down the line, though, as Steve Jobs' hatred of Android intensifies. We've also seen it happen somewhat with Facebook trying to hang onto Zynga exclusivity.

Neil Young: But that may have been incentives. There's a difference between incentives and prevention. So I don't really know.

Q: Gree are the Japanese rivals, but who, if anyone, would you see as being the major competition in the West?

Neil Young: I think that are different elements that you could consider competitive. I think at the end of the day probably we'll be slugging it out with Zynga. Basically that's what it's going to boil down - Neil and Mark Pincus in a ring going [throws punches].

Q: Yes, he was saying the other day that he wants 'Zynga' to become a verb - but I immediately thought 'you really mean 'platform', don't you?'

Neil Young: [Laughs] Yeah, they're formidable competitors. We have a lot of respect for them, and they've built an incredible company, so we'll see. Maybe we can all just make nice and have our games on each other's platforms.

Q: So you'd consider having, say, Cityville, on Mobage?

Neil Young: Sure, we'd be open to that. I know Mark pretty well, he is a great guy. Despite what you've read about him in the press, he's actually a good guy.

Q: Going back to the Star Wars thing, a lot of the other speakers today (Playfish, Enteraction) have claimed that increasingly you can't make successful mobile or social games without know brands. How much do you subscribe to that?

Neil Young: That's nonsense. You can't do games without brands? Of course you can do games without brands. We have a lot of successful games that don't have brands. That's the mistake that a lot of incumbents in traditional media and traditional games makes - the power of their brand is the thing that's going to lift them above the competition. Actually, I think it's about the relationship with the customer. The intellectual property that is the most valuable is that relationship. I think brands will come to the networks that have the most relationships with customers.

A different way of answering that question is that I think brands will find it difficult to be successful if they're not part of companies that have access to audience. Now, if you can put those two things together successfully, then that's an even better recipe for success. Still have to make a great game, but combine it with a great brand and a better network and that's probably a better shot than going to the other end of the spectrum: no brand, shit game, no network.

Q: There's that risk, too, of companies attaching their beloved brands to something that's a bit tawdry, and then that reduces consumer trust in that brand.

Neil Young: Yeah. That's happened all the time too - you can go through the history of the games business and there's been plenty of brands that have slapped themselves on products and the outcome has been mediocre. You can't compensate for that game. Critical success is important because it allows you to have future commercial success. You can sort of fool customers once, but you can't fool them a second time.

Q: On a similar theme, how do you prioritise behavioural trends and metrics versus innovation? There's been a lot of disagreement about that at this conference.

Neil Young: You need to do C) all of the above. If you just execute and iterate you will be able to build a big company that will be short-lived, because it will ultimately get out-innovated by someone. If you just do innovation without the ability to execute, you will build a small company that never reaches any scale. So the challenge is how do you do both of those things. We try to, and there's different moments where we're just executing, and others where we're just innovating, but we think that they're both important. The day that innovation stops inside the walls of the company is gonna be the day that it declines. We have to make sure that day never happens.

Neil Young is CEO of ngmoco. Interview by Alec Meer.

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