Trip Hawkins: iPhone gives mobile biz ‘permission to innovate’

Trip Hawkins, one of the video games industry’s true elder statesmen (he has a spot in the Academy of Interactive Arts & Sciences Hall of Fame, alongside Shigeru Miyamoto, Yu Suzuki, Will Wright, and Sid Meier), is known in part for his keen historical insights on the business of gaming. Most of his fame, however, is down to that little publisher he founded a quarter-century ago called Electronic Arts, as well as his tenure at Apple Computer and 3DO. In recent years, Hawkins has shifted his attention from the console space to mobile gaming; his latest business, Digital Chocolate, has grown from obscurity into a Top 10 mobile games publisher over the last five years. Like many of its competitors, DChoc is shifting away from its “pure-play” mobile heritage to address promising new casual games platforms, including web games, social networks–and, of course, the iPhone!

To the best of our knowledge, you can count the number of gaming executives who have worked at Apple, a console maker, a major console publisher, and a major mobile publisher on one finger. Clearly, Hawkins is uniquely positioned to comment on the iPhone phenomenon at large, and the iPhone gaming scene in particular. He generously shared his opinions with Slide To Play during a recent interview on DChoc’s shady San Mateo campus.

Naturally, the first thing we wanted to know from Hawkins was which iPhone games he’s been playing recently. As it turns out, the answer is none just yet–he very recently acquired an iPhone 3G, after waiting months for Apple to sort out the many serious bugs that infested the iPhone 2.0 software launch. “I’m actually a bit of a Luddite when it comes to technology I adopt and depend on,” Hawkins explained. “I didn’t consider buying a 2G iPhone, period, because I wanted to wait for Apple to fix the voice quality issues and add 3G.”

He did note the tremendous impact of the original iPhone’s launch on consumer behavior, however. “It was the first time that consumers actually cared which mobile carrier they subscribed to (because of Apple’s exclusive relationship with AT&T),” he added. “That’s never happened before, even with really popular handsets like the (Motorola) RAZR. There are three billion mobile phone users in the world, and I bet if you put them all in a room and ask who wanted an iPhone, pretty much everyone would raise their hands.”

In Hawkins’ opinion, this is due to the iPhone’s usability, its seamless connection to the Internet through WiFi and 3G, and, most importantly, the wide array of content available on the platform. “People are very familiar with the web experience at this point, and the iPhone has much more in common with the web than it does with mobile–it brings the two much closer together than they used to be,” he told us. “The iTunes store is a huge asset for Apple; everyone knows how to use it, and the billing’s all taken care of. It’s no wonder that the iPhone is the first mobile content platform anyone cares about.” According to Hawkins, the iPhone has given all other mobile companies “permission to innovate” by creating a “new archetype” for mobile technology. “Consumers didn’t realize they wanted an innovative, powerful handset and great content until Apple showed them they did,” he said.

Now that the App Store has launched, games are an increasingly important part of that content equation. Digital Chocolate hasn’t released any games on the App Store yet, but several products are in the works. Hawkins envisions the iPhone as part and parcel of an integrated strategy to reach the market segment he calls the “Omni Media Gamer“. These are people who don’t consider themselves gamers (and in fact may be repulsed or intimidated by “core” video games), but still enjoy playing supercasual, socially connected games on the Internet in a platform-agnostic fashion–they don’t care if they’re on XBox Live Arcade, a PC, an iPhone, or a set-top box.

One such “OMG” title is AvaPeeps: FlirtNation, a dating game that is already live on the web and some mobile carriers (T-Mobile, Virgin Mobile and Boost Mobile in the U.S., 3 in the UK). AvaPeeps’ gameplay is all about making casual, flirty connections with players of the other sex (or the same sex, if you prefer) in a mediated environment. You get to build and customize your own avatar–down to the cute snippet theme music that plays when you do something successfully–flirt with other players, and, if your choices match up well with theirs, go on dates. AvaPeeps is free to play on the web at the moment, but DChoc is adding token-based premium features, like custom messaging, to drive revenue.

Hawkins believes that microtransactions and other alternate forms of monetization are vital for ultracasual web gaming’s future. “If you look at conversion rates for casual web games on big portals, they’re terrible–somewhere between 1-2%,” he remarked. “Web gamers aren’t in the habit of paying for games like they do in retail. It’s a completely different business.” Thus, he’s not surprised to see the pricing bloodbath on the Games side of the App Store, where premium games that started at $9.99 have ended up at 99 cents or free in a matter of weeks. “Game companies tend to specialize in one major ‘silo,’ such as the MMO space or the PC games space, and they’re rarely agile enough to jump to a completely new category with much success,” he told us. “Individual developers and small indie shops don’t have that problem, and they also don’t have the overhead.”

In other words, the big mobile publishers are having a tough time competing with the large number of high-quality free and budget games at the moment, given the kind of customer they’re dealing with. Hawkins thinks that some of the indie shops on the App Store are bound for glory, “probably because they’ll just get lucky,” and several of the larger companies will have hit games too, “although they won’t necessarily understand why.” However, he also told us that the App Store isn’t a sure bet just yet. “It’s tough to rise above the noise level on the App Store right now,” he said. “Discovery is a real problem. That’s why most of the real success stories are going to come from companies that are able to drive traffic to their App from elsewhere.” He mentioned that DChoc is working hard on this by making its web games as viral as possible. For instance, the company brought Tower Bloxx, one of its stronger mobile titles, to the web and to Facebook; on the web side, it spread rapidly from four to five initial sites to 4,000, and it’s received an additional 1 million plays on Facebook. DChoc has even turned its own website into a fully equipped web games portal.

Despite the huge success that iPhone gaming has enjoyed so far, Hawkins isn’t convinced that Apple’s recent move into iPhone and iTouch games is part of a larger gaming strategy. “I love Apple, and if I thought they were really moving into video games in a big way, I’d welcome them,” he said, “but the fact is that they’ve had plenty of opportunities for the last 30 years, and they simply don’t seem that interested. I’m not even sure how committed they are over the next 5 years.”

Nevertheless, Hawkins and Digital Chocolate see great opportunities in the App Store, and they are monitoring its development carefully; we are under the impression that they are very ready to jump in when the time is right. That’s good news for iPhone gamers everywhere.

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