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Summary:

Last year, a small Mac game developer called Pangea Software ported one of its titles to Apple’s iPhone. Pangea’s Brian Greenstone didn’t expect to make much from the iPhone version of its arcade-style game Enigmo; he expected that the company might sell 10,000-20,000 units over its […]

enigmoLast year, a small Mac game developer called Pangea Software ported one of its titles to Apple’s iPhone. Pangea’s Brian Greenstone didn’t expect to make much from the iPhone version of its arcade-style game Enigmo; he expected that the company might sell 10,000-20,000 units over its lifetime. It sold that amount in a single day, and from July 2008 to January 2009, it sold a total of 810,000 copies, earning a profit of $1.5 million, even after Apple took its 30 percent cut.

Numbers like that help explain the burst of iPhone game/entertainment news here at SXSW 2009, from location-aware fun apps to the Facebook Connect function linking iPhone apps to the social network. But there are also challenges. Those were analyzed at a Saturday SXSW panel featuring Greenstone and three other successful iPhone developers; here are my five favorite takeaways.

Think Handheld Game Console, Not Mobile Platform

Moderator Raven Zachary laid out the playing field: On the market, there are now 17.4 million iPhones and an estimated 9 million iPods (which also run the iPhone OS.) There are 27,000 iPhone apps that have been downloaded a half-billion times; 1 in 3 are games or entertainment apps. While it’s not the most popular phone on the market, it’s easily the most Net-centric, accounting for nearly 70 percent of all mobile-based web usage.

For those reasons and more, the panelists consistently described the iPhone less as a mobile platform than a handheld game console. Stephanie Morgan of ngmoco argued that it’s actually superior to Nintendo’s DS and Sony’s PSP, since the iPhone has better Net connectivity, and unlike either competitor, has finger touch, accelerometer, and location awareness functionality that can be integrated into gameplay. And since it’s also, you know, a phone, owners are more likely to have it on their person than a handheld console.

Keep Budgets Low By Sharing The Risk (And Wealth)

Notwithstanding blockbuster successes like Pangea’s Enigmo or ngmoco’s Rolando, most games get lost in the clutter of so many iPhone apps. Consequently, Greenstone expressed caution on development costs. “We don’t want to invest a lot of money, because we don’t know if we’ll make it back.” To keep budgets low, he doesn’t pay artists and other developers to help with porting Pangea’s games to the iPhone; instead he gives them a cut of the profits when the game sells.

Web 2.0 Marketing Is Key

The difficulty of distinguishing your game in a morass of 27,000 apps was a recurring theme. The panelists recommended building awareness through YouTube, social networks and other Web 2.0 channels. The big goal, they unanimously agreed, is getting your game in Apple’s top 100 apps. Once there, it gains self-sustaining momentum.

Play With Your Price Point

But how much should iPhone games cost? At first, Pangea tried selling titles for $10 each, but found itself in a price war against 99-cent apps. It now prices its games at $3-7 dollars, though Greenstone believes the average price point will trend back up to $10. Morgan said ngmoco is experimenting with introductory low prices, too; panelist Danielle Cassley of Aurora Feint (makers of an intriguing eponymous iPhone MMO) suggested lowering a game’s price to get it into the top 100, then beginning to increase the price. (Rumors that Apple will soon introduce a “Premium App” store, largely for iPhone games, could also help raise the acceptable price point.)

Don’t Worry About Piracy (Yet)

With software success comes piracy; an audience member asked if this was a concern with iPhone games. Pangea’s Greenstone said unauthorized downloads of its games did initially spike, but that it now represents about 5 percent of the total. Stephanie Morgan of ngmoco concurred, calling it a “negligible concern.”

During the audience Q&A, someone who introduced himself as a staffer with Nokia said he was interested in acquiring the rights to the panelists’ bestselling iPhone games, and converting them to their own mobile platform; though the Finnish company still dominates the handset market, none of the developers expressed much interest in the offer. The exchange struck me as an object lesson that Apple’s rivals could do well to learn from. If they have any hope of competing, they must not only contend with the iPhone itself, but the dedication of the app development community that’s sprung up around it.

Disclosure: I was an unpaid advisor for SXSW’s panel selection process.

Image courtesy Pangea

  1. I would only caution to your points on the handhold game console comparison that iPhone’s bullseye is casual gamers, as the serious dedicated types are likely to expect more out of the controller, more out of the dedicated hardware functions and the like.

    Ultimately, this is a “so what” specifically because everyone at some point of day/week find themselves in a mode where casual gaming/entertainment is applicable, and the instant gratification and low bar cost economics of App Store make indulging such moments rather easy, something I blogged about in:

    iPhones, App Stores and Ecosystems (http://bit.ly/Hre72)

    Check it out if interested.

    Mark

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  2. I think you’ve highlighted most of the really key things to think about in the world of iPhone games. It’s a really nascent space and we’ll see what happens next. I was in the room at SXSW when all of the FB Connect integrations were discussed and I think a lot of lightbulbs went off in people’s heads.

    Also, if you’re interested in spending more time in this space, the iGames Summit is this Thursday. We have most of the top iPhone games developers gathered for a day of talks in San Francsico. Check it out – happy to give you a press pass to attend.

    http://www.igsummit.com

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  3. [...] Read the rest of the article here Share and Enjoy: These icons link to social bookmarking sites where readers can share and discover new web pages. [...]

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  4. That’s 9 million iPod TOUCHES, not 9 million additional iPods, in the 3rd paragraph.

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    1. It said “which also run the iPhone OS” which means ipod touches only…

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  5. I would agree there is a market for such games, yet could that market be saturated by rivals to iphone, such as LG Prada and the maybe even the future of the Google phone? I was wondering what apple maybe thinking as far as their competitors are concerned. Do they think that other similar modified iphone clones may make money for others?

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  6. [...] How To Make Money From iPhone Games (GigaOM) [...]

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  7. [...] How To Make Money From iPhone Games Numbers like that help explain the burst of iPhone game/entertainment news here at SXSW 2009, from location-aware fun apps to the Facebook Connect function linking iPhone apps to the social network. But there are also challenges. Those were analyzed at a Saturday SXSW panel featuring Greenstone and three other successful iPhone developers; here are my five favorite takeaways. (Tags: games development appstore ipod apple mobile iphone) [...]

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  8. [...] How To Make Money From iPhone Games [...]

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  9. [...] mostly from third-party developers, which makes it competitive with the rapidly expanding (and often very profitable) market for iPhone games. He got an American Nintendo exec to demo Moving Memo (tentative name) and [...]

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  10. Jeremy Bishop Thursday, April 30, 2009

    if you dont even know the name of the competing devices, how can you offer up a serious opinion here? There are 1billion + dnld apps, ~ 30million devices and a saturated market… saturated as far as relying on apple for visibility, not on spending. Dont invest too much, try things out, run with what works. Use social networking to push your products and if you make a good chuck of cash, consider investing significant amounts into advertising and building up the brand that the user base responded to… there are plenty of success stories left to unfold here

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  11. [...] There are a few distinct “areas” the categories can fall into. Is the software for fun (one out of three apps is an entertainment app or a game) or does it enhance productivity (weather, productivity, utilities etc.)? More than 50% of the top [...]

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  12. [...] evidence that gamers are increasingly turning to interactive entertainment that’s cheap (as with bestselling iPhone games that usually sell for a few bucks) or free (as with incredibly popular social games like YoVille.) [...]

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  13. [...] media are generally entertainment-based rather than utility-based. What’s more, on the iPhone, one out of three apps is an entertainment app or a game. Let’s look at some specific similarities and [...]

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  14. so i think thats why admob and other giants are moving towards it.. mmm lot of money

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  15. [...] and iPod Touch games are a booming business in the App Store, but how do they stand up against the big daddies of the handheld game [...]

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  16. [...] and iPod Touch games are a booming business in the App Store, but how do they stand up against the big daddies of the handheld game [...]

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  17. [...] How to make money from iphone games [...]

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  18. [...] emergence of the iPhone has proven that a real market exists for mobile games, but Nokia for years has failed to grow its gaming business beyond a small crowd of users on [...]

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  19. I think you got a lot of good points, as a developer myself i know how difficult it can be to have anyone notice my games.

    But web 2.0 marketing only works if you have something really special, meening that only a fraction of all released apps have what it takes.

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  20. [...] Still On). “How to” articles were also very popular at that time. (See GigaOm’s How To Make Money From iPhone Games and HubPages How To Make Money With iPhone Apps and BusinessWeek’s How to Make Money off [...]

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  21. [...] 1. Au, W. J. (2009, 03 16). How To Make Money From iPhone Games. Retrieved 11 29, 2009, from Gigaom: http://gigaom.com/2009/03/16/how-to-make-money-from-iphone-games/ [...]

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  22. [...] 1. Au, W. J. (2009, 03 16). How To Make Money From iPhone Games. Retrieved 11 29, 2009, from Gigaom: http://gigaom.com/2009/03/16/how-to-make-money-from-iphone-games/ [...]

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  23. [...] media are generally entertainment-based rather than utility-based. What’s more, on the iPhone, one out of three apps is an entertainment app or a game. Let’s look at some specific similarities and differences. Read the full article » blog [...]

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  24. Saltmarch Media is organizing India Game Developer Summit Event in Bangalore. This Summit will be a boost for the Game Developing Industries. It covers the topics like Online Gaming, Gaming Business, Gaming Career, Audio in Gaming, Making money in Gaming, Mobile Gaming and Adobe Flash Platform and has 1 day workshop at the end as well. Any one attending this event?

    Register at gamedevelopersummit dot com

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  25. plz tell me how can i develop game for apple i-phone .what tool is required or these are freely availabel or what is the chargeg for it.plz tell me .plz help me

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    1. @bhavishya: Google is your friend dude

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  26. If I want to start creating apps for iPhone, what is the best source for this kind of information? I would like to find books about this topic.

    I found a site called Iphone apps money ( http://www.iphoneappsmoney.com ) which currently have some e-books listed..

    -Chris

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  27. here are a few related mobile game apps http://www.mimvigames.com

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  28. Nice summary on the iOS market. On the topic of “Keep Budgets Low By Sharing The Risk” we experimented with a model inspired by the movie industry. We call it the “Smorgasbord”-model, since the companies involved are all from northern Sweden. You can read a small article on the subject here: http://filmarc.net/?p=3768#more-3768

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    1. keento develop or sell an existibg iphone game to me?

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  29. Hi all,

    I strongly agree Wagner, and would like to share with all my first iPhone/iPod game I developed since a week it is available on App Stores.
    It is called “Oops! Its Raining”,
    and this is the App Stores URL:
    http://itunes.apple.com/ae/app/oops-its-raining/id406642278?mt=8#

    Thanks to all, if anyone played, kindly send me your feedback.

    Wish you a merry Christmas and happy new year.

    Regards,
    Ammar

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