There are over 350,000 apps in the Apple’s iTunes App store alone. No wonder it’s tough for developers to standout. What’s even tougher? Trying to build a scalable business based on the apps – be it for iOS, Android, Blackberry or all of those platforms. Neil Young, co-founder and CEO of ngmoco, a mobile gaming company, knows it all too well.
Earlier this week, in my email newsletter Om Says, I shared Young’s story about how he changed his company’s business model: a decision that not only saved his company, but also ended up getting it acquired by Japan’s DeNA for $403 million.
In a wide-ranging video interview, he shared some of his thoughts about the gaming industry and mobile app platforms (and business) with me, which I believe are incredibly useful for anyone building apps and app-based businesses. First, though, let me give you context as to why you should listen to him (and why I have a lot of respect for what he has to say).
The first time I came across Neil was about seven years ago. Then a senior executive at Electronics Arts, he gave a talk about the future of games titled, “Can a game make you cry?” He argued we were entering the phase where games would be nearly movie-like. It was a powerful presentation, impressive enough for me to stay in touch and follow Young’s career.
About three years ago, he decided he was going to leave EA and start ngmoco, a mobile game company. The company raised tons of money from the likes of Kleiner Perkins Caufield and Byers. It rode the iPhone wave, and last year, it sold out to Japan’s DeNA for $403 million.
Young started the company building premium games. He raised millions of dollars from top venture capitalists. Apple promoted his apps inside the app store. Along the way, he learned some vital lessons and formed opinions I think would (and should) come in handy for a lot of entrepreneurs, especially those in the business of developing apps.
“Opportunity is here to build a new kind of entertainment company, thanks to the disruption in media, social and mobile,” says Young. “iOS and Android are the platform for the future of media and entertainment. “ Still, he bemoans the fact that not a lot of apps are not taking full advantage of the technological capabilities of the iPhone and the iPad platforms.
He doesn’t believe you can start an app company based on the iPhone, though does think it’s time to start a tablet-oriented company built on the premise of creating awesome tablet experiences. He pointed out that on the mobile platform, the “opportunities are for companies that connect customers together and maintain relationships with those customers for a long time.”
Lesson #1: Hits Aren’t a Sure Thing
- You can’t build a company of consequence inside the app store, because it’s a hits-driven business, and the half-life of a game is pretty short.
- The company would have to have two games appear in the top five paid games on the iPhone store every day for 365 days for the company to build a $10-million-a-year business.
- There are thousands of apps in the app marketplace/store. The likelihood that your app is going to break out from the pack without significant support is pretty low.
Lessons #2: Awesome Products Engage Customers & Bring Profits
- Don’t build products for fleeting moments. Instead, focus on building products that build on a relationship with the customer. The longer the relationship, longer you have a chance to monetize that relationship.
- Snoop Dog tells his son that everyone is good at something. Be great. That’s particularly true in the app market. There are a lot of good apps; build something great.
Lesson #3: Great Experiences, not Whiz Bang Technology Are What Matters
- You have to look at games (and apps) through the eyes of the users and look at how you are delighting the customers.
- Great games are those with fun game mechanics, and they always win over games with the greatest/most-cutting-edge technology.
These lessons are only a distillation of what I believe is a knowledge-laced interview with Neil.
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