Nintendo reported a loss for its first fiscal quarter, which ended June 30, as the Japanese company saw its Wii game sales wither.
Kyoto, Japan-based Nintendo said it had a loss of 25.2 billion yen, or $287 million, compared to a profit of 42.3 billikon yen a year earlier. Revenues were 188.6 billion yen, down 25.6 percent from 253.5 billion yen a year earlier.
The company saw sales of Wii console sales increase, but it said that Wii software as well as Nintendo DS hardware and software sales fell. In addition, the rise in value of the Japanese yen compared to a year ago had a big negative impact on net sales. Nintendo also had foreign exchange losses of 70.5 billion yen, caused by the strength of the yen. Nintendo has a lot of its assets in non-Japanese currencies.
Nintendo said it has sold 73.97 million Wii consoles worldwide, 573 million Wii games, 132 million Nintendo DS handheld game systems, and 740.9 million DS games. The company left its forecast for the fiscal year unchanged. It anticipates selling 18 million more Wii consoles by March 31, 2011, 165 million more Wii games, 30 million new DS hardware units, and 150 million more DS games.
http://venturebeat.com/2010/07/29/nintendo-reports-a-quarterly-loss-as-the-wii-sales-tumble/
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Rumors have surfaced that Disney is in the process of negotiating to buy social game company Playdom for more than $600 million.
Techcrunch reported tonight that it had heard from six or seven sources that a deal was in the works. We also heard the rumor from a credible source earlier today and sent messages this afternoon to Disney and Playdom. Disney did not comment, and John Pleasants, chief executive of Playdom, said in an email only that it was the “rumor of the week.” I interviewed Pleasants two days ago at the Casual Connect game conference in Seattle, and he gave no hint that an acquisition deal was in the works.
Rather, Pleasants said he was on an acquisition spree himself, with Playdom acquiring seven developers in as many months, because the social game industry feels like “the early days of iTunes, the birth of the Nintendo Wii, or the dawn of web-based email. The drivers of social gaming’s rapid growth are the addition of friend-based social play, the launch of web-based games that are more like services than products, and the lucrative free-to-play model, where gamers try a game for free and pay real money for virtual goods as they proceed through the game.
If the deal comes to fruition, it would kick the already-overheating social game market into high gear. Disney has made its multi-year ambition to become a powerhouse in gaming well known. It has acquired a number of game companies over the year, including the iPhone game company Tapulous for $35 million or so last month.
But Playdom is probably the hottest property in town. Zynga, the largest social game publisher with 211 million monthly active users, is likely to hold out until it can do an initial public offering. Electronic Arts acquired the No. 2 company, Playfish, for as much as $400 million in October. That leaves the third-largest player (and the No. 1 social game company on MySpace), Playdom, with 41 million players on Facebook, as the largest available property.
Tim Chang (pictured above) a principal at Norwest Venture Partners, is an investor in Playdom. He declined to comment on the rumor. But he said in a presentation this morning at Casual Connect that a number of companies are watching the growth of the social game industry, and they want in. The parties with lots of cash to invest come from all corners of the earth. They include Russia’s Digital Sky Technologies; China’s Tencent, Shanda Games, and other publicly traded online game companies; Japan’s Softbank; cable TV company Comcast; NBC Universal; and News Corp. The latter was reportedly one of the bidders for the much smaller Tapulous.
Companies such as Zynga have shown a tremendous ability to generate profits, even with 1,000 or so employees. Playdom, at 600 employees, has produced hit games such as Social City, which has more than 9 million monthly active users. The company is certainly enjoying good times; for the second year in a row, it threw an overcrowded party at Casual Connect, where I snapped this picture of a happy Pleasants with his colleagues.
But there are clouds on the horizon. One of the themes at this year’s Casual Connect was the post-viral era of Facebook games. After Facebook cut its viral channels to reduce spam for non-game users, traffic for many of the games on Facebook has gone downhill. That has forced many companies to advertise their games more heavily, putting profits into the pockets of Facebook but driving up costs for the publishers. If the growth continues to stall, then it might make sense for some of the companies, such as Playdom, to sell while they’re at their peaks.
That may be why Playdom might be thinking about taking the money and running. On the other hand, if there really is a gold rush going on, it might be foolish for Playdom to sell out at such an early point in the social gaming era. Playdom has raised a total of $76 million to date from Bessemer Venture Partners, Disney’s Steamboat Ventures, and New World Ventures. Pleasants said he believes that brands will come into the market for social games; his own company has a deal with ESPN, which happens to be owned by Disney.
http://games.venturebeat.com/2010/07/22/is-disney-ready-to-buy-social-game-company-playdom-for-more-than-600m/
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SGN today launched its first game where players with Android phones can engage in multiplayer competition with players using iPhones.
The Skies of Glory flight combat game launched last fall on the iPhone, and its Android version is launching today. Players can connect via Wi-Fi and other wireless modes and play each other in multiplayer dogfights. Such live cross-platform play hasn’t been possible before, but the Palo Alto, Calif.-based company did the necessary work to make it happen.
You can form a team of Apple pilots to fight against Android users or have players on different platforms fight on the same side. The Android version requires players to have version 2.0 or higher of the Google mobile operating system. Such phones include the EVO, NexusOne and Droid. The Android version was developed in collaboration with Revo Solutions Games, which developed the original iPhone game.
Randy Breen, chief executive of SGN, said in the mobile games panel this week at VentureBeat’s MobileBeat 2010 that cross-platform games will help broaden the audience for mobile games over time. It’s more convenient for friends to be able to play each other across any platform, since the odds of friends having the same phone are relatively low.
“Mobile phones are unquestionably the gaming platform of the future. Smartphones are becoming accessible to all, and we are really excited to offer a true multi-platform, multiplayer social mobile gaming experience through ‘Skies of Glory,” Breen said. “As more and more people connect with family and friends through gaming, we continue to facilitate that connection regardless of users’ device or platform preferences.”
SGN and Revo Solutions created an open multiplayer platform framework to support a variety of platforms with a range of wireless connectivity, from EDGE to 3G and Wi-Fi. SGN has had more than 18 million downloads of its iPhone and iPod Touch games. It remains to be seen whether Apple itself will be a fan of cross-platform play.
http://games.venturebeat.com/2010/07/15/sgn-launches-skies-of-glory-as-the-first-cross-platform-android-iphone-game/
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Purchase of virtual goods are starting to take off on the iPhone and game startups are starting to prosper from the added revenue, according to data from mobile analytics firm Flurry. For game developers, that means that the iPhone is finally living up to its potential as a revenue generator for third-party app creators.
Apple turned on the in-app purchase feature for the iPhone last fall. That enabled game developers to embrace the same “free to play” business model that has made companies such as Zynga so successful on Facebook. In that model, companies offer their games for free, but they charge real money for virtual goods such as better weapons or online multiplayer play. The in-app purchase feature allows gamers to purchase their goods without leaving their games at all.
The results are surprisingly good. In January, Flurry said that the games that it tracked generated revenue of $9 per user per year, on average. In June, that number had risen to $14.66 per user per year. Previously, these games were generating around 99 cents to $1.99 per user per year. The data was measured across 21 iPhone game makers. The in-app purchase numbers are really high. They may reflect the fact that the people purchasing the iPhone now are early adopters and are likely to spend much more money than most users. Over time, the number might naturally go down; but for now, it is rising as the number of iPhones in the market increases.
The virtual goods revenue does not include revenue from ads, which is expected to increase as Apple activates its iAds advertising feature for the fourth version of the iPhone operating system, dubbed iOS. Users are now getting used to the new business model, which is like putting quarters into arcade machines.
“The free-to-play business is starting to emerge,” said Simon Khalef, chief executive of Flurry. “There are not a lot of companies that have broken the code for making money on the iPhone. “We never saw anyone crack the code for a real business model. Now it’s a geiser of money. You can build companies around this business model.”
Given all of this progress, the issues related to the iPhone 4 couldn’t be happening at a worse time. If Apple is forced to recall the product, the platform could lose momentum, allowing others to catch up a little, and that will hurt the entire app community. But if Apple gets past this problem, the developers could breathe a sigh of relief.
Simon Jeffery, chief publishing officer at Ngmoco (pictured, third from left), spoke on the mobile games panel at our MobileBeat 2010 conference this week. He confirmed that his company has prospered ever since it switched to free-to-play games. San Francisco-based Ngmoco does not disclose its revenues as a private company. But its fortunes looked so good that it managed to raise $25 million from Kleiner Perkins Caufield & Byers, Norwest Venture Parters and Maples Investments in February.
Randy Breen, chief executive of SGN (pictured, second from left), an iPhone game maker in Palo Alto, Calif., echoed Jeffery’s comments, saying his company has made more money from free-to-play transactions for its F.A.S.T. flight simulator game than it did by selling the app outright.
“We’re running the game as a service and making more money that way,” Breen said.
Back when selling an iPhone app was the only option to make money, SGN’s move away from Facebook to the iPhone was viewed as a bad strategy, at least compared to Zynga’s decision to focus on Facebook games. But now, with 4 billion apps sold and an estimated 100 million iOS devices sold, and now with virtual goods models taking off on the iPhone, SGN’s bet isn’t looking so silly.
Apps that are sold for a flat fee of 99 cents to $4.99 don’t have much ability to generate ongoing sales. They tend to rise to the top of the App Store and then get buried among the 41,000 games available there. Advertising costs anywhere from 75 cents to $2 per user, but that doesn’t work if the revenues per user are so small, Khalef said.
With the higher per user revenue figures, more developers are creating sustainable businesses just as Playdom, Zynga and EA Playfish are on Facebook. On Facebook, companies are generating around $2.50 per user per year, but the raw numbers are so large that the revenues are as well. Khalef and others who attended our conference that the Android app business isn’t generating the same kind of revenue; over time, if Google fixes problems such as a high-friction Android Market and adds in-app purchases, Android developers could see the same kind of revenues, Khalef said.
Our panelists argued that the big advantage of Facebook — its social nature and the ability for apps and games to spread naturally through a network of friends — is going to happen on the iPhone and other mobile phones. Through the aid of social platforms such as Aurora Feint and Apple’s upcoming Game Center, games will spread through friend recommendations, not just by looking at the top 100 charts in the App Store, Breen said. That will allow a game to spread not only to game players, but to non-gamers as well.
Niccolo de Masi, chief executive of Glu Mobile (pictured, far right), said that his company is shifting more resources to smart phones as well. About 9 percent of his company’s revenues are from smartphones now, with the rest coming from feature phones.
Jen Herman, (pictured, at left), director of FarmVille Mobile at Zynga, said that her company returned to the iPhone game market after a hiatus of about a year because its users on Facebook were on the device and the potential is very interesting on mobile, given the fact that consumers have the device with them all of the time.
She said that virtual goods purchases are good and the company is pleased with the growth of FarmVille on the iPhone. On the iPhone, the company’s six games have more than 5 million monthly active users. She said that revenue per user went up dramatically when the company shifted to in-app purchases on the iPhone.
“We are diving in deeper into the iPhone and other mobile platforms going forward,” Herman said.
At some point, if the mobile game platform owners allow it, cross-platform mobile games will boost the market even further, Breen said. De Masi said he was skeptical that companies such as Google and Apple will cooperate on allowing cross-platform game play, but at least it will become easier for developers to make cross-platform games as most phones become smartphones.
http://venturebeat.com/2010/07/15/free-to-play-business-model-starting-to-generate-a-geiser-of-money-for-iphone-game-makers/
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After much delay, Nvidia launched its high-end graphics chip, code-named Fermi, this spring. But a new generation of Fermi has arrived just in time for back-to-school season.
A no frills version of Fermi, formally named GeForce GTX 460, debuts today as a high-performance graphics chip for price-conscious gamers. The GTX 460 targets graphics cards that sell for $199 to $229, which puts them in the sweet spot for gamers. In the parlance of gaming, the original Fermi, the GeForce GTX 480, was like a combat tank, while the 460 is more like a “hunter,” said Justin Walker, product manager at Nvidia.
“People drool over the newest graphics chips, but we realize not everyone can afford it,” Walker said.
The GTX 460 will go up against mid-range chips from Advanced Micro Devices. Nvidia claims these chips are four times more powerful on some measures, such as tesselation, than AMD’s equivalent Radeon graphics chips. The Nvidia 460 chips are powerful in part because they’re made with the same 40-nanometer manufacturing process that Nvidia’s contract manufacturer, Taiwan Semiconductor Manufacturing Co., uses to make the 480 chips.
This new introduction is part of Nvidia’s typical technology waterfall. It takes its high-end design and launches it at a high price for the most fanatical gamers. Then, as it becomes easier to manufacture such chips in volume, it comes up with stripped down models until it eventually covers every bracket of the market. Right now, the 480 chip priced above $199 can only hit about 14 percent of the market. But at $199, Nvidia can address another 31 percent of the market. Once it targets $99 and below, it can blanket the market.
Nvidia designed the chips to handle Microsoft’s latest graphics technology, DirectX 11. Games such as Mafia II, coming in August from Take-Two Interactive, use DirectX 11 to deliver cool effects such as trench coats that flow when a mobster wearing them is running down a street. A bunch of other PC games coming this year, from Civilization V to Kings and Castles will also look better when they exploit DirectX 11.
Graphics boards using Nvidia’s chips and 768 megabytes of video memory are available today for $199 from a bunch of manufacturers. The 1-gigabyte version of the graphics cards at $229 will be available on July 26. PC makers such as Dell’s Alienware division will ship computers with the new Nvidia chips. The 460 chips have 336 cores, or processing brains, for CUDA tasks, or non-graphics, compared to 40 in the 480. It also runs on 160 watts of power, rather than 250 for the 480. One result is the 460 can be part of a very quiet PC.
http://games.venturebeat.com/2010/07/11/nvidia-goes-for-price-sensitive-gamers-with-powerful-new-graphics-chips/
When you’re taking on a billionaire, you have to bulk up. That’s what Titan Gaming is doing as it readies to challenge Virgin Gaming, the recently announced affiliate of Richard Branson’s Virgin Group. Titan is forming new partnerships and adding video game veterans to its board and management team to build itself a stronger position. The Los Angeles-based company is one of a number of companies competing in the online video game tournaments market.
John Maffei, chief executive of Titan Gaming, said in an interview that he has added game industry veterans Keith McCurdy and Brock Pierce as board members and appointed other veterans David Christensen and Michael Steuer to the management team. Last month, the company also announced it had raised $1 million in angel funding and lined up strategic distribution deals with ZAM Network and Quepasa. Both are social networks that will use Titan Gaming’s technology to offer cash or prized-based game tournaments.
While Virgin Gaming has begun staging its own video game tournaments for consumers, Titan Gaming is a business-to-business company, partnering with video game publishers and others who want to stage game tournaments on their own sites. Maffei believes that Branson’s entry into the space — as heralded by Branson’s own appearance at a press conference during the E3 video game trade show two weeks ago — validates the market for online tournament gaming. But Maffei believes that game publishers would prefer to operate their own sites rather than make games available to Branson’s Virgin Gaming.
McCurdy was formerly head of Electronic Arts’ online game division and a vice president of technology at game company EA. Pierce was the founder of Affinity Media, formerly IGE, a virtual currency business. Christensen is a 12-year game executive who ran international business development for Sony Online Entertainment and a former Affinity Media executive. Steuer will be vice president of product development and was previously vice president of games at Twistbox, which made skill-based mobile games.
The competition among these startups will be interesting. Virgin Gaming is betting on the larger Virgin Group brand to get gamers to come to its site to play online tournaments for cash and prizes. But Maffei is going to companies such as Quepasa, a big social network with 14 million followers in South America and other places, to provide them with the ability to host their own game tournaments. Titan Gaming has technology to match players of comparable skills. In places where it’s legal (it is not legal in 12 U.S. states), players can duel each other for money. Titan supplies features such as leaderboards and points competitions.
The first partner will go live with a site in July, while ZAM Network, a site for fans of massively multiplayer online games, will go live in the fourth quarter. ZAM has more than 11 million unique monthly visitors and Maffei formerly ran it. Game developers could potentially reach a network of 25 million gamers by the time those launches happen. Maffei said his platform will support all sorts of game titles: hardcore and casual, console and PC games.
“We think the next hot model is competitive video games,” Maffei said.
Of course, competitive video games have been around for a while. Major League Gaming is one of the survivors of the many startups that tried to get gamers to engage in tournaments. MLG focuses on hardcore superstars and tournaments for them, but both Titan Gaming and Virgin Gaming are focused on the larger masses of less-skilled gamers.
Maffei believes that his company can make a lot of money much the same way online poker companies have done so, taking a cut of the game stake no matter who wins.
Titan was founded in 2006 and has 30 employees. Titan’s game providers include Wicked Interactive, Digital Bee, Goods Pants, and Mode 7 Games. Most of these are relatively unknown indie game developers. Besides Virgin Gaming, rivals include King.com, BringIt and WorldWinner. Titan has raised $1.3 million altogether from investors including West Coast Angels.
http://games.venturebeat.com/2010/07/06/titan-gaming-takes-on-billionaire-richard-branson-in-video-game-tournaments/
Helios Interactive doesn’t have the greatest pedigree for success in video games. Its parent company, Mehta Group, is a multibillion-dollar transportation company.
But Helios is making an interesting play to capture the hearts of game developers with its GameCore development platform, which can be used to create cross-platform games with cool 3D graphics. A couple of weeks ago, Helios said it would give away the platform for free to independent game developers.
Helios is also using GameCore to create MetaJets 3D (pictured at top), a cross-platform game based on the MetaJets animated TV show. The show launches on the Cartoon Network cable channel over the July 4 weekend with a five-hour marathon. And the company is also in the midst of making Truck Off (yes, appropriate for a transportation company), a 3D monster truck racing game with multiplayer play. As you can tell from the images, games created with GameCore look pretty good.
On top of that, MetaJets 3D players will be able to play head-to-head in instantaneous action regardless of whether the different players are using PCs, Macs, devices with web browsers, or Facebook. Helios can do this because GameCore enables cloud-based game play, where game data is in central servers and the player’s own machine is really just a portal for logging into the game.
Not bad for a transportation company. But Mehta began its diversification into technology ventures 12 years ago. Ravé Mehta, chief executive of Helios Interactive (pictured right), said the game business is a long-term investment for diversification into the information age. The game-building technology has been in the works for seven years, but Mehta acquired the group in early 2008 and turned it into Helios. The collective investment to date has been more than $11 million.
“We can extend our platform to on-the-go gaming, where you start at home and you continue playing on a mobile device,” Mehta said.
More than 10,000 developers are using the GameCore platform now. But GameCore faces big competition from five-year-old Unity, which makes an engine to create 3D games that run in web browsers. GameCore is trying to match Unity by providing a full solution and seeding free copies among emerging game makers. Another rival is Epic Games’ Unreal technology, but that has been used primarily for big budget PC and console games. Helios’ premium version sells for $1,500.
Mehta says the company will add support for iPad and iPhone games soon (as soon as Apple lifts restrictions on allowing such adaptations). Mehta said it took four employees just three weeks to make the Truck Off game, which is still in beta testing.
One cool feature is that more than one game developer can modify assets in a particular game level at the same time. It also lets game developers visualize prototype sections of a game early and create their own user interfaces for a game. Mehta claims that the company’s more efficient tools can save 30 percent of game development time compared to other more antiquated systems. It also supports “socializing” games with Facebook integration, multiplayer matchmaking, and other social features.
The company is betting that Web-based games, which have heretofore been simple two-dimensional games, are shifting toward visually arresting 3D graphics. With tools such as GameCore and Unity, developers are proving that it is possible to create console-like graphics on web-based platforms.
While the Mehta Group is a huge 30-year-old multinational transportation company, Helios itself has just eight employees. GameCore is currently in version 2.5 and it has been out for the past nine months. Mehta is trying to get game development schools to adopt it for training students.
Mehta previously served at Modis Technologies, a virtual reality software company that created military simulations. That company was sold in 2000. He says a bunch more games are in the works. As for the competition, Mehta says, “It’s an uphill battle, but the battles are always changing.”
http://games.venturebeat.com/2010/07/01/helios-interactive-snares-indie-game-developers-with-cross-platform-gamecore-tools/
Facebook can be a daunting place for many small businesses. While they dream of reaching some of the social network’s more than 450 million users, they don’t always have the time or money. Enter a new Facebook application, FavRav, that aims to help local businesses tap current customers to create positive recommendations for their Facebook friends and drive business.
The company’s service sounds pretty simple. A business can create a FavRav profile, send an email to their current customers and ask them to recommend the business to their friends. Ideally, customers would agree and write up a glowing review which would then be automatically posted to the users Facebook wall as well as other social networks, including LinkedIn and Twitter. Promotions can be attached to updates as well to help drive friends interest. The company claims a 3-5 percent clickthrough rate.
The price, at $29 a month, seems attractive to small businesses. Other means of driving business leads, such as SEO or banner ads, can cost several hundred dollars a month with much lower clickthrough rates.
While one might think review giants like Yelp or CitySearch might be direct competition, cofounder Bill Manos argues that FavRav is different:
“If you’re looking for a recommendation on a great ‘date night’ restaurant or local bar, you can use the other myriad of referral/recommendation sites like Yelp or Citysearch. We’re really the place people come when you need a trusted referral from friends on important decisions like your first child’s pediatrician, a realtor for your next home purchase or an insurance agent to help you protect your family.”
Redbeacon, a company that helps you find local service providers, also lets Facebook users tap their friends through updates to gain perspective on local businesses and their services.
The Westlake Village, Calif.-based company, founded in 2009, is privately funded and claims to have over 30 businesses using the service currently.
http://social.venturebeat.com/2010/06/28/favrav-facebook/
Zynga is the biggest success story to come out of the new wave of social game companies, bu it has been curiously absent from one of the hottest new game platforms — the iPhone. That’s changing today with chief executive Mark Pincus‘ announcement that Zynga is releasing FarmVille for iPhone.
FarmVille is Zynga’s biggest hit, with Pincus reporting that it has more than 70 million monthly active users. The main platform until now has been Facebook, but Pincus said, “With FarmVille on the iPhone, you can farm anytime, anywhere.”
The San Francisco company has released iPhone games before, but none appeared to take off the way Zynga’s products did on Facebook. So this marks Zynga’s return to the platform, and in a big way with its flagship game. It comes as the company is allying with SoftBank for expansion in Japan, and as it eyes an initial public offering. If the new game takes off, it should make Zynga less dependent on Facebook.
One question is whether virtual goods purchases on FarmVille for iPhone will be as lucrative as they have been on Facebook. Pincus said players will be able to buy items that are unique to the iPhone, such as a snow leopard. The game will also take advantage of the iPhone’s push notification feature, so players get alerts when their crops are dying.
Zynga plans to release FarmVille on the iPhone later this month.
http://mobile.venturebeat.com/2010/06/07/zynga-farmville-iphone/
Fueled by revenue from its popular Facebook games, Zynga continued its acquisition spree by buying Austin, Texas-based Challenge Games.
Zynga will turn the Challenge Games office into Zynga Austin, adding to locations such as its San Francisco headquarters, Baltimore, Los Angeles, Bangalore, and Beijing. The move suggests Zynga is increasingly modeling itself after larger rivals like EA and Activision Blizzard, which have studios scattered across the United States and the world. Terms were not disclosed.
“Austin is an ideal location to extend our studio operations with its rich talent in the games business,” said Mike Verdu, senior vice president of games at Zynga. “We look forward to building out our Zynga Austin studio with the best and brightest in the industry as we continue to bring social games to more users worldwide.”
Challenge Games’ chief executve Andrew Busey will become Zynga’s general manager and vice president of the Austin studio. The Challenge Games team of 35 employees will be immediately integrated into Zynga’s workforce.
Challenge Games, backed by Sequoia Capital and Globespan Capital Partners, launched in 2007. It has built Web-based games such as Warstorm and Ponzi on a virtual-goods business model, where players buy digital trinkets to advance in the game. Challenge raised $14.5 million in venture funding in two rounds. It focused on games that can be played in a “quick fix” round of about 15 minutes or so.
Zynga has nearly 900 employees now and is in a race with rivals to snap up the best game talent. On May 20, Zynga bought XPD Media, a 40-employee game studio in China.
http://games.venturebeat.com/2010/06/03/zynga-buys-challenge-games-as-part-of-ongoing-social-game-expansion/
