O2 UK has been planning its new games platform for the last two years. Now its ready to deliver
Tell us about the new games platform…
It’s a brave new world for the O2 Games Arcade. We’ve got a new Materna-powered platform and have great aspirations for it. It’s part of a wider project we’re undertaking. We’ve got lots of different partners pumping content into the O2 Active portal, so we’re working towards a unified platform that they can all plug into. Games is the first category to use the Materna platform, but eventually it will power all our content verticals.
Why change now?
When O2 started offering games five years ago we had five games for ten handsets. Today we have 450 games for 250 handsets, so the old system could no longer cope. The other benefit of a unified platform is that you can cross-promote games with other kinds of relevant content. It’s what the rest of the world calls merchandising and it’s a really compelling value add for the customer. Merchandising also entices people who wouldn’t normally play games or watch movies. As an operator we mustn’t forget that at the end of day we’re a retailer, so we should make sure we act like one.
What kind of health is the mobile games market in right now?
We are at the first level of maturity, but there’s still a long way to go. The consumer wants value. For example, the overwhelming market is still for games that cost £5, but there’s now more scope for £2.50 and under for the pre-pay crowd. The sands are shifting and everyone needs to be smart when it comes to promotion – our new platform means for the first time we can try ‘two-for-one’ offers, subscriptions, ‘happy hour’ prices, WAP micro sites and so on.
And in terms of actual performance?
We’re 20-25 per cent up already on what we would expect at this time of year, which is great as June/July is traditionally a pretty slow period. The number of downloads continues to increase. UK games trade body ELSPA put the market at 1.3 million downloads across all operators in May – in May 2006 it was 900,000. In general terms, price points are coming down and volumes are increasing.
How do you manage publisher relationships?
The structure that some publishers have built means they can turn round a new game SKU in 24 hours. The down side is that it’s increasingly difficult for the smaller guys to keep up with the pace. For example, 18 publishers featured in the latest monthly ELSPA top 50 chart, but just seven of those companies accounted for 70 per cent of all the downloads.
We are no longer in a position where it’s viable to manage 25 direct relationships, so we’ve decided to focus our attentions on eight. It has to come down to which publishers are generating the bulk of our revenue.
So does that mean the door is now closed to anyone else?
Certainly not. We’ve got Player X managing the rest of the partnerships. There’s so much content for an operator to choose from – there’s just no way we can keep tabs on everything that’s coming out of the ‘tier two’ publishers or places like China and India. Player X handle the sales side of things and they also have the facilities to take care of all the QA and deployment.
And I should stress that on top of the eight specialist publishers we also maintain direct relationships with the media companies and film studios that produce games and other content.
How can publishers break into that ‘top eight’?
They will have to show they can both offer up the best content and be proactive when it comes to marketing. There are a few publishers out there that can piggyback console game marketing and of course we want to be involved with that. Guerilla campaigns around specific events work well too – we’re way beyond publishers offering a few competition prizes in return for placement at the top of the deck.
How do ad-funded games fit into the O2 plan?
There have been some interesting stats and my personal view is that games are probably two years away from surpassing ringtones in terms of revenue, so I don’t think giving them away makes sense right now. People will always download stuff just because it is free, but it doesn’t necessarily mean they’ll come back.
However, ads could potentially offer games an extended life cycle. For example, six months after launch we could make an ad-funded version of the game available at half price. I think the ad model should be geared towards subsidy rather than giveaways.
What role can communities play?
Mobile phones plus games should equal community and connected play, but it never quite works out that way. We are looking at it, but we want to get our retail platform right first and foremost. I think it’s now unlikely that any of the operators will make connected platforms themselves – we’re waiting on others to come and show us a compelling solution. We’d be more than happy for a publisher to come in and run its own services.
I think Nokia is doing interesting things with the community aspect of the new N-Gage platform and we certainly won’t be protectionist about allowing them to offer those services to O2 customers. We are definitely talking to Nokia about what possibilities are out there. There’s no reason why there couldn’t be an N-Gage channel on O2 Active, for example.
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