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Secret Knowledge from the Future

August 13, 2012 Article Start Page 1 of 3 Next

When Neil Young looks at the mobile market in the U.S., he sees the past -- Japan's past. The U.S. has had an explosion in adoption of free-to-play mobile games, and it coincided, he argues, with milestones in the adoption of 3G internet-enabled handsets -- things that happened much sooner in Japan than in the U.S. So he uses it as a yardstick of what to expect in the West.

In fact, it's what led him to sell the San Francisco-based company he co-founded, Ngmoco, to Tokyo's DeNA, one of the leaders of the space in Japan. It's like getting "secret knowledge from the future," he argues.

Right now, Ngmoco and DeNA's Rage of Bahamut is the top grossing app on the U.S. Google Play and iOS charts simultaneously. It's a runaway success for the company. And, according to Young, it grosses more than it did when it first got to number one -- something of a game changer, he argues.

Here, Young talks about identifying successes, his $30 billion view of the future of the space, how he hopes to delight both players and developers, why consoles are going to be disrupted by mobile platforms and why he thinks that Mobage, the Ngmoco game service, is number one in the world -- despite what some of his competitors might say.

When we spoke last year at GDC, and you were outlining the roadmap for Mobage, it hadn't launched at that point. But you talked about it as a network, and you'd have channels, and it would bring that metaphor to players. I was wondering if that's still how you look at it, and if you really feel like now that it's launched that's accurate.

NY: No. I think one thing that's evolved for us is putting the games more at the forefront. I think when we spoke, our thought was, "Let's start with a consumer destination, and we'll use that as the launching point to introduce these games."

And what we found very quickly is actually, the most important thing is to almost silently and quietly, in the background, connect customers with games -- whether they're existing customers, or whether they're new customers.

Find mechanisms to kind of connect people together, and make sure that the first order of business is delivering successful games that are connected together by the network, and that help create a healthy ecosystem for the developers. And then, over time, introduce as many consumer features as makes sense.

Mobage is embedded in every one of these products, and you can certainly bring up the service, find friends, post messages, find other games that you might like. But we really try to focus on the games first.

In your presentation, you mentioned again the similarities between Japan in the recent past and America now. What are the similarities? You've talked in the past about things like 3G penetration. Are you finding these are panning out as time goes on?

NY: Yes. We really are. That was a hypothesis that we had when we essentially agreed to be acquired by DeNA. That was the underlying thought for us. We looked at the trajectory of the business as a free–to–play business in mobile games and we said, "You know, there has to be something bigger here."

The scale of the business that we could project, it just capped out. And when we just thought about being a free–to–play company exclusively, we looked around the world and we said, "Okay, what's going on in Europe, what's going on in China, what's going on in Korea, what's going on in Japan?" And what we found in Japan was an ecosystem that felt really similar to the ecosystem we were operating in, but was four or five years more advanced.

And when you kind of dialed back time, and you got to the root of the things that actually created that ecosystem in Japan, we were able to quite easily map it. And that's actually what motivated a lot of our conversations with DeNA initially -- it was kind of this shared vision that there was this tremendous opportunity there, and this big market that would actually end up getting redefined.

And you know, I think we often look at our industry as static, and we sort of assume that everything is kind of incremental, but that's really not the case when you're going through rapid and dynamic change.

An example of that would be, when we released Rage of Bahamut on Android, it got quite quickly to the number one grossing game. Like 16 weeks ago, it hit number one grossing. But where it is today, versus where it was there in those 16 weeks, the daily revenue is more than 2X where it was when we first became number one.

So those chart positions are fungible, you know? They are not static. And we look at, "Oh, number one grossing equals this number of dollars, therefore the whole market is this size." But actually if you do something different, or you do something better, you can change those definitions. And that's something that we've been really encouraged by -- that we're able to kind of take this "secret knowledge from the future" and actually make it work here in the West.

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