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Secret Knowledge from the Future

August 13, 2012 Article Start Previous Page 3 of 3

You mentioned that you consider yourselves the number one mobile social network, but there's some debate about it.

NY: Yeah.

Can you go into it?

NY: Well, I think the debate would just be, there are other companies out there that would say the same thing. And the question is just really, what are you measuring on? Are you measuring on global gross revenues? Are you measuring on market cap? Are you measuring on profit? Are you measuring on installs? Are you measuring on registered users?

I kind of put that up there [during the presentation] because we believe that. We believe that we are that. But we try to avoid the debate, for the most part, honestly. Because it's just at the end of the day, what really matters is we're trying to build a really, really big business, and try to help build a really big industry, and I'm sure that there's room for a few companies in that mix.

You say you avoid the debate. But what do you measure it by?

NY: So what I care about is, I care about registered users. I care about active users. I care about the percentage of those users that are actually paying money. I care very much about how we're doing in the top grossing charts. You know, I'm not really interested in doing a press release if we get into the top 10 downloads, because I know that that's not really a measure or mark of success. And those are the things I care about.

I feel good about where we are, and we haven't crossed any finish lines. We're not, "Yay, we're the winners!" And we've got a long, long way in front of us, but I do feel good about the progress that we're making.

When you say you want to be the best platform for developers and players, are those two goals one and the same? Are they intrinsically tied?

NY: No I think they're really different. They are connected, but I think they're very different. So DeNA, and actually Ngmoco before DeNA, has a set of values that are core to everything we try to do, and the number one value is delight. And it sounds very soft, right? "Oh, we want to delight our customers."

I don't know. That's Nintendo's goal, and I'm pretty okay with that.

NY: So what "delight" actually means when you break it down, for us, to delight your customers means to exceed their expectations, and to exceed their expectations you have to, one, understand who your customer is, and two, you have to understand what their expectations are. And if you think about the expectations of a developer, and how you exceed those expectations, and the expectations of an end user, a player, and how you exceed those expectations, they are two very different activities.

And so, for end users, for the most part it's really about giving them really great games. Games that they love, and that they really want. And a way to find other games easily, or play with other people easily, and the things not to get in their way too much, and to not annoy them too much -- to enable them to do things that they want to do easily, and effectively, and quickly, in a way where the platform actually respects them.

And for developers, they want a platform that makes their life easier in terms of actually delivering the software, or developing the software, or getting it in the hands of customers. And from a business standpoint, what they really need is, they need audience and they need monetization. And if you can give them access to audience at more scale for less cost, that's a thumbs up, and if those customers that they have access to monetize more effectively then another audience, then that's a thumbs up. So we would like for developers to have two thumbs up on our platform all the time. We could continue to work and improve on trying to do that.

When you talked, if I understood correctly, you will help with marketing on games made by external developers.

NY: Yeah.

How do you look at that?

NY: What we really look at is, we look at is lifetime value. It's actually very easy to establish and understand the lifetime value of a customer in a game, and then, the lifetime value of a customer in our platform, and the basic math of any free-to-play business is, you want to acquire customers for less than the lifetime value.

So for those games that have metrics that are in that realm, or close to that realm, we first help by, one, getting them to that realm -- if they're on the bubble, helping them get to next level. And once they're in that realm, then we work them to see well what marketing dollars, or what traffic can we deploy to help them really turn their business into something really big.

And so that's really how we look at it. Thee thought process is, very simply, "Let's partner with developers, build games that have a really high lifetime value, and then be willing to deploy lots of money marketing, if necessary."

Do you think about someone who has a really cool game? Is it really, like you say, a value proposition, or do you want to also just think about cool game ideas? There's always that sort of thing with free-to-play, where you wonder where on the spectrum these things fall.

NY: Well, we want both, right? So we want cool games, and we really believe that the industry's moving to, has moved to, will move to predominately a free-to-play business. And so we have to help developers make their transition where appropriate.

We don't always want just the highest monetizing games on the platform. We just want really good games, as gamers. But we're not really delighting anyone -- we're not delighting both our constituents -- if we just have great games that don't actually help the business interests of the developer.

Article Start Previous Page 3 of 3

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