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No free lunch for video gamers

I’ve always liked the video game industry, just not playing them because … oh look, there goes a bunny rabbit.

The market is basically broken down into three segments: Consoles, computer and mobile devices (phones).

Lump them together and sales (hardware/software/service) should produce about $90 billion in sales this year and climb to $120 billion by 2018, according to Jupiter Research.

That’s more than the media and entertainment industry.

Most of the console and computer revenue comes from actual purchases or monthly subscriptions to multiplayer games.

Since the smartphone began to seemingly dominate our every waking moment, you’d think that there would be a shift from sitting in front of the screen to the small screen where there is a dizzying array of paid, free, freemium options.

It hasn’t.

Some like to say it’s a way to keep their mind sharp. Others claim it’s a way to improve your eye/hand/mind coordination. Both have some degree of validity.

Except for the addictive personalities that are fed by the potential of the big win just behind the next click, it doesn’t really matter.

Games are harmless, right?

Well, as David Hannum said, “There’s a sucker born every minute.” We know you’re going to say P.T. Barnum said it but check Wikipedia … yep, a sucker was the first to say it!

While some groups like to say game violence is bad for young folks, it seems to be more of a problem with people who don’t play much or who are closet players.

Most of the games (91 percent, according to the Entertainment Software Association) are designed for teens and kids, but they appeal to all ages.

While game developers are increasingly focusing on cross-platform games that will let you play on your console at home, computer in the office and phone while you’re everywhere else, the fastest growing segment is the “free” games for your smartphone.

If he were still around today, economist Milt Friedman would say the games were proof that “There’s no such thing as a free lunch.”

And if you think Big Data scraping and programmatic ads are a problem, they take a back seat to the growth of free smartphone game downloading, play and pay.

In the U.S., mobile game revenues — download and in-app purchases — will rack up more than $4 billion this year and roughly $10 billion globally, according to eMarketer.

Google loves to talk about how many more Android-based phones are in use, even though Apple makes more profit with the iPhone.

So do the games on their platform.

According to NPD’s Checkout Tracking, the average iPhone user/player of Game of War spent $398, while Android cheapskates only spent $165.

Across all apps iPhone users spend $56.24, compared to Android users who dropped $52.78.

There are nice (I guess) innocent games like Candy Crush but everyone seems to like the adrenalin rush of gambling. In fact, game developers borrowed from the casino industry to categorize players so they better cater to them — whales, dolphins, minnows.

Unlike the casinos of Vegas and Macau, the gambling mobile games have better odds — for the developer.

You win digital credits and pay with real money.

Translation? Pure profit!

And if you’re worried about all those government agencies following your every text, Tweet and sordid site visits, know they’re pikers compared to the game developers.

Every time you log on to play, they start collecting data — a couple of hundred GB a day per player.

Sure, there’s the basic demographic data — male or female, age group — but heck, the National Security Agency can get that just by asking Google, Facebook, Yahoo and your service provider.

But game developers are so much better, more thorough.

They know where you live, your income, your relationships, favorite teams, political/religious/sexual preferences, when you go to work, where you work, how you like to spend your weekends … oh hell, everything.

You give it to them … willingly.

They use it wisely to help you improve your value to them as a whale.

And to boost their chart position and retain more users.

The more players they retain, the more they get to play longer/spend more, and the more valuable their games are to ad networks.

Sounds like a helluva business to be in, doesn’t it?

Well the people who do it are bigger gamblers (OK, entrepreneurs) than some of their whales.

At WWDC (WorldWide Developer Conference), Apple noted that they have about 1.5 million apps in their app store with more than 50 billion downloads and more than $5 billion paid to developers.

At Google I/O, they said they had 150,000 developers who delivered up more than 800,000 apps. Analysts estimate they also had about 48 billion downloads that earned developers maybe $1 billion.

Granted, they weren’t all games. Some companies put up apps to sell pizza, burgers, clothes, do business stuff but still …

OK, so you don’t have grand visions of having your game in App Annie’s Top 10 and you just want to make a comfortable living.

Well that’s tough — and getting tougher.

First, you have to develop an insanely great game and jump over all the security hurdles that Apple and Google put up to ensure you do no harm to them or their users.

Then you have to market the hell out of it because “if you build it, they will come” doesn’t work in the crowded marketplace where yours is one of tens of thousands of insanely great games.

Market Research firm SuperData noted it costs about four bucks, even when you put a free sign on it to get a user; and you have to keep that sucker (oops, gamer) at least two months before you get out of the red.

Most of the games are put on the smartphone, never played and then discarded for something newer, better, more exciting after 30 days.

Of course, you could scrape together a few bucks and get someone as endowed as well-known Kate Upton to do an ad for you that you can put on YouTube, Facebook or even the Super Bowl telecast.

Maybe it’s just better to make a good game that folks pay $1.99 to $499 for and be part of the mobile video game industry’s long tail that pays developers who are lucky $1,000 to $5,000 over the year.

Of course you still have to spend countless hours enhancing, enriching the game because even millennials and boomers quickly tire of the same old stuff.

Or, you can simply keep enjoying your smartphone games at home, on the road, in the office, in the classroom.

Seems like smartphone gaming is another case of playing against the house odds.

Andy Marken of Marken Communications in Santa Clara, Calif., writes on a host of cultural topics. Reach him at Andy@MarkenCom.com

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