iPhone Games Market: Promised Land or Cesspit?

While at TGS, I had a lot of hallway & dinner conversations about iPhone games, with people weighing in on whether the iPhone Appstore was the promised land (a la XBLA circa 2005) or whether it was going to rapidly turn into something less than that.

Some thougts on the subject:

• The fact that the Appstore was not part of the initial design of iTunes is apparent. There are some fundamental features you would want to enable here that are lacking. Most significant of these is a "Try'n'Buy" mode which right now developers are implementing by shipping two versions of their games, which is a broken experience. Other examples include couponing, gifting, friend invites, discounting, retail point-of-sale cards, on-deck pre-installs, etc. (some of these, like gifting and friend invites, are going to become especially important when you look at the marketing challenges which I discuss below)
• Two different people involved in the business of iPhone games told me that "Try'n'Buy models actually often result in people NOT buying the games". This may be true, but the opposite means that the customer has made a purchase he/she will regret, and will be more reluctant next time. If it's good product, let them see it and try it. Fooling them into buying it is a loser strategy.
• The "open" policy of letting developers put anything up on the store (vs, say, XBLA's approval process) is good for a number of reasons, but it has implications:

The store is CROWDED. Even more than XBLA, the responsibility of getting your app noticed falls on the developer. Crossing your fingers and hoping to make the "featured" page or the "top 25"page is not a strategy.

The quality level is highly variable, and the long-term effects this is going to have on the customer impression of the store is TBD. My guess is that over time, there's going to be negative perception for this reason, and Apple's going to start reeling it in (either by pushing low-quality titles to the 'back shelf', or pulling them off altogether).

• We are going to start hearing questions about transparency. For example, if the Featured page is a big driver, then how does something get featured? Can people buy their way onto that page? Maybe not today, but the pressure will be there to do so going forward.
• An additional driver for transparency will be that some developers will choose to 'spend their way out of the clouds' in terms of development budgets, quality, etc. If they do so, they are going to want to know BEFORE they develop their titles, if they are going to be allowed to ship. This is especially true for apps that might be viewed as conflicting with Apple's business model or on-deck apps, but also true for games.

All in all, I think some of the shine is going to come off the apple, but that it's definitely a compelling platform and has reached critical mass as a platform that it's here to stay for developers. 

I don't think developers should delude themselves though. This is rapidly going to become an even more crowded space in which quality titles are going to be expected, and in which the challenge will be in overcoming obscurity - which you can read as "developers need to do their own marketing and they need to be good at it". Alternatively, they an rely on a publisher to do that marketing for them, which is one of the reasons that a publisher business makes sense in this space (Ngmoco, for example, was an early entrant into this space).

[Speaking of Ngmoco, they've announced their first couple titles, and while I'll reserve judgement on Maze Finger and Topple, I will say that Rolando, an innovative platformer using both accelerometer and touchscreen, looks awesome. Trailer here]

Last thought: On the subject of marketing, several folks I spoke with were in agreement that devs/pubs need to do their own marketing outside of the Appstore e-tail placement. However, there was some varied opinion on what that marketing should entail. Several folks I spoke to were of the "viral" mindset. (i.e. you do it on facebook and myspace and via mechanisms incouraging friends to join mail lists and such). There wasn't much excitement around traditional mechanisms like, say, print ads. On the other hand, if you think about it, this is a very interesting marketing problem. The iPhone customer, I'd guess, has a widely varied demographic, is affluent (they aren't cheap), and there may not be one answer to he question of how to reach them. Maybe print ads make sense, but if so, where? Wired? Forbes? Tiger Beat?. Maybe do something at retail, but where? Target? AT&T stores? Starbucks? Maybe coupons/invites in your cell phone bill? Will be interesting to see what turns out to be successful here.