San Francisco game publisher Ngmoco was acquired by Japan’s DeNA in 2010 for $400 million. Since that time, the Ngmoco has strived to prove that it was worth that high value, launching Asian games such as Rage of Bahamut in the U.S. with great success.
But today, the company and its Swedish game studio Scattered Entertainment are announcing The Drowning, a high-end game that attempts to bring the multibillion-dollar market for first-person shooter games to mobile. If it’s successful, Ngmoco could unlock a new audience for hardcore gamers on devices such as tablets and smartphones. And that could go a long way toward making the U.S. market more lucrative than Japan, where DeNA already has a $1.8 billion business.
We spoke with Clive Downie, who recently took over as chief executive of Ngmoco after founder Neil Young left. Here’s an edited transcript of our talk.
GamesBeat: It can be interesting to take over a company that has been bought and had its founders leave. What’s this like?
Clive Downie: Well, two of its three founders have left. Alan [Yu] is still there. Alan is still a very trusted partner of mine on a day-to-day basis. I’m lucky to have him, fortunate to have him.
What it’s like, really, is good. I have the benefit of working at Ngmoco for close to three years, anyway. I came in very early on in 2009, and I’ve worked in a large number of positions around the company. I’ve had visibility with a large number of people. They know me, which always makes transitions easier. They respect me, which is good. That makes transitions easier. Neil [Young] and Bob [Stevenson] were very genuine about why they were leaving. Everyone appreciates that and they realize it’s time for a change. That has all meant that the transition has been very positive.
From a business standpoint, what makes the transition positive is that the things we set out to do close to two years ago when DeNA acquired us are bearing fruit. You’re seeing them and talking to some of them today. The outside world is seeing proof positive of what are tactics were and what our strategy is as a key player in the social mobile game space in the west. Grossing positions in the charts. The size of the Mobage platform as measured by the time it takes per day from our consumers. The number of developers. The number of markets. Monetization as the end result of all of that, because it is a business. That’s also making the transition positive. What we’re doing is working, but we still have more to do.
GamesBeat: Is Rage of Bahamut the game you can point to as the biggest success?
Downie: What we are very fortunate to have now, because it’s the strategy that has played out. … We’re starting to have games from one of the four areas that we targeted. There were four because we needed solidity in our foundation.
We set out to get partners from Asia, from our Mobage relationships in Asia, across to the West and provide them with the value of Mobage so they could be successful here. That’s happened. Rage of Bahamut is an example of that.
We set out to bring our first-party games from DeNA in Japan — the forefathers, if you like, of freemium social mobile gaming — to the Mobage Western platform and make them successful. The likes of Blood Brothers, the likes of Ninja Royale, are examples of those products.
We set out to take what Ngmoco was always known for, which is creating delightful, consequential experiences on mobile and smart devices in the West, partner that with the know-how from DeNA, and bring successful games from our first-party studios in the West out. You’re seeing Hellfire today. You’re seeing Transformers Legends today. You’ll see The Drowning today. Those are clear and present examples of that.
Finally, but not least, our third-party partners in the West. We set out to deliver a large portfolio of third-party partners that came because they could see the value in Mobage. We wanted to make them successful in the space. You’re starting to see examples of that with Backyard Monsters from Kixeye and our Flutter. The guys from Massive Damage and their Please Stay Calm products.
Those are the four product and content areas that we set out to bring content from across to Mobage in the west. That, in certain areas, is starting to prove successful. It’s not all about Rage of Bahamut. Rage of Bahamut is an example of one of those four.
GamesBeat: It seems like Ngmoco still has a ways to go reaching the level of profits and revenues here that matter to your Japanese parent company.
Downie: Let’s say it matters to us, right? We are choosing to do what we do. Nobody’s telling us. We’re choosing to do it because we can see the opportunity in front of us. Let’s not forget, DeNA in Japan took more than eight years to get to the point where they are now — $2 billion dollars in gross revenue, more than $5 billion dollars in market cap, that took eight years.
In two years, we’ve gotten to the point where our quarter-on-quarter growth is going in the right direction. Our portfolio structure that I just explained is going in the right direction. The visible signs of success in the grossing charts are growing and going in the right direction. Our portfolio of partners is going in the right direction. The time spent by consumers in our platform is going in the right direction. I don’t think it’s going to take eight years in the West. We know what our trajectory looks like for the next two years. We’ll build on the successes we have and the leadership position we have to get to that success level we are choosing to get to.
GamesBeat: It’s interesting to watch Gree move right alongside you guys here. They’re a little bit behind. They chose tactics that were more expensive for getting into the market. The critics are out there saying that the Japanese mobile game companies here are going to learn that they’ve overspent on this market and that they’ll have to retreat. One or two signs of that are emerging on their side. But the critics seem to lump you guys in with them. I don’t know how you’d react to that.
Downie: I think it’s not accurate. We are in a market that has 1.1 billion smartphones globally right now. By estimates, I think about half of them are in the West. We know at the peak of the feature-phone business, the number of subscribers was 5 billion. So I know that we can go from 1.1 billion to 5 billion in terms of global subscribers on smart devices quicker than feature phones did it. I know that at least half of those can legitimately be in the world that we’re operating in, in the West. Those consumers will gravitate toward great content. I think we’re in a position to be able to deliver that. When we do that, the kind of consequential business scale that we’re talking about will more than recoup the investment. I just look at the numbers and I think that’s not accurate to say what’s happening.
GamesBeat: So The Drowning (pictured above) represents the next generation of content for you?
Downie: The Drowning represents another strategy for us. The strategy for us overall has always been that we want to give people great things to spend their time on. Time is the great value that we would like to have consumers give to us, because they feel that it’s not wasted.
When we look across the time landscape of consumers using smart devices, we are going after areas that we know we can disrupt based on the skill of the people that we have, based on the game design knowledge we know we have, and based on the ownership of smart devices within those groups of consumers. The Drowning represents a strategy to unlock another portion of that time opportunity. It’s console gamers who own smart devices.
It’s not an indication of “the future,” in the sense that that’s all we’re going to do. We’re going to do everything we’re doing now, and we’re going to do that, and we’re going to do more things. There’s far more time out there for us to legitimately be given by consumers for entertainment and games. We know we can give them some more new and exciting things — not just FPS games, not just trading-card games.
GamesBeat: It seems like the “console quality” phrase isn’t just all talk right now. It’s starting to become real.
Downie: It is starting to become real. You know more than most about the power of the hardware that’s in these wonderful devices. The quality can rival and in some cases even go beyond what we’ve experienced in consoles over the last 10 years. It’s an exciting time. Now, the challenge is marrying that with mobile play patterns. I know we can do that, because we have market-leading knowledge on mobile play patterns. We marry that with market-leading knowledge in high-fidelity game experiences. That marriage is a great thing. You’ve seen it with The Drowning today. I’m excited about it.
Downie: Well, The Drowning looks great on Apple TV. You can play it over the air through Apple TV on your flatscreen. The challenge has always been in making sure that the speed of control is accurate, that it doesn’t suffer from lag. We’ve done some work there. To your question, is there an opportunity there? I would like us to be able to offer consumers the ability to play the game how they like. Are we going to be positioned around that? No. But it’s a feature that some consumers are going to want.
GamesBeat: The Drowning looks like it’s higher-budget than some games. Are you heading toward larger teams? Although 20 people isn’t too big.
Downie: Again, to your point about “Is it the future?” It’s one of the futures. We’re not narrowband like that. We make lots of kinds of games. We make games with very small, agile teams in three months. We make games with 20 people in 18 months. We’ll make games with the right amount of people in the right period of time. There is not only one way of doing it.
GamesBeat: How do you look at the environment around mobile games right now? Do you look at other things? Facebook is getting more active. Many worry about this high cost of user acquisition.
Downie: My sense is that user acquisition is an important aspect to crack. The value of Mobage to our partners has been reducing that because of discoverability. Putting the right games in front of the right people at the right time. The sheer size of the market means that it’s just noisy. You need a friend to help you. User acquisition is crucial, and it’s hard right now.
Everyone talks about new technologies that might come out and break that. 2011 was the year of geo-location games. I don’t think we’ve seen geo break out. It still might happen today. But we’re yet to see the big technology shifts as a benefit. I’m seeing more people move to free. Free continues to be the dominant distribution mechanic. We’re seeing more people do it right. There’s an art form to it, to understanding how to deliver credible, consquential free content to consumers. We’re seeing mobile itself becoming this overwhelming target for entertainment companies, online companies on the desktop, other game companies who have existing IP. Mobile as a target is becoming even hotter than it was in 2011. That’s exciting for us. It’s great to have competition. It makes us sharper.
GamesBeat: The next few weeks are the peak of app downloads, I think? That seems to be the pattern.
Downie: This Christmas, I think, will be a tablet Christmas. I saw some data yesterday saying that more than 34 percent of 6- to 12-year-olds list the iPad as the number one thing they aspire to for Christmas. And number three on that list was the iPad Mini at about 20 percent. You have more than 50 percent desire among 6- to 12-year-olds. That says something about the ramp of tablets and what it’s going to be. If not at this Christmas, it’s still going to sustain because of that young demographic. They’re going to want to come in. That marries with the scale of the exponential growth of tablet, which has so far outpaced iPhone and iPod Touch. Tablet is going to be another facet of what we call mobile. It’s one thing that’s going to become more and more important, and it’s going to need to be prosecuted differently.
GamesBeat: Are any other platforms looking attractive to you?
Downie: We always look around to understand what’s out there and keep our options open. Right now, iOS and Android keep us busy enough. Ultimately, that’s where the scale is.
GamesBeat: I know Zynga’s had some trouble hanging on to their people. You could theoretically be in a vulnerable state as far as people moving on to other things, too. How are you able to convince people to stay?
Downie: Honestly, I don’t have to convince people to stay. That would be bad if I had to. People stay because they believe that what they do every day is consequential. People do things that make them feel happy. We talked about that. The number one thing I need to do internally is make people happy. We’re happy when we’re successful. We’re happy when people believe that what they’re doing is legitimately of consequence. They choose to do it. It’s not like work. The best times in my career, including now, have been when it’s not work. It’s what I love to do, because I just want to have success in what I’m doing.
All of the things we’ve been talking about — the proof positive points, the fact that we’re in this leadership position, the fact that we’re working hard to extend that leadership position through our content, through our platform offering — that’s what’s keeping people around. And you know what else it’s doing? People are coming to us and saying, “I’d like to work with you.” That’s a really great position to be in.