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When Apple’s App Store first launched back in July there was a wide range of prices for individual applications. While many were free, quite a few of the early games were $5 or $10. But as time has passed, there’s definitely been a trend of the paid apps to move towards $0.99, which seems to be a magic price point for high sales. But $0.99-an-app isn’t much of a way for developers to make a living, and quite a few of them are now trending back towards $10.

I met with a group of popular iPhone app developers the other day. While most were game makers, others had apps for doing things like restaurant reviews. Most were showing off apps that would be coming out in December (like SimCity and Rolando). The one thing the majority of them shared in common was price: $9.99.

This was surprising to me because of the obvious trend the App Store has been seeing in recent months towards lower pricing. The development house Tap Tap Tap even wrote a very long (and in my opinion, thick-headed) piece about the trend towards cheap turning the App Store in to the “Crap Store.” Their proposed solution was to de-emphasize pricing in the rankings by making it based on gross revenues. Of course their argument is that this works great for Hollywood box office records — except that the systems aren’t the same — at all. Movie ticket prices are constant (with the exception of IMAX films) for each movie, apps are all priced differently.

But the real reason why no drastic change is needed in the App Store is that the developers are seemingly starting to get more comfortable once again with the higher price points. While Ngmoco sells its current apps, Topple and MazeFinger for $0.99 and free respectively, its newest one, Rolando, will be $9.99. When I asked the team why they chose this price point, they said that Ngmoco wanted to differentiate its so called “micro-priced” (cheap) apps from the more premium ones, which require a lot more work. They’re confident consumers will be willing to pay for a higher-quality product.

Electronic Arts, which is, of course, a gigantic game company on just about every platform, echoed that sentiment. The company already has games like Tetris, Scrabble and more recently Yahtzee on the iPhone, but with SimCity, Need for Speed: Undercover and Monopoly all launching in December, the company will have a ton of games on the iPhone that people already know and will probably be willing to buy just on name alone (comments on my SimCity post certainly seem to indicate that).

“A lot of developers made an assumption that racing to 99 cents will lift them — that’s kind of worked, but it won’t always work,” EA Mobile’s marketing director Patrick Gunn told me. He noted that both Apple and app publishers are still finding their way in terms of how best to price applications, but that things are starting to shake out.

Another option that hasn’t been fully realized yet is advertising on apps. Companies like AdMob, AppLoop and Medialets are all working in this space, while bigger companies like EA are also thinking about their own solutions. If someone can nail advertising on the device within apps, that could help keep prices low even for high-quality games.

Of course, EA isn’t ruling out titles higher than $9.99 either, which makes sense if the iPhone really can compete with systems like the Nintendo DS and the Sony Playstation Portable, which sell games for anywhere from $20 to $50 a piece.

But $9.99 seems to be the new hot trend in iPhone app pricing. In my meetings with developers, I also saw an iPhone game from Gameloft called Ferrari GT Revolution. The makers of this racing game teamed up with Ferrari to simulate the hot car on the iPhone. Again, this app will be $9.99 when it comes out in December.

And even the popular ratings and review guide Zagat has placed a $9.99 price tag on its new iPhone app (find it here). Again, this was a bit surprising to hear given that competitors like Yelp have iPhone apps for free, but the makers of the Zagat app (Handmark), think Zagat’s brand name will overcome any price differentiation.

And there is the game Puzzle Quest, which is a remake of an old video game classic. Once again, it will be around $10 when it hits the App Store next month, according to Kotaku.

Time will tell if users will buy into this trend back to more expensive apps. It seems like these upcoming titles with a mixture of quality and known properties should make slightly higher prices feasible for a lot of app makers. But maybe the $0.99 apps will still rule the day and force the more expensive ones I’ve mentioned to slash their costs. That’d be too bad, because I want to see some really great apps on the iPhone, and most of those take money to make — and in this economy people aren’t going to be throwing away money if they don’t think they can get it back.

I’ve been excited about an iPhone game named Rolando ever since a video of it spread throughout the internet back in July right before the launch of the iPhone 3G (and App Store). The developers had hoped to release it in August, but that came and went, and the buzz largely subsided. But today I got a chance to play the basically completed version of the game — it’s even better than the original demo video — the buzz will be back soon.

The game, developed by Hand Circus and being released by one of the fast rising iPhone gaming powers Ngmoco, is now set to launch in December. But unlike Ngmoco’s other iPhone games, Topple and MazeFinger, both of which are hits so far, Rolando will be the first to move away from so-called “micro-pricing,” which is a fancy way of saying “cheap.” Topple is $0.99 and MazeFinger is free, but Rolando will be $9.99.

But in a world where we’re used to paying $20, $30 or even $40 for Nintendo DS or Playstation Portable games, $9.99 seems like a good deal for a game of this quality. Not only is the game a lot of fun and shows off perhaps the best combined use of multi-touch and accelerometer technology within any iPhone game yet, it’s also a pretty big game with four worlds and 36 total levels.

The game itself involves manipulating round characters named “Rolandos” around certain obstacles, fulfilling goals and doing so in a set time. There are regular Rolandos, which you move by tilting the device from side to side and make jump by swiping up on the screen; there are groups of Rolandos that you can control all at once by drawing a box around them and doing the same movements; and there are even characters like Spikey Rolandos, which can roll on walls.

Another great feature of the game is that you can quit it at any time (to do something like take a call or answer a text message) and it will automatically save your progress to jump right back in.

Rolando is kind of hard to describe, but it’s a lot of fun to play. Watch the video below for a better sense of it.

Rolando - iPhone and iPod touch gameplay trailer from ngmoco:) on Vimeo.

Ngmoco is unveiling its first three games for the iPhone and iPod Touch today. The San Francisco-based startup is on a tear. Neil Young, a former Electronic Arts executive, founded the company in June, raised $5.6 million from Maples Investments and the Kleiner Perkins iFund (targeted at iPhone-related startups) in July and is now about to publish his first titles.

These first games include two “fast apps,” or quick games that will sell for the “micro price” of 99 cents. They are called “MazeFinger” and “Topple,” and were conceived by Ngmoco before being handed to ouside developers, said Young (pictured left, holding mouse).

“We’re excited to be able to generate revenue so quickly, but it’s a fast-moving market,” he said.

The third game is a bigger deal. Ngmoco will publish “Rolando,” a flagship premium title that will carry a higher price when it debuts later this year. Young describes the game as a “platformer” — one that scrolls from side to side with largely two-dimensional animation. He said it would take advantage of all of the iPhone’s unique capabilities, including its four-inch touchscreen, which has “multitouch” capability, the ability to be touched simultaneously at more than one point on the screen. The game will also use the accelerometer, which senses which way the iPhone is facing.

It’s an impressive feat for the company to launch so quickly. But Young says the strategy is to focus on quality and to work on titles that emphasize the unique design of the iPhone. It won’t be easy to pursue that strategy, as there are already more than 1,000 games available on the Apple App Store, where people download applications to their phones or iPod Touch music players. Many of those applications are either free or sell for just 99 cents. Electronic Arts’ “Spore” title debuted at No. 3 and moved to No. 1. But it is already out of the top 10 just a few weeks later, suggesting that $9.99 games may not sell.

In Rolando, you tilt your device to roll cute little ball characters into and out of hot spots and puzzles. The goal is to help the colorful little creatures recover their world from the forces of darkness. It is reminiscent of “Loco Roco” on the PlayStation Portable. It will have 36 levels and four worlds created by pop-culture illustrator Mikko Walamies. It will be released later this fall.

Topple, meanwhile, is a block-building game that is reminiscent of both “Tetris” and Steven Spielberg’s Electronic Arts game “Boomblox.” You build a tower and try to keep it from falling, resisting the forces of gravity. In MazeFinger, you use your finger to trace paths through mazes on the touchscreen. Both games are expected to be available via the App Store as early as this weekend.

Rolando was already in the works at Simon Oliver’s British game studio, Hand Circus, when Ngmoco formed. With that game, the company will act as a traditional game publisher, selling and marketing the title produced by an external developer. Other studios working with Ngmoco include Other Ocean and Stumptown Game Machine. Ngmoco itself will focus on high-level creative production and publishing.

Young said there are a dozen titles in development and that Ngmoco will likely release two to four games per month. None of those are likely to be licensed brand games or ported from another game platform. The company has 18 employees, including chief creative officer Bob Stevenson, chief operating officer Joe Keene, and Alan Yu, former director of the Game Developers Conference and another EA veteran.

It will be interesting to see how Ngmoco does. What we do know, is that it has a sea of competitors, from old world game companies such as Electronic Arts and Sega to new players such as Zynga and Social Gaming Network.

iPhone games publisher Ngmoco has raised a first round of funding led by Kleiner Perkins Caufield & Byers. Kleiner Perkins partner Bing Gordon, the former chief creative officer of Electronic Arts, will join the San Francisco company’s board. The amount was not diclosed.

It isn’t too hard to connect the dots here. Neil Young (pictured left), a longtime EA veteran, recently quit to found Ngmoco (whose name means next-generation mobile company) to make iPhone games. In April, Gordon (pictured below) left EA after more than 26 years at the big game publisher to become a venture capitalist.

So it’s no surprise that Young has raised his first round from an old friend. Maples Investments, an early stage fund with expertise in games and social networks, also participated in the round. Ngmoco will use the investment to create, acquire and publish games built specifically for the iPhone.

The money comes from Kleiner Perkins’ iFund, a $100 million fund for iPhone and mobile computing investments. Since starting in June, Gordon has been actively joining boards of companies that Kleiner Perkins has funded.

It will be interesting to see whether Young can make Ngmoco into a mobile games player. There is stiff competition from the likes of Glu Mobile, Sega, Electronic Arts’ EA Mobile division, Gameloft and a variety of other companies. Those companies all have a head start making games for the iPhone.

On Apple’s new AppStore, games are the No. 1-downloaded application, as MG Siegler has reported. About 53 of the top 100 downloads are games. But Young stated previously that the current generation of iPhone games reflect early thinking and that he believes there is plenty of room for new innovation. He believes that there is a gap in the market between cheap mobile phone games and the Nintendo DS games that sell for $30. The average price paid for iPhone applications is $4.96.

John Riccitiello has been driving a lot of change at Electronic Arts. He was president and chief operating officer of the big independent video game publisher from 1997 to 2004. Then he left to co-found Elevation Partners. He engineered a deal to invest $400 million in acquiring a majority stake in the game development firms, BioWare and Pandemic. While he was gone, EA suffered lackluster financial performance and its games were often mocked as dull and uninspired. Riccitiello rejoined EA as CEO in May 2007, and reorganized EA so that it could operate its game studios as a bunch of city-states. EA acquired BioWare/Pandemic for $800 million. The aim is to get the game maker out of its funk and to produce original content that hardcore gamers won’t sneer at and nongamers will try out. EA’s games are indeed looking better; I put three of them on my list of the top 10 games of E3. But it may be some time before anyone can declare that Riccitiello has engineered a turnaround.

VB: It seems like your drive to higher quality is a tough thing to measure.
JR: I don’t think so. You’re a gamer. What do you think?

VB: The question is what these games will really look like when they come out.
JR: A lot of this stuff is close to coming out. You might not like cheesecake. There are different tastes. If you can’t see it, wait for it to sell. Then we can look at the results. I don’t think you can look at Mirror’s Edge and not think it’s innovative. The same with Dead Space (pictured left). Or look at Warhammer Online (our Q&A) and not think it’s a high quality game. Or look at Madden and not see massive innovation from a year ago. Or look at Hasbro and see how it’s great on the different platforms. We’ve got Tetris and Scrabble on the iPhone. Those are good executions. EA has had a couple of years where it’s been tough.

VB: If you come in as a new CEO, and you want to improve game development, how do people benchmark it? Do they just wait a couple of years to see if what comes out is good stuff? It’s a little squishy.
JR: For core games, there is the Metacritic rating. Go to the Miss Universe contest. There are pretty girls there. Somebody has to make the judgment. You do the best you can. You try to stay objective. The lion’s share of the people writing about our product and consumers playing our games are noticing there are better games here. Battlefield Bad Company is better than the title that preceded it. BoomBlox is a surprisingly good title. Nascar got a sizably better rating than a year ago. NCAA is getting better reviews. People look at NBA Live and say it’s really cool. People think Spore (below) is a candidate for game of the show. Or Warhammer. We could be wrong. But we did things on purpose to get those reactions. I’m fine if you remain a skeptic.

VB: No, I’m thinking more of investors and shareholders. Maybe they can’t tell as easily. The stock hasn’t moved in any great directions.
JR: I don’t think the investors give a shit about our quality. They care about our earnings per share. They wait for it to happen. We had three years where we didn’t make our expectations. If I were an investor, I would wait and see. That’s fine with me. Read the rest of this entry »

The iPhone’s remaking of the cell phone business is creating opportunities for new start-ups, particularly in the game field. That’s why one of the game industry’s leading executives left his job to create Ngmoco, an iPhone game start-up.

Neil Young was one of the rock star game development executives at Electronic Arts, responsible for games that sold millions of video games, from “The Lord of the Rings” titles to “The Sims 2.” He was the executive in charge of EA’s most important upcoming title, “Spore.” He gave it up a couple of weeks ago to start his own game company in San Francisco.

Today, the 38-year-old is announcing that Ngmoco will make and publish games for the iPhone. Young said the company will try to raise the bar on quality of mobile games.

“We are finally at the place where we can reinvent the experiences and the economics of the mobile games business. The industry has been stagnant for a few years. I feel the iPhone is a real opportunity to change that industry.”

I asked Young if he would tap Bing Gordon, the former chief creative officer at EA who recently left to become a partner at Kleiner Perkins Caufield & Byers, for venture funding. Kleiner Perkins has set up a $100 million iFund to finance applications for the iPhone. But Young declined to comment on the possibility.

In particular, Young thinks the 3G version of the iPhone will be a much better platform for showcasing high-quality games. Apple’s new Apps Store, a web site where users can go to cruise for new applications, will likely make it easier to discern the bad games from the good ones, Young said.

Young said he’s impressed that the data usage and web usage on iPhones is so high. The iPhone has all of the enabling technology to create new kinds of games that are tuned to the mobile experience. That includes global positioning system navigation, a camera, an accelerometer (which detects which way the iPhone is tilted), an instant-messenger system, email, and other functions that games can exploit.

Ngmoco will focus on creating a new type of game publisher, making its own games or hiring developers to make games under the Ngmoco brand. Young said he has backers and cofounders but he isn’t revealing them now. He remains an advisor to EA.

Young said that he made the decision to leave in April and EA executives tried to talk him out of it. They even asked him if he wanted to run such a group inside EA. But he decided to make a clean break. At the time he left, Young was running an EA division dubbed Blueprint Group. That group included EA’s Maxis division, the Spore franchise (which includes an iPhone game), the relationship with film director Steven Spielberg (whose inspiration led to Boomblox) and a couple of unannounced titles.

Maxis will now be headed by Lucy Bradshaw, and Blueprint will be run by longtime EA executive Louis Castle. Young said he’s been happy with the leadership of John Riccitiello, who became CEO of EA last year, and he believes Riccitiello’s reorganization of the company into stand-alone studio groups will lead to better games.

“It’s bittersweet,” Young said. “I’m so excited about what we are doing. On the other hand, I’m stepping away from 11 years of history and a whole bunch of friendships. Sometimes you have to step out.”

The games that Young worked on or managed while at EA beyond those mentioned above include “Ultima Online,” “Medal of Honor,” “Command & Conquer,” “Boomblox,” and “Majestic.” The latter was a novel X-Files style “alternate reality” game that ahead of its time. Majestic staged a mystery and enlisted gamers to communicate with each other and left clues via mobile phones, instant messages, and web video.

Before joining EA in 1997, Young was a vice president of product development at game publisher Virgin Interactive. Upon joining EA, he became the manager of EA’s now-defunct Origin Systems division in Austin, Texas.

EA’s own mobile group will now be competition for Young. He said that the current mobile game business consists of about 200 million downloads a year with an average revenue per user of $8. That’s a $1.5 billion annual industry. By comparison, games on the Nintendo DS and PlayStation Portable generated at least $45 per user and billions of dollars a year in revenue. He thinks the iPhone could help mobile games bridge that gap. While iPhone is the big opportunity, Young is also intrigued by Google’s Android platform.

“This is the moment,” he said. “This next 24 months an industry will get revitalized and re-energized. You have to look at this opportunity on the iPhone and ask yourself, ‘What would a company like Nintendo do?’”

The iPhone games that have already shipped, such as “Tilt,” a free game where you tilt the iPhone back and forth to catch items being dropped, represent “first order thinking” and are fun initial distractions. Such games are just the starting point, Young said.

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