This is part 2 of our interview with Wikipad’s James Bower and Fraser Townley, the company’s CEO and president of sales. Click here to read part 1.

GamesBeat: Getting back to partnerships, are you working with OnLive as well as Gaikai/Sony?

James Bower: We’re in discussions with OnLive as well. One of the key things of Wikipad is that we’re approaching this as a very open platform. We’re willing to work with a lot of various players. The most important thing for us is that our customers have content and that there are various ways for them to get content. There’s the traditional way through Google Market. And then there’s the streaming games, like Gaikai, which was just bought by Sony, and OnLive. We’re in discussions with what our relationship is moving forward.

We also have other forms of content that are interesting, forming on the horizon, that I can’t share yet. We’re not concerned that there won’t be enough content on the Wikipad to get started, and it’ll only get better over time.

GamesBeat: What is Wikipad’s funding? Is the company self-funded?

Bower: The core founders have funded all of the capital to date–

GamesBeat: And the core founders are yourself….

Bower: Myself, Matthew Joynes, and one other founder that we’ll be announcing shortly. We haven’t discussed him as a founder because of who he is, but that will be coming out shortly. It’s a higher-profile person. A lot of the financing of the business is through banking relationships for the purchase orders we have, and things like that.

GameBeat: You previously worked at Master Image. What was your position there?

Bower: President/COO.

GamesBeat: And when was the company acquired?

Bower: Master Image was acquired from Korea and moved to California in November 2009.

GamesBeat: Do you think you’ll have to look for outside funding, perhaps getting closer to the product release?

Bower: I think it’s a question of how fast we want to grow. As of today, they’re fine. So to answer your question, yes, we’re open to look at that and how it can accelerate the business, but it’s not something we’re overly concerned about doing in the short term because of where we’ve come with doing it ourselves.

GamesBeat: Why go with Tegra T30 instead of the more powerful T33, like in the ASUS Transformer Prime Infinity TF700T?

Bower: One of our goals was to ensure that the Wikipad was both lightweight and thin as possible. The T30s is Nvidia’s smallest, high-powered, component CPU. The T33 is a larger component requiring a larger PCB and would have added addition thickness and, in turn, additional weight to the Wikipad. An additional benefit to the T30s is that it draws less power from the battery. This results in the benefit of longer battery life for gamers using the Wikipad compared to the T33, which draws more power from the battery.

GamesBeat: From my own research, it seems like Wikipad is a secretive company. The company has put out so little information. Is this intentional?

Bower: We really had the intent to come out with the stereoscopic version of the Wikipad. And we made the announcements at CES. With some of the decisions we’ve made to make a better tablet, faster platform, that gamers will take very seriously, some of that strategy had to shift a little bit. We’re being very cognizant and careful about what we announce and when we announce it. We don’t want to mismanage the expectations of our future customers. As you’ve seen, there are a lot of people who are excited with what’s coming, with the potential of Wikipad, of what it means. And we want to be very careful and cautious on what we say, and we want to deliver on what we say.

But you’re going to see a shift in the chatter coming from us, and we’re going to amplify things considerably, going into the launch of the company. It’s just us being cautious.

GamesBeat: Are there any game partnerships, like with developers or publishers, that Wikipad has to release titles specific to the Wikipad?

Bower: We’re working with some of the [graphics] engine guys, like Unity and a couple of other guys that build the engines for other guys. We’re in some discussions for unique game designs for the Wikipad, but there’s nothing to the point where we can make an announcement. We’re going to see a lot of content coming from a lot of directions.

GamesBeat: What can you say about the manufacturing of the Wikipad?

Bower: We’re working with the top two manufacturing plants in the world, that have embraced us as a newer company and have taken us on.

GamesBeat: Can you announce who they are?

Bower: Not yet. But we can sleep at night knowing that the guys who sleep at night are the guys who are manufacturing it for us are manufacturing some of the best brand names in the market.

GamesBeat: Several products similar to the Wikipad have been showed over the last year. The Wii U uses a tablet controller but targets a home audience. Razer’s Project Fiona concept device is a laptop-in-a-tablet with a built-in controller running Windows 8. How would you differentiate Wikipad from these?

Bower: It’s challenging to come back with a very poignant answer to that, because one’s a concept and the other people have only just started to see and play with. The unique factor that we have is that we’re really a bridge between a historically mobile console and the invention of the tablet. We do everything as good or better than other tablets on the market, and very easily you can transform the Wikipad into a very efficient, easy-to-use video game device that’s very comfortable.

How we’re different is that we’re not just about gaming. The focus of the company is gaming; that’s who we are, and that’s our pedigree. But when this comes to market, people are going to realize that, wow, I might as well just buy the Wikipad to do all of this plus have fun with games and have a control mechanism that I have on my console.

GamesBeat: Apple holds 68 percent of tablet marketshare with the iPad. Amazon’s Kindle is the next best, and it’s not even close. Android isn’t even close, even though it’s riding smooth at 50 percent of smartphone marketshare. Is that a concern?

Bower: Not really. Apple’s done such a fantastic job with their products, and we all love them. What we’re coming to the market with is a different concept; it’s not just a tablet — it’s a mobile gaming platform that can do all of the functions that you can with a tablet with all of the advantages you have for gaming. So we’re competing right down the middle with what a tablet is, with what people expect out of a tablet, and with what people expect out of a mini console device.

And it’s a space that isn’t populated by very many, or anybody, because we’re really the first ones to market on this. And the other aspect of this is if we’re as successful with this as we believe we’re going to be, from the indications from retailers, from the orders we already have, we don’t have to dominate a market to do really well, because we’re new, we’re relatively small, and we’re innovative, we’re agile. We have a roadmap for the next 24 months. We don’t have to make 2, 3, 10, 20 percent of the market to do really well. One percent of the market is tremendous success. But I think we’re going to do better than that.

GamesBeat: Do you also see the Wikipad competing with portable game consoles, or does it hit the middle ground so users can have a tablet, a game console, all in one device?

Bower: That’s what I would say. What we’re proposing to the market is a bridge between the two. We’re saying if you get this, you can still do all of the things you love to do with a tablet, and you’re also going to have access to all of the great content that’s historically only been able to get through a console-only device.

GamesBeat: What do you think about newer game technologies like Microsoft’s Smartglass? Or the large number of upcoming Android game controllers? And the recently announced Kickstarter success home Android-based game console Ouya?

Bower: What’s coming from Microsoft is great. We’ve seen some of the prototypes of Windows 8 and RT, and it’s great. The interesting thing about the future of that platform is going to be the access of some PC content. There’s not much I’m going to talk about in relation to our company at this point, as it relates to Microsoft’s platform, but it is something that we’re looking into. It’s something that we’re open to, not to replacing the current platform we have now, but maybe as an additional product. But it’s exciting. I think Microsoft has finally got a hit with this new OS. And behind the scenes, retailers and manufacturers behind the scenes, are really excited.

GamesBeat: And that’s notwithstanding Valve chief Gabe Newell’s recent remarks about how Windows 8 is just awful?

Bower: Everyone’s going to have their own opinion. I think Android has done a fantastic job on getting out there. If you look at the global numbers, Android has outpaced everything. You then talked a little bit about…?

GamesBeat: Android game controllers?

Bower: You know, for me…I can only speak for myself because our product isn’t on the market yet. If you’re dealing with a mobile product, if there’s separation between the screen and the your person, then it’s an unengaged experience. I think in order to have the experience, on a device that is personal, that you’re willing to put your credit card into, the game experience on controllers has to be directly connected because you’re expecting it to be totally personal. I would rather use this [holding an Xbox controller] than this on a tablet that I have to prop up and play. That’s all I can say. The market will determine who’s the winner at the end.

And since I mentioned Ouya, we’re really excited about Ouya. Them talking about and launching on Kickstarter, and the results that they have, is a really interesting and solid sign for us. The games that are going to play on that are going to work on the Wikipad, and the games that will work on Wikipad will work on the Ouya. The more content that is prepared for them is going to help us, and the more content prepared for us is going to help them. It’s a very interesting concept that they have.

What I think it’s really going to come down to is how can these devices, and how can our partners like google and others, begin to fix the piracy issues? Because the big game developers, the Epic’s of the world, the Crytek’s, they won’t invest the tremendous amount of money they spend to create these great games for consoles until the piracy issues are fixed. Because it’s a lot more difficult to pirate something for a Playstation or an Xbox. It’s just a lot more work. And the discussions that we’ve had with them is yes, the concept is great, but fix the piracy so that our investment of $30 million, $40 million, $50 million, $80 million in marketing and development cost isn’t going to go to a waste and everyone is going to steal it. Fix that problem and we’ll develop everything for this platform.

GamesBeat: But you’re not concerned at this point about piracy….

Bower: Not for us. But I think as far as the experience on these devices, the game publishers need to know that their investment in these high-quality products is protected, and then we’ll see more of that content come about. We’re very involved with the dynamics behind the scenes with our partners like Nvidia and Google and others about how we can help…we’re people’s art that they create is protected, and respected, and paid for. So that there’s enough money so they can develop their next games.

GamesBeat: Have you been in contact with Ouya, maybe for a partnership?

Bower: We love what they’re doing, I’m sure we’re going to have a conversation at some point, but there’s nothing in the works right now. There isn’t anything worth talking about, or even speculating about.

GamesBeat: What about, since we already spoke about potentially going outside of the company for funding, using Kickstarter since Ouya was so successful. Is that something that you’re considering?

Bower: Frankly speaking, we’ve considered that from the beginning. We decided not to because of the significant adoption that has been relayed to us from retailers around the world. Would Kickstarter have helped us or hurt us? We want to see the retailers make money with us. Right now we’re really focusing on the retailer relationships that we already have in place.

GamesBeat: When will the Wikipad ship?

Bower: We’re looking to release later this year.

GamesBeat: And that’s just in the U.S.?

Bower: For now, yes. We’re also actively looking at the European and Asian markets.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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There are tablets, and then there’s a gaming tablet. The Wikipad, an Android handheld that promised to be the first mobile device with a gamepad built specifically for the device, is set to launch later this year. Venturebeat recently sat down to talk with CEO James Bower and President of Sales Fraser Townley in a local design office in Thousand Oaks, Calif.

Here’s an edited version of our interview. For details on the Wikipad’s specifications, see our report from late last month.

Venturebeat: What is Wikipad, and what is the history of the company?

James Bower: Last year we (Bower, Matt Joynes, and one more founder) started thinking about what type of consumer device could make a difference. What’s something that we could do that would really get good market acceptance as well as being a game changer?

We all started getting smartphones and tablets and we’re playing games and whatnot, and it just doesn’t quite have that experience as when you’re playing with a controller. The touch experience is okay, but it doesn’t quite get you there. So we thought what can we do to take the concepts of tablets and create a much better gaming experience.

VB: When did the company get started?

JB: We officially formed the company in September. But as a team, we’ve been thinking through concepts, I would say, since back in the spring of 2011.

VB: What was the team doing back then if it wasn’t a company?

JB: Matt [Joynes], who is the chairman of the company, previously bought and sold companies. He and I partnered up on this, and he was twiddling with some of the business planning of creating a consumer device. I was involved with the restructuring of a company called Master Image, which was acquired and restructured and moved to California. That company created stereoscopic 3D for cinema and screens for tablets and smartphones.

The market dabbled in [3D in mobile devices] for a little bit. We saw LG come out with its 3D version (the LG Optimus 3D) of a phone, and the Nintendo 3DS, but there hasn’t been a tremendous market push to adopt this from a tablet and smartphone perspective. In some cases, from my standpoint frustratingly so, anyone who loves stereo sees this as a huge potential market that hasn’t really been opened yet. We see this in the television market; most TVs support stereoscopic in some form, and we see a lot of the market shifting to that.

The fact is, there’s a lot of 3D content that is still coming out. What’s different when it comes to a personal device, when you don’t have the challenges of putting glasses on that becomes a socially inhibiting event — you know, you’re not going to sit with friends and put glasses on in your house. It’s a little bit awkward. When you remove that barrier and enable stereoscopic 3D, it starts to change.

VB: So the original idea was to have the Wikipad be a stereoscopic tablet, and as time went on the 3D got pushed out?

JB: Yes, but it’s more than that. It’s the nature of how fast we can get to market with the price points that we need to get with the market research we’ve done, you know, for the first version [of the Wikipad]. [3D] is in our DNA, if you will, and in our future plans.

VB: Why the name “Wikipad? What exactly does that mean?

JB: ‘Wiki’ actually means fast [in Hawaiian], and so we were thinking about what are we going to create here? We’re going to create a tablet that’s really fast, that’s really edgy for the gaming community, and ‘wiki’ is such a representative name of what we want to be, which is a fast pad. And it’s catchy. Sometimes there’s an educational tone associated with it, and if we come out with a tablet that people may think has educational benefits as well, we start to hit a brand that’s accepted across a lot of mediums.

VB: If I’m not mistaken, you’re currently partnered with NVIDIA, as well as Gaikai. Does that mean Sony as well now, since they purchased Gaikai?

JB: Gaikai has been a great relationship for us, but we’re under NDA with Gaikai and Sony. That’s about all I can say right now, but we know what’s going on and we’re still close to the situation, and the transaction is just in the completion stage as we speak. Stay tuned.

VB: What about Sony Mobile Certification, where Playstation titles can play on some Android devices, mostly from Sony and now some select HTC smartphones?

JB: Sorry, I can’t comment.

VB: Fair enough. So you’re working with NVIDIA as well. Why go with Tegra?

JB: For a number of reasons — a few secret ones that I can’t talk about, and a few that I can. When it comes to a brand of processor that is close to the hearts of gamers, NVIDIA has been there a long time. They have a very good, integral brand; they have a very good relationship to content, and content is key for us, as it relates to our product. So there are a lot of advantages to Tegra as it relates to gameplay. They’ve been working on a lot of things behind the scenes that they haven’t talked about regarding gameplay. They also were one of the front-runners in the development of stereoscopic 3D support, integrating their 3D vision capabilities into the Tegra processor as well. So it became much more of a turnkey easy solution for our future as we look at stereoscopic 3D.

VB: So you’ll be working with them for 3D support?

JB: Yes.

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Chris Petrovic (pictured above) is the general manager of GameStop Digital Ventures. His job is to make sure that the world’s largest video game retailer crosses over into the digital era, when gamers are as likely to download a digital game to their computers or phones as they are to walk into a store and buy a disk. GameStop still has 6,614 stores and annual revenues of $49.5 billion. Within a couple of years, the company wants to grow its digital revenues to $1.5 billion a year. The retailer grew its downloadable content sales by 315 percent last year, and it has acquired digital game startups Kongregate, Spawn Labs, and Impulse. Will that be enough for the company to “cross over” to the digital age?

Dan “Shoe” Hsu, the editor-in-chief of GamesBeat, did a fireside chat with Petrovic at our GamesBeat 2012 conference. Here is an edited transcript of the talk.

GamesBeat: As we hear about Gaikai, OnLive, Ouya, and more and more digital distribution, how is GameStop reacting to this? How are you looking at the future? And also, how are you helping developers and helping the consumer? So, Chris, welcome. And first, could you tell us what GameStop Digital Ventures is?

Chris Petrovic: At GameStop Digital Ventures, we’re responsible for the global digital strategy of the organization. More specifically, we focus on new and external opportunities. That’s a fancy way of saying that we look at investments, acquisitions, and strategic partnerships to help drive the overall digital vision for the organization.

We’re working closely with my fellow senior management colleagues back at corporate headquarters in [Grapevine, Texas] to figure out how to best leverage the assets and synergies that GameStop has, to become a meaningful and larger player in the digital space as it evolves this business from just brick and mortar into, I would say, a kind of multichannel hybrid company. Ultimately, our goal is to meet the needs of the consumer, and the consumer is actually driving us and pointing us in a lot of these different directions that we’ll talk about.

GamesBeat: You hear a lot of industry people talking about how the future will be all digital. How does that affect your strategy? Do you see a future where brick and mortar will go away, where traditional retail and physical media will go away?

Petrovic: No. Without putting any time constraints on that kind of prognostication, I guess everybody could be right, that at some point those things could go away. I think one of these things that we in this industry tend not to get right is the chronology of technological advancements. I think gaming in particular has a lot of different dynamics to it that are different from books and music and movies. But at the same time, we’re not…by virtue of the fact that my division exists and by virtue of the fact that we’ve done half a billion dollars of digital revenue in 2011, we’re acknowledging that it’s a major part of our focus and the consumer’s focus.

GamesBeat: How does that half a billion compare to your retail sales?

Petrovic: On an absolutely dollar basis, we’re a public company — you can look at the reports — but we’re about a [$9.5 billion] company overall. For 2011, we reported half a billion dollars in digital sales. When I joined in 2009 it was virtually zero. So when you look at it from an absolute growth basis, obviously there’s a much higher hockey stick on the digital side, but it’s also very nascent. We see it becoming a meaningful part of our business. It already is. I think in 2014, we said we’ll probably do up to $1.5 billion. It’ll probably be 10 percent of overall revenue, but growing much more quickly.

GamesBeat: Have you projected far enough into the future to see where your digital revenues will match your retail revenues?

Petrovic: No, I think that would be, for us, just an exercise in futility. Once you go out beyond a certain number of years, it’s just a finger-in-the-wind prognostication. There are so many variables that haven’t even come to light yet, whether it’s the next console cycle or new platforms. It would be a flawed model at best.

GamesBeat: One of the things GameStop is very famous for is resale. You resell a lot of used products. If we moved to an all-digital world sometime in the future, or a world where digital distribution is dominant in the business, how does that affect your resale business?

Petrovic: We’re talking about digital, but there still needs to be a physical device through which you game. Whether it’s a console, whether it’s a smartphone, whether it’s a tablet, whether it’s a next-gen Android device like Ouya…all these things require some kind of physical product to use.

We’re embracing of all those things. Many people may know that we’re a very large player in the sales of Android tablets. We have them in about 1,600 of our stores. We developed our own wireless Bluetooth gaming controller. And we’re working with developers to make tablet games controller-enabled because we feel that’s where the sweet spot is for our customer: taking a tablet, connecting it to your big screen, sitting on your couch with a controller, and playing. So we embrace all of these different kind of endpoint devices.

Even though there may be an assumption that more games will be delivered digitally, you still need an endpoint device. The other thing that we realize, too, is that 70 percent of purchases of digital products that are made in our stores involve some other form of payment besides a credit card. So when you think about all of the other ways that you could pay for stuff, when the purely digital platforms are limited to a credit card as the primary means…. We see a lot of people coming in with cash, we see a lot of people coming in with gift cards, and with trade credit. We have an ecosystem that’s very unique in terms of unlocking value that others can’t, and we do that with and for our partners as well as for our own digital platforms.

GamesBeat: The resale business: Can it do well just selling hardware and peripherals?

Petrovic: It’s definitely TBD. But you have to also understand that we have digital platforms that are actually engaged in the distribution and sale of games, whether it’s downloadable PC games or free-to-play social games. We’re working on a mobile initiative to help consumers and developers more effectively find each other. Ultimately, it’s a customer service for us to curate mobile games, as discovery and monetization become more challenging. We know a lot about our customers; we have good insights into what games they want to play. And so creating those kinds of conduits or liaisons between content creators and consumers is still important. We’re also selling preowned iDevices. There’s a huge market for that. We’re selling new Android tablets. So there’s a lot of other stuff out there besides just console games that makes up that ecosystem.

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Publisher Meteor Entertainment plans to release Hawken on Dec. 12 as a web-based title. The rights for the web video, secured by DJ2 Entertainment (represented by WME and Morris Yorn), and since Hawken is a new franchise, the video series enables Warner to present the game’s backstory to potential players. Copper Media, a new division of Silver Pictures Entertainment, Warner Bros. Digital Distribution, and DJ2 will produce the show.

Adhesive Games, a division of Meteor, is developing Hawken as a free-to-play downloadable web game, but its quality better mirrors triple-A development on consoles and PCs. The game drew a lot of attention thanks to a YouTube video that scored millions of hits.

More than 300,000 users are registered for the game’s closed beta test, which is scheduled for this fall. The game will be available on PCs, Macs, Facebook, tablets and others device via the Gaikai cloud-based game streaming service platform.

Warner has made web video series such as Mortal Kombat: Legacy and Aim High.

“We believe ‘Hawken’ is a cutting-edge gaming franchise that lends itself to multiple platforms, and we’re very excited to work with Copper Media and DJ2 to develop it into a top-flight digital series,” said Eva Davis, the executive vice president and general manager of Warner Premiere. “Warner Bros. Digital Distribution proved there is a way to reach a sizable and passionate audience with this type of property, as we have seen with ‘Mortal Kombat: Legacy,’ which has reached over 70 million views since its debut.”

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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