SAN FRANCISCO — Today, Wooga revealed for the first time in its four-year history that it turned a profit. Revenues are split evenly between mobile and web games.

The Berlin-based developer is a private company, so it wouldn’t go into further detail about its financial situation. Chief executive Jens Begemann (pictured above) added that “we don’t want to be chased” by quarterly results. It’s investing the money back into the company to “innovate” in new genres and grow its audience.

“I’m focused on our 20-20 vision to make games available to [people who] play games every day,” he said.

Wooga targets devices with more than 1 billion users. When Begemann and his cofounders started in 2009, that platform was the PC. More specifically, it chose Facebook — since then, Wooga has become the third-largest social gaming company on the site. The company shifted its focus to mobile when smartphones crossed the 1 billion mark. And in just two years, Begemann believes that tablets will also join the club.

But the company isn’t waiting around, as some of its games are already available on the iPad. In March, it will release a version of the popular gem-matching game Diamond Dash to Amazon’s Kindle Fire.

Wooga currently has 50 million active monthly players across all of its platforms and products.

---

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!

---

That’s saying a lot since the mouse drove PC gaming for decades. Begemann made the assertion today in a speech at the opening of Casual Connect Europe, a casual game conference in Hamburg, Germany. Of course, since his company makes touch-screen games such as Diamond Dash, he is a little biased in their favor. Begemann said, “It’s ridiculous to try to add game controllers to a tablet, to make it more like an Xbox.”

Adding such controls to a touch-screen device ignores the innovations that are possible with the touch interface, and it represents an effort to bring tired game mechanisms over to a new platform. It’s like the old “light guns” created for Nintendo consoles for games such as “Duck Hunt.”

Such devices were limited and perfect for just one game, Begemann said.

Companies such as Nvidia, PowerA, and controller makers are creating controllers for Android gaming on tablets or smart TVs. But Begemann isn’t a fan of the smart TV because he thinks the games created for it will be very similar to those on consoles. On top of that, the TV manufacturers and controller makers would have to band together to come up with a common format in order to attract more game development. That’s not really happening, and it’s one of the reasons that Begemann is a big advocate of games on smartphones and tablets but not smart TVs.

“If every smart TV is a different platform, then you won’t see high-quality games on it,” Begemann told GamesBeat after his talk.

Every once in a while, a new platform comes along that draws innovation and game developers like a magnet.

Doom, launched by id Software in 1993, revolutionized mouse-based control with the first-person shooter genre. The mouse led to new genres of games like hidden-object games. It enabled titles like Minesweeper, Solitaire, and Bejeweled. Likewise, Begemann believes the touch screen will trigger new genres for today’s generation of players.

“The new options are either a new mechanism will be invented for first-person shooter games on the touch screen, or the genre will go away,” Begemann said.

Begemann said that Temple Run is a perfect example of designing for a smart device. If it had been ported from a console,  it likely would have been a landscape-mode sidescroller rather than a 3D-portrait-mode endless runner.

“The creators were able to rethink it from the ground up,” he said.

The advantages of touch screens include direct control. You make movements directly by tapping the world. It feels more personal. Also, gestures are easy to do with your finger. And multitouch lets you control multiple things at once.

Drawbacks include no ability to “mouse over” something. You can’t see through your fingers. You get no tactile feedback.

By the end of this year, there were be 1.4 billion smartphones and 217 million tablets in active use. By the end of next year, that will be 2 billion touch devices. About 40 million consoles sell each year.

“This will become the games platform of the future,” Begemann said.

People who are buying smartphones and tablets are using their PCs less. Within a few product generations, the PC will go away, he said.

“We have reached a peak, and it will decline for consumers,” Begemann said. “What can we do to be prepared? Build games for touch devices. We have to rethink game design. And reinvent existing genres for the touch device. If we do that, this era of touch will be the best era we ever have as a game industry.”

Disclosure: The conference organizers paid my way to attend the event as a speaker for it. Our coverage remains objective.

---

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!

---

Agawi is announcing today that it will launch its cloud-gaming platform, Agawi CloudPlay, on Android tablets by March.

The platform will take the form of an app available on Google Play, one of the app stores for Android devices. Users who pay for the game service can get access to games that Agawi will make available through the app. By March, the Menlo Park, Calif.-based company expects to have “tens of games” available, and it will release more every week after the initial launch.

“There is a huge library of premium games on the PC, but it is unfortunately locked out of the Android tablets,” said Rajat Gupta, founder of Agawi, formerly known as iSwifter, in an interview with GamesBeat. “We think 2013 will be the year of the tablet.” Market research firm IDC seems to agree; it predicts more than 170 million tablets will ship in 2013.

Agawi can get Flash games and other PC titles to run on tablets by hosting the games in the cloud. It then streams the games to users as they play them, allowing gamers with tablets to play games that were not designed to run on their specific tablets. The appeal for game developers is clear. They can move older games to hot new mobile platforms and generate new revenue without doing much work.

Agawi has been available as an app on the iPad and on Windows 8. On those platforms, Agawi is approaching four million downloads and a million paying tablet users. But in this case, Agawi isn’t operating a direct to consumer business on Android. Rather, it will offer a white-label service for developers, enabling them to launch their own Agawi CloudPlay apps on Google Play.

Agawi’s own initials stand for “any game, anywhere, instantly.” Gupta said it is very easy for developers to adapt a game to run on the platform, which automatically converts a title for use on a touchscreen device. Agawi has already brought 12,000 social web games to tablets via its cloud platform for the iPad and Windows 8. Agawi makes money through flexible profit-sharing programs.

Gupta said the company plans to get core games made by indie game developers onto the Android app first. Developers can contact Agawi by sending a message to cloudplay@agawi.io.

---

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!

---

Before I make predictions on the new year, I’ll take a look at how I did on my predictions last year, with letter grades on them. In a separate post, I’ll let fly the predictions for 2013. If you have ideas of your own, please leave them in the comments and take our poll at the end. After you get a look at this story, be sure to check out our 2013 predictions. Of the 12 predictions I made last year, I’m giving myself a letter grade of A on four of them, a B on 5, a C on one, a D on one, and an F on one. Here’s this year’s predictions.

Last year’s predictions

1. Social and mobile gaming will get stronger. I predicted, “Now that Zynga and Nexon have both raised a billion dollars, they’ll be able to use that money to accelerate acquisitions and expand their positions in the fastest-growing parts of the video game business. The good thing is that social and mobile games are already popular, but they’re in their infancy. They have plenty of room to evolve and grow.”

Letter grade: B

Mobile games took off as the number of smartphone and tablet users soared. But social games stalled as Facebook’s growth slowed and Zynga failed to execute on its strategy, disappointing Wall Street.

2. Console games become the Red Queen. ”Like the Red Queen in Through the Looking Glass, console and PC games will continue to run just to stay where they are. With sales flat compared to 2009 and 2008, the console game sector appears to be stuck.”

I got this one wrong because the retail game industry led by the consoles saw double-digit declines in the U.S. for just about every month in 2012. December sales haven’t come in yet, but I don’t expect it to have a lot of great news for publishers. Blame the slowdown on the aging consoles and the growth of digital games.

Letter grade: B

3. World of Warcraft will continue its steady decline. “The question is whether Blizzard will be able to execute an orderly retreat. At some point, the company will launch Titan, its next massively multiplayer online game. But it sure doesn’t look like that game will arrive in 2012.”

World of Warcraft has been losing players, falling from a peak of 12 million at the beginning of 2011 to 10 million in the most recent quarter ended Sept. 30. The losses haven’t been drastic, with the 10 million figure down only 200,000 from the beginning of the year. WoW lost a million players in the second quarter, but in the third quarter, WoW regained nearly a million subscribers thanks to the launch of its Mists of Pandaria expansion. Will the number go back down again in the fourth quarter? If it does, I’ll get an A on this prediction.

Letter grade: B

4. Cloud gaming gains ground. “In 2010, OnLive launched its cloud-based game streaming service. But its impact hasn’t really been measurable yet. OnLive hasn’t released user numbers, retailers such as GameStop haven’t gone out of business, and publishers are still counting on retail sales for a big part of their revenues. In 2011, cloud gaming continued to expand, growing to the United Kingdom and spreading to mobile devices. As more websites embed cloud-gaming demos for free, users will start to see the benefits of the games-on-demand services. We can expect to see more game streaming in 2012, since Gaikai has teamed up with Wal-Mart and GameStop is prepping its own service. OnLive has a couple of hundred games available, making it a force to be reckoned with among those distributing games in digital form. If more titles and more exclusives land in the lap of OnLive, the gamers will follow. But the question is, will the growth be gradual, or will it pick up momentum in 2012?”

Cloud gaming isn’t dead, but it suffered its worst setback as OnLive (led by Steve Perlman, pictured right) hit the wall and filed for a bankruptcy alternative. The company failed to raise funding and changed ownership.

Letter grade: F

5. Tablets and smartphones will continue to steal gamers from dedicated handheld gaming devices.  “The competition between Android and Apple will accelerate the rate of innovation in mobile, and that will grind up the dedicated gaming devices. Kids in particular will drive this transition as they move from the iPod Touch to iPhones to iPads, possibly skipping handhelds altogether. The PS Vita has plenty of cool new games, but it’s hard to beat the free-to-play or 99-cent prices on iOS and Android.”

Even as console game sales fell at double-digit rates during 2012, the growth of smartphones and tablets paved the way for big gains in mobile game downloads.

Letter grade: A

6. The platforms will multiply. In every part of the business where there isn’t enough competition, new platforms will emerge to provide it. Google+, for instance, will rise as a gaming platform to compete with Facebook, which has pretty much wiped out a lot of its competition. In mobile, Microsoft’s Windows Phone will mount a bigger challenge to Android and iOS. And within existing platforms, such as Android, we’ll see new kinds of gaming devices emerge. And where these new platforms arise, they will prominently feature games because games will help differentiate these platforms and show off what they can do.

This year saw the launch of the Wii U, the expansion of the Amazon Kindle Fire, new smartphones, the iPad Mini, and the announcement of the Ouya Android-based game console.

Letter grade: A

7. Nintendo launches a console in the fall of 2012, but Sony and Microsoft wait until 2013. “Nintendo’s new Wii U console is expected to debut in 2012 with its tablet-like controller. But I don’t expect it to set the world on fire the way the Wii did starting in 2006. That will give Microsoft and Sony some breathing room to create high-end machines that can run circles around the Wii U. By waiting a year, the heavy-duty console makers can stretch out the console cycle by one more year and then make more money on the current generation. They will also be able to launch advanced consoles with one more year of the cost learning curve under their belts. Having said that, I would bet that it is more than likely that Sony and Microsoft will try to dampen the enthusiasm for the Wii U by announcing new systems in 2012 that won’t ship until 2013. That’s the familiar vaporware tactic that helped the PlayStation 2 defeat Sega’s Dreamcast in the good old days.”

This was right on the mark on the timing of the consoles as the console makers didn’t pull any big surprises. But Microsoft and Sony didn’t announce anything.

Letter grade: B

8. Location-aware mobile gaming will gather momentum. “Will Wright, the gaming legend who created SimCity, is exploring location-based entertainment because it can lead to what he calls “personal gaming,” where a game can be more easily customized to a person’s tastes because it makes use of data that it knows about that person. By tapping into location information, game creators can make their titles more and more relevant to consumers. To date, location-based games have had density problems, where not enough players are playing in one location. But it’s possible to design games that get around this issue, and developers will be able to keep you entertained based on where you are.”

Unfortunately, Wright got into a lawsuit with a co-founder and spent much of the year dealing with the litigation. The lawsuit was finally settled, but personal gaming will have to wait. Meanwhile, Red Robot Labs scored big with its Life Is Crime location game in 2012.

Letter grade: C

9. Family mobile data plans increase game consumption. “I borrowed this prediction from Exent, which forecasted that numerous mobile carriers will lower their data fees per device and allow families to share plans. This means that you won’t have to pay a lot extra to enable your kid to play online games. That will enable more users to engage in connected social games on mobile devices that operate at satisfyingly high speeds. That could trigger sales of more data-enabled devices, which are ideal gaming machines.”

Verizon Wireless followed through on its plan, but there is no indication whether this affected game downloads.

Letter grade: D

10. HTML5 won’t be ready for prime time yet. “This new format for web content wants to be the lingua franca of the web. But it isn’t so fast when it comes to running games. By contrast, native apps run much better on mobile devices. HTML5 games can’t make use of specific hardware in games such as a camera, and they don’t work well if the browser’s connection is weak. As devices get better and web speeds improve on mobile, HTML5′s performance will get better. But it has a long way to go, and native or hybrid solutions are likely to rule the day next year.”

Some companies tried to launch HTML5 games, but there was a lot of pushback. Wooga created a HTML5 mobile game but decided not to launch it commercially. But advocates of HTML5 hybrid apps such as Ludei and Game Closure launched ways to speed gaming up.

Letter grade: A

11. Monetization matters.“New revenues from ads and improved conversion rates will provide a bigger growth rate for the industry. Too many companies rely on one business model when they could embrace multiple ones. If you look at Zynga, the company gets only 5 percent of its revenue from advertising and 95 percent from virtual goods. With more than 200 million monthly active users, Zynga has amassed a huge audience for brand advertisers, yet it has shied away from ads for fear they could be intrusive in the game experience. But in-game ads can be crafted so that users like them. Just ask innovators such as Kiip, which offers promotional rewards in a mobile game at the moment when you achieve something. If Zynga made just $1 a month in ads from each user, it could generate an extra $2.4 billion in annual revenues. That’s an untapped opportunity. By the same token, Zynga generates revenue from only 2.5 percent of its users. If it could double that number to 5 percent, it could double its revenue. In 2012, I expect to see publishers take advantage of multiple monetization strategies.”

The use of alternative monetization strategies expanded on mobile platforms, but Zynga was still very dependent on virtual goods revenue during 2012.

Letter grade: B

12. Somebody will get hacked. “With embarrassing security breaches all over the place, game companies can expect more hacker attacks in 2012. The PlayStation Network suffered the ultimate embarrassment as it went down for six weeks after being hacked. Valve, Square Enix, and many others suffered the same indignity. It’s good to be prepared. Online game sites and companies that use virtual currency have a lot at stake.”

A variety of firms were hacked, including Zynga, NCsoft, Gamigo, and others.

Letter grade: A

---

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!

---

Consoles from Microsoft, Nintendo, and Sony may still rule the living room, but Aurora Feint (and OpenFeint) founder Jason Citron has his eye a time on when tablets will take over. Hardcore tablet gaming is the purview of his latest game startup, Phoenix Guild, for which he’s raised $1.1 million in funding.

In an interview with GamesBeat, Citron said that he plans to build hardcore social games for tablets in the “post-PC world.” PCs aren’t quite dead yet, but Citron wants to be on the leading edge of technology, and he believes that that means tablets such as the Apple iPad.

“Apple is going to ship more iPads than [Microsoft will for] the Xbox 360,” he said.

Citron founded Aurora Feint and launched his first game as the App Store opened in 2008. He expected maybe 100 people to play the game that day, but by the time he woke up, more than 2,000 had downloaded it. He then morphed that company into Aurora Feint, which created OpenFeint, a mobile social network platform. Gree bought it for $104 million in April 2011, and now the platform has more 200 million users. YouWeb, headed by Peter Relan, incubated OpenFeint, and Citron said he teamed up with Relan again because he is “a mentor to me.” Citron said he also went with Accel and General Catalyst because the partners were smart.

Phoenix Guild investors include YouWeb, Accel Partners, and General Catalyst Partners. Together, they’re a well-known bunch, and it shows that the idea of making games for new platforms is a popular one in Silicon Valley.

Phoenix Guild has just three employees, but Citron wants it to be the “Blizzard of the post-PC era,” a reference to Blizzard Entertainment, the developer of the successful Diablo, StarCraft, World of Warcraft, games. Citron thinks mobile touchscreen devices will replace consoles as the primary medium for hardcore gaming. While Microsoft has shipped more than 67.2 million Xbox 360s since 2005, Apple shipped 52 million units with iOS in the first quarter of 2012.

“Post-PC devices are growing faster than any consumer electronics category in history, and gaming is the killer app,” said Citron. “It’s obvious to me that fantastic, engaging games need to be built for these devices, but instead, everyone’s building these lame free-to-play sims.” That’s a not-so-veiled reference to Zynga’s FarmVille.

Phoenix Guild plans to push the tablet hardware to its limits and make games that take advantage of touchscreens and other characteristics that are unique to the devices. The company plans to hire a developer, a 3D artist, and a game designer. Citron said that the company hopes to ship its first game this year. Phoenix Guild is exploring using the Unity Technologies development platform.

“This is an opportunity to get in on the ground floor and contribute significantly to everything: culture, team, design,” Citron said. “It’s not often you get to build something you’re incredibly passionate about, but I believe that’s how greatness happens. You’ve just got to pour your heart and soul into it. That’s what we’re doing with Phoenix Guild.”

How’s that for swagger? Citron is speaking on a panel at the MobileBeat 2012 conference in San Francisco today.

[Image credits: Phoenix Guild, Dean Takahashi]

---

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!

---

The spending on tablet games is expected to account for a third of all mobile game revenue by 2016, when total mobile game revenue is expected to top $18.3 billion.

For 2011, Juniper estimated tablet game revenue to be $491 million. The report says the large screen size and outstanding graphics will motivate users to buy games and in-game items such as virtual decorations. The tablets are particularly appealing for fans of hardcore games.

Tablets such as the iPad are selling for $500 or more, but the prices are dropping. In 2011, tablets sold 55.2 million units, up from 17.6 million, according to Juniper.

Revenues from games for tablets are coming from a variety of business models, including pay-per-download, free games with ads, free games with brand presences, free Lite versions upgradeable to paid, and a free-to-play games with in-app purchases.

Charlotte Miller, author of the report, said, “The tablet is the perfect device for playing mobile games — the screens are large enough for the user to see the action, no matter how big their hands are. Tablet owners also tend to have a larger disposable income, as tablets are often bought outright rather than subsidized by operators. Higher user satisfaction with games and a bigger wallet mean that tablet games look to be highly lucrative.”

The report also identifies challenges including overcrowded app stores, tiered data plans that discourage heavy usage, operating system fragmentation, partial network coverage, piracy, and content regulation.

---

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!

---