Making money from mobile gaming is expensive thanks to rising costs of acquiring users, but one company wants to subvert this by treating the products it makes as a form of art, not as just a consumer product.
Nexon chief executive officer Owen Mahoney thinks that it’s rare to find a profitable company on mobile. During a fireside chat at the GamesBeat Summit in Sausalito, Mahoney explained that publishers are dealing with rising marketing costs that are destroying profit margins. But he doesn’t really think this is a marketing problem. Instead, he claims that acquiring new players is difficult because so many mobile games are all alike.
“A lot of the companies on the top-grossing chart are not making money,” said Mahoney. “We perceive the problem as not one of marketing but trying to sell a commodity. When you’re trying to sell a commodity, your marketing costs are almost infinite.”
A commodity is something like a toaster. Anyone can make a toaster, and they are all similar. That means that no one company is going to dominate and make a huge bulk of the profits in the toaster business. And the only way to get ahead is to heavily market your toaster. That’s expensive, and it’s probably not worth the expense.
For Mahoney, the problem here is not figuring out new ways to market a toaster. Instead, he wants to make something new.
“We see this as a product problem,” he said. “Our answer is to try to make a game that is fun and different. It sounds really simple and almost silly. But actually, I personally like to play games that are fun and different. If they are, I’ll play it for years. Most customers are like that.”
Nexon works as a publisher that brings in developers with new ideas, and that’s the challenge for Mahoney and his team.
“Many of the companies we talk to are trying to make something that is already out there with a slightly different twist,” he said. “But we are in the art business. And if you insist on making a commodity, you’ll end up with commodity profits.”
Mahoney says he often hears that making something totally new and different is risky, but he thinks that’s not the case.
“Making a junky or similar product is much more risky because you know it’s not going to be successful,” he said.
To emphasize his point, Mahoney pointed to modern television as an artistic medium that has figured out a lot of what gaming is working through right now, citing programs such as The Wire.
“There’s this incredible wave of fantastic art that is in television,” he said. “TV is now a great place to see great art. It’s revolutionized the industry. It’s made a lot of companies very successful. There’s an absolute analogue to the gaming market.”