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The games sphere is an incredibly competitive space. There are over 660,000 games in the app store. Many of these apps are free, and those that charge a fee often struggle to gain traction. Successfully monetizing mobile games is an issue that everyone in the industry faces.

Just hours after major mobile players Tapjoy and Kontangent announced a partnership, their leaders, Mihir Shah and Josh Williams, came together to impart insider insight on what creates a lucrative game. Both emphasized the changing scope of the gaming industry and the importance of focusing on the player and applying analytical data to product development.

This GamesBeat 2012 session, “Overcoming Hurdles in Monetization Distribution and Discovery,” also included ICS Mobile CEO Joe Bayan, Playhaven CEO Andy Yang, and Mark Friedler (pictured right), managing partner of Worlds & Games and moderator.

“The days of getting lucky, only thinking about gameplay and worrying about monetization later, are gone,” said Williams. “The sophistication of the market has increased, and it is a lot more competitive now. Developers have to be more scientific and rigorous about the way they design, acquire users, promote, and operate.”

As the market grows more saturated, companies must continue to innovate across the board, adapting to new technology, introducing more advanced marketing methods, and making the most of analytical tools.

“A lot of people are basing monetization on hopes and dreams, hoping to make top 25, when it should be map- and science-based,” Yang said. ” You have to understand traffic sources, the bio of the users, and the user base.

While leveraging “big data” and applying business strategy can lead to success, creating an appealing, easy to use, and creative product is equally as important.

“I am a firm believer in strong user experience and strong user engagement,” Shah said. “Games and apps that bring joy to consumers will generate significant economics over time. When I think of our partnership and things we are doing, there will be a laser-beam focus on what a user wants and what are they getting out of it.”

However, small, independent developers without a publisher or significant investment can struggle to keep up in a world of gaming giants, no matter how great their product is.

“I am much more pessimistic,” Bayen said.  “The app store market is becoming more and more difficult for developers. They need serious funding and good partnerships, like Gree and Tapjoy. They need to team up with experts, because with 660,000 apps, you might as well go to Vegas and gamble.”

The chances of striking it big may be slim, particularly with major content players dominating the field, but that does not mean it is impossible. Room is still there for upstart companies and the elusive X-factor.

“There are countless examples of apps with great social viral features,” said Shah, giving hope to aspiring game startups everywhere. “The takeaway is in cases when we see independent developers doing well, they have a maniacal focus on user behavior early on, not monetization. If you can’t outbid Zynga, you gotta do it another way, with constant iteration and partnerships.”

There is, of course, no exact formula for success, nor is there a simple, clear-cut formula for monetization or distribution. The good news is that in this evolving industry, there is plenty of room for creativity, and you never know when an unknown will hit it the jackpot. It all goes back to a classic piece of American wisdom: The customer is always right.

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