Interview: Mike Yuen, Senior Director, Gaming, Qualcomm, On Revenue Models And Portable Consoles
Moconews.net caught up with Mike Yuen earlier this week at the Mocollywood mobile content conference in London. Mike’s been with Qualcomm (NSDQ: QCOM) for the past six years and has in the past been a vocal member of that camp of people who believe that the mobile handset could well become the primary device for gaming in the future. But these days he’s also considering where revenues might be made out of those games, and whether other kinds of portable devices—the Gameboy or the PSP for example, might also be a natural home for Qualcomm’s Brew-based services. Here are some of his views on various business models, and you can read the full edited transcript of the interview here.
—Mobile game advertising: “There’s a difference between product placement and in-game advertising. Product placement works today, but pure in-game advertising, where you can swap ads in and out, is a long way away. They’re trying to figure out how to do that on PCs with consoles but on mobile you have to ask yourself the value of putting an ad on such a small screen.”
—Wholesaling data charges via content providers: “From a consumer standpoint it makes a lot of sense: if I pay $9.99 for a data plan, why do I have to pay extra costs? But to make it work, the tier-one operators need to support that and they still feel very territorial and want to be able to say, I want that customer to know he is a Vodafone (NYSE: VOD) customer and not a Disney (NYSE: DIS) or EA customer. The guys below that tier-one level might be more willing to do this. They might say I don’t care, if I wholesale data that at least might be a way that I can get paid for it. If you’re going to buy $3 million worth of airtime then I’ll be willing to give that up because at least it would be another way of competing rather than on the big guys’ own terms.”
—Selling licenses for games versus sharing revenues based on use: “If content does take off, you can make a decent revenue stream from download revenue shares. The key question for games companies like Sony (NYSE: SNE) and Nintendo is that they built up a business based on packaged software, but the idea of digital distribution will destroy their relationships with retailers. The challenge for them is how do you evolve your digital distribution without upsetting your existing ecosystems? But you’ve got to get people used to downloads before this becomes a bigger business.”
—Selling Brew licenses for other portable devices that are not phones: “We are looking into this strategically but we’re not ready to announce anything. The Sony PSPs, Nintendos of the world…there are a number of opportunities where we could work with them.”
—On vendors offering services: “Conceptually the devices are now open, but in some parts of the world they are not. In another part of the world, I don’t think Motorola (NYSE: MOT) would have gotten as far as they have in China with music for example. But vendors like Nokia (NYSE: NOK) or Sony Ericsson (NSDQ: ERIC) have some limitations too: if you’re Sony Ericsson and you have a good music service, you are confined to your own ecosystem. You’re not about to start licensing that to other handset makers.
—On being on- or off-portal: “If the economics can be worked out, you can’t avoid the reach of the web.”
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Comments (2)
Oct 5, 2007 12:33 PM
In-game cell phone advertising is not “a long way away” as Mr. Yuen suggests. Nor do ads have to be on “big” screens to be effective. We have been delivering such ads for as long as since 2003 and last year executed an agreement with Qualcomm to offer our BREW ad APIs. We have ten types of effective ad types that we marry with the advertiser’s objectives.
Oct 7, 2007 12:45 PM
I don’t question the value of advertising on mobile phones, but what I do question is how soon in-game ads will really come to fruition on a small screen. And what I mean here is the traditional definition of in-game advertising as in being able to swap out adevrtising dynamically in the artwork of the game itself like the vision Massive (MSFT), Double Fusion, et al have painted from a few years back for console and PC titles. Interstitial, pre and post level and/or pre and post game ads is not what I was putting under the same umbrella of in game advertising as mentioned in the interview.