iPhone 4, iPad ushering in sea change in gaming

One of the clear winners to emerge from Steve Jobs' formal unveiling of the iPhone 4 Monday was the game development community. With major new features like a gyroscope, a better screen, a better antenna and a better camera, developers have a slew of new tools to use in making their games.

Yet at the same time, the release of the iPad has also opened up what amounts to a major new platform for games. Many people are using it more like a computer than an iPhone and that means that developers can take advantage of users' longer sessions with it. And that means more money.

One company seemingly very well poised to leverage these new dynamics is Ngmoco, one of the largest makers of iPhone and iPad games, and the developer of hit titles like Rolando, Word Fu, and Topple.

At Ngmoco's helm is Neil Young, the former head of Electronic Arts' Los Angeles studio. Young left EA in 2008 to form Ngmoco and quickly hauled in $40 million in funding from A-list VCs including Kleiner Perkins Caufied & Byers.

On Tuesday, with the dust from Jobs' keynote still settling, Young sat down for a 45 Minutes on IM interview and talked about what Apple's hot new device means for the industry and for companies like his, and what he sees happening to the larger iOS platform over the next year or so.

Q: Welcome to 45 minutes on IM. Let's start with the obvious question: What's your take on the iPhone 4? I know it's a broad question, but I'm hopeful you have a strong opinion.
Neil Young: I do have a strong opinion. I think that Apple took a big leap forward with the iPhone 4 over the 3GS.

How so?
Young: If you think about the iPhone lineup, it's really been pretty incremental structurally. This feels like the third major revision (2G, 3G, and 4). It has a new chipset, a new screen. A new antenna. And a new camera. All are meaningful upgrades.

Do you see that as linear advancement, or as a more Microsoft's Project Natal, Sony's Move, etc.?
Young: No, I think that's a ways off. But as a fan of Apple TV, I can't wait for them to do something that lets my company's apps run on the TV and gives me a control interface that's not just movement based, but is also touch based.

Clearly, bandwidth is going to be a bigger and bigger issue. What's your thought on AT&T's decision to stop offering unlimited data usage with new contracts? And how do you see that playing out for Ngmoco and your competitors?
Young: Ultimately, access becomes a commodity and should be able to fall to free with the subsidy coming from what people do on the network. In the short term, I don't think it really hurts the business, but it creates an opportunity for AT&T's competitors to differentiate themselves. I don't think it has a big impact in the short term. For us, 75 percent of our users play while connected to Wi-Fi.

Do you think that number will change much in the next year or so?
Young: I would expect Wi-Fi usage to grow as a percentage as more Wi-Fi hotspots and civic hotspots appear. There will always be a 3G component for sure.

What have you seen in terms of iPad adoption?
Young: It's growing fast. And the customers who play our games on iPad play for fewer, but longer sessions per day and tend to spend more.

Why do you think?
Young: I think that they spend more time, because people are using their iPad at home and the paradigm for interaction is much more like a computer than a phone. As for spending more, it's hard to tell how much of that is early adopter behavior vs. sustainable consumer change.

I really think the iPad opens up so many more dimensions to gaming that it's a totally different platform. What's your thought on that?
Young: I think it's a different platform, but because of the user behavior and the screen predominantly. Humans react to what they see, what they hear and what they touch. The iPad takes two of those things and radically changes it over the iPhone and iPod Touch: a bigger screen and more of it to interact with. It's almost like "Minority Report." And with multitasking in iOS4 for iPad, it'll be even more like that.

Again, I see a much more exponential change than the linear, incremental change than you might expect because of pure percentage growth in screen real estate with the iPad. Because it's so much bigger, it opens up whole new realms of behavior and design opportunity. Do you agree with that?
Young: I do. With the iPhone 4, I think that the gyroscope is going to really open up augmented reality gaming. Overlaying the real world with game data that is accurately rendered because the position and orientation of the phone is accurately understood will finally usher in that age of AR. For the iPad, I think it's going to be much more about touch.

That and time spent are the fundamental differentiators. So building games that can support longer play cycles that are more rewarding when tactile interaction is involved will be the imperative there.

Any examples you can give of ways that that will manifest in games?
Young: No specific examples that wouldn't hint too strongly at some things we're working on.

Talk a little bit about multitasking in iOS. How much of a game-changer is that for Ngmoco and for the platform itself.
Young: I think that multitasking done right is the last functional requirement of making interacting with the apps on the phone a flawless experience. Switching contexts on the device is important and the current loop is sub-optimal; 1) Find App; 2) Launch App; 3) Engage in App; 4) Hit Home button; 5) Find next App; 6) Launch next app; 7) Engage; 8) Hit Home button. Go to 1. I think for the types of games we make, it's going to work well. It'll allow users to drop in and out of play experiences and likely increase engagement, which is really a proxy for monetization: Engaged users tend to spend more time and spending more time=spending more money.

What's your thought on Apple re-branding the iPhone OS as iOS?
Young: That makes sense. It's an OS that's across multiple devices and would seem like a good set up for future devices running iOS. A TV or TV box running iPhone OS doesn't make as much sense as one running iOS.

I always end my 45 minutes on IM interviews with this: Instant message is a great medium for being thoughtful and articulate and also for getting a great transcript. But it's also good for multi-tasking. So, tell me: What else have you been doing while we've been doing this interview?
Young: Let's see. I signed some documents for our legal team. I spoke with my co-founder Alan Yu about two developers that he's talking with. I spoke to my co-founder Bob Stevenson and our executive producer Chris Plummer about two of our upcoming games. I did email. I looked at stats from the server infrastructure and I talked about an offer we're making to a new employee in our New York office. So, yes, it's good for multitasking.

Well, I really enjoyed the discussion. Thanks for sharing your thoughts on this. I appreciate your perspective.