Yesterday at VentureBeat’s MobileBeat 2009 conference, Henri Moissinac of Facebook Mobile, Shervin Pishevar from SGN, Mark Pincus from Zynga, David Marcus of Zong discussed the future of social media and mobile content in a panel discussion moderated by VentureBeat’s Eric Eldon. Here are our interesting notes from the session.
Eric: David and Henri, you both came to the Bay Area from Europe to work on mobile. What brings you here?
David: I started the mother company behind Zong nine years ago in Europe. Working with operators and carriers in the U.S. and Europe is always difficult. You have to be extremely convincing. We’re working with over 100 carriers. The reason for moving here is that we needed to take the company global, and there’s no better place to do that than in the Silicon Valley. It’s a one-way ticket and has been an amazing experience so far. There was a delay between mobile innovation coming out in Europe compared to Asia, and the same delay is happening in the U.S. If you look back even six to seven years ago, people on Verizon and AT&T couldn’t even send text messages to one another.
Henri: When I started working on mobile in the Bay Area, I thought about going back to Europe where mobile innovation was more developed. But as mobile became more software oriented, Silicon Valley became the center of gravity for mobile development and is a place that’s well respected around the world.
Eric: Henri, what’s going on between Facebook and mobile operators?
Henri: The next frontier for operators is data. They have always turned to Google, eBay, Yahoo, etc. to try to understand what’s going on. What we do for our 150 or so operators is customize as much as possible for them (e.g., trimming, providing them with APIs, etc.).
Eric: Can you share numbers on the effect of Facebook Connect on mobile apps?
Mark: Across the board, about 50 percent of our users on iPhone have authenticated Facebook connect, and we’ve seen higher engagement and retention with Connect users, but it’s also hard to say. There may be a selection bias going on because people who use Connect are naturally more passionate, hardcore users in the first place, so it’s hard to determine what the leading indicator is.
Shervin: It’s going to take more education on what users can do with Connect. Over time, these numbers will get better and better. We should also think about how to develop APIs that go beyond Facebook Connect to, for example, identify who is an iPhone user. This will lead to more cross-company work interactions.
Henri: It’s still the early days for Connect. Over 15,000 sites using the feature. We released the mobile version three months ago. Playfish is a good example of a company that has been very eager to implement Connect.
Mark: Yeah, we launched Live Poker by hacking the Web version before Facebook Mobile came out.
Audience: What is the consumer propensity and appetite for subscription versus free to play models?
Shervin: On the iPhone, users can install apps for free or pay for them. The holy grail will be who is going to create World of Warcraft on iPhone and Android. On our jet app, Fast, 65 percent of users return every day. That’s better than the industry rate, but the key is having users return and actually buy jets, land, fuel, and resources. A year from now, games on mobile platforms will be using social techniques to make millions in revenue. To experiment, we launched subscription on (fluff)Friends. For $10 to $15 dollars, you can get a certain amount of points. We saw that those people who had subscriptions spent more on subscriptions the month after. User behavior is changing and hybridizing. Those companies that succeed will iterate really fast have have the analytics to track and change.
Eric: What other opportunities exist besides what the iPhone brings?
Mark: From our perspective, we fish where the fish are running. When they’re not running, we don’t fish. With platforms that are too early in their infancy and don’t have clear viral and communication channels, it’s hard to justify putting in the next marginal development effort.
Henri: There are countries where iPhone isn’t popular, so there’s the need to replicate apps on other platforms – not just by copying and pasting, but by creating unique experiences for specific devices. For example, how can we design a Palm Pre Facebook app that automatically populates your friends’ contact information? This would make one’s phone quickly operational.
Shervin: Henri, can I make a suggestion? Create a Games tab in the Facebook iPhone app. The iPhone needs a game center.
Audience: How can Apple make its platform more profitable for developers?
Shervin: AppleCare is about the customer experience. Apple is afraid of developers who create free apps that don’t do much. Currently you have to pay for apps to unlock microtransactions. This isn’t ideal, but that doesn’t mean this won’t evolve over time. Metrics in terms of payments and sales are really healthy. If you’re an app in the #1 spot, you see 30,000 to 40,000 units a day. If you’re one of the apps that charge nine dollars, that’s about half a million dollars right there. This is the world we’re going into. In the next three years, expect to see a billion dollars in games sales via the iPhone.
Mark: I don’t think we have complaints, but we have recommendations. The glass is 10 percent full. Apple has been vastly successful, with developers making $600 million dollars this year; however, when Apple focuses and sees the bigger opportunity, which I’m sure it already does, it will be a $6 billion dollar a year business. We will see acceleration in things like enabling any users to buy things, which should increase revenues by a factor of ten.
Audience: Do you hope for a centralized network like PlayStation or Xbox where games can be distributed and gamers can be distributed through this network?
Shervin: The ideal candidate for providing such a network would be Apple. If Apple could provide an identity that goes along with different apps so developers can tie into universal IDs. Right now, users use a million different IDs to login to a million different apps. There needs to be an “Apple Connect,” and it won’t be a small startup that’s going to step in. It’s got to come from Apple or Facebook.
Audience: Do you see a day coming when Apple will make the iTunes store available over the Web rather than through an app that could revolutionize mobile? This way a Web developer can use Apple as a billing mechanism.
Shervin: The power in that idea is that it’s seamless. Facebook Connect and Facebook’s payment solution are also powerful.
David: Any one-click payment system works because they enable faster transactions on the Web.
Shervin: I’m shocked PayPal has been so slow to jump on this opportunity and basically ceded it to players like Zong.
David: PayPal has to balance fraud and conversion. They’ve had a hard time managing fraud.
Audience: What will give the iPhone model longevity? Ringtones were a billion dollar market that just crashed. Are iPhone-based business models just a phase?
Mark: The iPhone reflects a much bigger change in web business model and experience. Three trends are colliding: 1) The beginning of an app economy where consumers will expect that the way they’re going to discover, find, and share new services on the Internet will be via apps; 2) Once users instantiate an app, they’re really instantiating a potential long-term relationship with service and will keep a small number of those services that are worthwhile; 3) The new revenue model of users paying for things directly will fund massive experimentation and development.
Shervin: What iPod did with music, iPhone is doing with mobile. It’s totally disruptive. It’s more about the architecture, doesn’t matter. This way of designing experiences and processes is training users and to fundamentally shift the way that people transact, experience, and consume things.
David: Things that don’t have long-term value to consumers will ultimately disappear. I’m surprised they took that long to decline. iPhone is fantastic platform for game developers for diff apps and verticals that will bring value to consumers.
Eric: How are mobile apps making money on the mobile platform in a year or two? Are offers working?
Mark: Offers don’t work easily on the mobile platform. It’s a pain to be on your mobile phone, go to a Web browser, and complete an offer. There needs to be a new kind of company that wants to make offers that are tailored for mobile phones because Web-based offers have been tested and thrown out the window. When you think about social games, they’re a pleasant distraction, but more breadcrumbs need to be left to remind users to return or bring their friends in.
Shervin: I disagree. What if social games created experiences in the same way that Pixar is creating beautiful movies. When you’re watching a Pixar movie, you’re totally focused and inspired. There’s a potential to tap into greater innovation and inspiration and stretch people imagination about what’s possible. People are looking to be entertained, and social gaming as the potential to do it. It’s not just breadcrumbs, it’s a whole croissant.
Eric: Let’s talk about revenue model.
David: All in all, what we’re seeing on the mobile platform, Facebook, and gaming sites is that the gaming industry is moving toward free to play models that are monetized by in-game transactions and virtual goods and currency. This holds true for mobile platforms. What makes it all possible is frictionless payments. The issue with the current iTunes app store is that you can have in-game transactions, but users have to pay first, which defeats the purpose of free to play.
Henri: At Facebook, we’re talking to the mobile industry. A lot of people in the industry are still thinking in the old way when you have to think completely differently. The new generation that’s coming to mobile is young. Generation coming to mobile that’s not old. This is not a fad – the cake is just starting.
Audience: What’s the future of the mobile landscape three years from now?
Mark: As the platform gets more open and adopts single standards that enable platforms to compete, competition will accelerate the seamless distribution of apps in faster, lower friction ways. In three years, that will all be there. Games in the Western world should be well north of $5 billion in revenue. Users will own devices that are socially connected and enabled.
David: We’re going to see amazing apps, enhanced reality apps. The combination of location, broadband, camera, and social viral distribution will bring amazing apps.
Henri: People who use mobile apps and play games do so because their friends play with them and decide to share.
Shervin: Someone needs to figure out how to write something once and run it everywhere – build an app that can run on multiple devices. I’m looking forward to the ability to have complete cross-platform experiences. One day, a user will be able to play with an app on the bus, go home and have it transfer to the TV. Synchronicity is coming, and it’s going to be a pretty interesting experience.
Note: The panel was transcribed as accurately as possible, but may not be word for word.
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