Q&A: Trip Hawkins on Digital Chocolate

As reported earlier in GameSpot, Trip Hawkins is up to something new. Earlier this week at the CTIA I.T. Wireless & Entertainment trade show in Las Vegas, Hawkins announced that he intended to start a company to create entertainment applications that will run on mobile handsets.

"I'm in the process of putting together a new startup company and I expect to do some interesting strategic partnering," Hawkins told GameSpot. "It's a new medium and that's what's interesting about it," Hawkins said. "There are a lot of killer apps that have yet to be invented."

GameSpot has since spoken to Hawkins at greater length about Digital Chocolate.

GameSpot: Thanks for talking with us today, Trip. Why the move toward mobile?

Trip Hawkins: Because in another four to five years, there will be two billion people carrying these little mobile computers around--and there's an incredibly diverse range of interesting things you can do with them.

GS: Is there anyone in the space today who you see properly exploiting the platform?

TH: What I find fun about it is that very little has happened so far. In fact, there's been a lot of disappointment because there were technologies like WAP that weren't good enough … they got over-hyped. It's actually only in the last year that it’s gotten interesting--new, color handsets, handsets where you can press multiple keys at the same time, and carriers that have a good pricing model for data services. … And you are already seeing examples of ring tones and messaging that are multi-billion dollar markets people didn't expect to be multi-billion dollar markets.

GS: What's the lesson to be learned from these new markets?

TH: These examples are showing us it's not only a new market, but a new medium. What's going to be fun is figuring out what's different about the customer, and what kind of things they are going to be doing.

GS: What part of the mobile puzzle are you aiming to solve?

TH: I'm an entertainment guy so I have a lot of ideas in the realm of entertainment--although I view entertainment pretty broadly. I'm not going to do things where I feel there are obvious 900 pound gorillas [already] in a much better position to do exactly the same thing. I think there is a lot of room for creativity and invention, so I'm not thinking of only conventional videogames.

GS: Although conversion of current product seems to be a fairly common approach…

TH: Truthfully, a conventional videogame isn’t very good on a cell phone today. And certainly, the hardcore gamers' expectations aren’t going to be met by a cell phone, but there are a lot of fun things that you can do.

GS: What's behind the name Digital Chocolate?

TH: It's the same kind of name as Apple Computer or Electronic Arts, where you take two words that don't look like they belong together. …When I was at Apple, I used to get letters from customers telling us we were crazy and we had to change the name if we ever wanted to be taken seriously. The whole point about that name was to soften up the image of computing. I think people who have cell phones don’t realize it's a computer now--that it can do a lot more than just be a telephone. Maybe people feel a little embarrassed about indulging themselves in a few moments of instant gratification. But when people are away from home, this mobile computer is the only one they've got--and they spend a lot of time waiting around. I think you can serve that market with a lot of different things. You can get people accustomed to the idea that's it's ok to give themselves permission to have a little fun. And in many cases it can be something productive, educational, or something informative…it doesn’t have to be, strictly speaking, playing a game.

GS: But it's still about it being a phone.

TH: Yes. [But] gradually it extends out into other hardware that is on the same network.

GS: What's the lure of wireless for you?

TH: To me the phone is an interesting frontier because it's a wide open marketplace and there aren't a lot of established competitors yet. Development costs are fairly low and there's room for creativity and freedom of expression by developers. One of the problems in the console market now is that you are spending so many millions of dollars just to even have a chance to show up. … [Mobile is] more of a place where you can experiment. You're just not going to suffer from failed experiments, because you didn’t spend a lot on development.

GS: Where do you see the space moving?

TH: It's the start of something big. When you build successful network applications that work over the phone, you can extend those same applications over the web and on to other client hardware like game consoles, set-top boxes, car navigation systems, and PDAs.

GS: Assuming 3DO was still around, would the idea or impulse behind Digital Chocolate have come to life?

TH: It's a two part answer. The first part is that one of the assets of Digital Chocolate is a patent that I authored about 10 years ago. When 3DO's assets were sold, I bought that. It's a patent that has to do with computer network entertainment applications that 3DO was thinking about in more conventional gaming terms. As soon as I got outside that context, I realized that cell phones were a perfect way to get started with the idea. … Secondly, there's not a lot of synergy now between the conventional game market and the cell phone market. They are very different businesses and it's much more interesting to look at the wireless gaming market if you are a start-up because it doesn't take that much money to get into it, and you can't be that big anyway. That's the irony of it. If you are a big console game company, you can’t make very much money in wireless games, so it's not going to be a high priority.

GS: How do you explain the split in today's industry? Why do some large game publishers commit to the space and others do not?

TH: In PC or console gaming, you're spending millions of dollars on the game, millions of dollars on inventory and marketing. You've got to really be on the top of your game. That's where you're going to put your best people. If companies are succeeding at that, they're going to have to focus on that. The ones that try to get into [wireless] now may have corporate reasons why they aren't as happy with their position in other activities, so they want the diversification with wireless. And in some cases, they just have a longer-term vision and are willing to suffer through the pioneering days.

GS: Which way is the right way?

TH: I think both approaches are legitimate. What I think is common to them, though, is that they are still looking at it as another gaming platform whereas I'm looking at it as a whole new medium. I think it's a different computing architecture, it’s a different customer, and it's a completely different range of applications that are going to be successful. You can start with the examples of ring tones and messaging as killer apps that most people didn’t expect were going to be killer apps. It just shows you: it is a different medium, and there's a lot of room for inventing things that nobody's done before. The conventional game companies tend to either look at it and say it’s a gaming platform but it's not a very good gaming platform, or it’s not a very big market so we're not going to do it. Or they're going to say, let's go do it and put our content on it. And they're going to just shrink down their content. There's nothing wrong with that, but I just think that is only one of the ways to look at it.

GS: Any similar feeling to when you wrote the business plan for EA back in the early 80s?

TH: I enjoy being creative. When I started EA twenty years ago, there was a lot of opportunity for creativity. The game industry at that time was unshapen, there were a lot amateur business practices, [similar to] a cottage industry that was ready to be professionalized. That was a lot of fun. The product development costs at that time were fairly low, so you could try a lot of interesting ideas. It took EA maybe three years to get its bearings and experiment enough to know what did work and what didn't work. Wireless affords that same opportunity. It's just wide open so you get a chance to think more creatively and have an opportunity to succeed and have a positive impact on customer's lives. Some people look a cell phone and say what a convoluted crummy computer. I look at it and say: when someone is away from home, it's the only computer they have. And if they are waiting in line at the bank, maybe they'd like to have some fun. What can we do for them that would be fun. It's a challenge.

GS: Any similarities with what you experienced at Apple?

TH: When I was at Apple, I called up the Computer Science department at the University of California at Berkeley and said: I have this Apple II, why don’t you come down and help us figure out some software we can put on it? And they said: That’s not a computer. They didn't want anything to do with it. Cell phones today are a lot like an Apple II. It's not everyone's cup of tea. Some people are excited and inspired and challenged by being out on the frontier and coping with the limitations with the medium, and being excited about overcoming those hurdles. And some people think it's a big turn off.

GS: What the present state of Digital Chocolate?

TH: I'm just now getting my business plan done, lining up the capital, and getting ready to start hiring people. Once that phase is finished, then we'll have to make decisions about exactly what product line we're going to build first.

GS: Thanks, Trip. Good luck.