EA Mobile clarifies stand on off-portal sales

Mitch Lasky, Jamdat founder and now senior vice president of EA Mobile, responded to a previously published story in GameSpot News (see below).

The article is reprinted below, with Lasky's comments preceding the previously published story.

GameSpot: Our story last week, based on a publicly available transcript of comments you made to a group of analysts, stated EA Mobile was in the process of developing a methodology to sell mobile games directly to consumers. You said, "these remarkable new applications will open up new ways for us to sell content directly to our customers..." What were you talking about if not perfecting an off-portal play to detour around carriers and sell directly to cell phone users? In simpler terms, what didn't we get right in our story?

Mitch Lasky: In my presentation, I discussed EA Mobile's strategies for creating new demand to grow the mobile game market. One strategy I discussed was the use of certain applications to allow us to market our games to customers directly, utilizing EA's broad consumer reach and brand. We already do this to a limited extent, marketing games on our Web site and using WAP push or premium SMS to make it easier for our customers to buy games without navigating the carriers' decks. We believe that we could do this a lot better and bring in more first-time users to mobile gaming.

What you got wrong in your story was making the leap from this marketing activity--which almost all publishers currently do--to the sensational conclusion that we are detouring around the carriers. Regardless of how we get customers to the "buy screen," these are still carrier-based sales, with customary economics.

GS: Is a selling-direct strategy even possible today? Technically possible, where game creators and publishers could go off deck and sell games to consumers without the collaboration of a carrier? If so, what's to prevent it from being tapped? How do you think a carrier would react to a triple A publisher selling some of its library of games direct to consumers?

ML: The biggest limitation is billing. The carriers can utilize their existing credit relationship with their customers to make charges for mobile games appear seamlessly on your phone bill. In order to sell directly, one would have to provide an alternative billing mechanism. There is some interesting activity in this area, such as Paypal's mobile platform. But right now, the carriers provide the best solution. There are additional technical limitations imposed by certain carriers and certain platforms.

GS: Do carriers actively promote third-party games today or is it all publisher money that is used to market and promote? Assuming it is slight, are carriers becoming more willing partners in efforts to promote mobile games? Is the current ad model fair, in your opinion?

ML: Carriers do promote games, but remember that they typically view mobile games as a subcategory of data services, and so promotion of games is competing for attention and funding with mobile video, mobile music and, in some cases, messaging. As you are well aware, video and music are getting a lot of that attention these days. Hence, our desire to take more control of the marketing message as I discussed earlier.

GS: I know you also felt this graph was not factually correct. "He then demoed a "desktop to mobile" application where games, presumably bought from a retail area of a publisher's Web site, can be dragged and dropped onto a Java application that will immediately load the game code onto the memory of a consumer's connected cell phone." What got lost in translation?

ML: It was factually incorrect in two important ways. First, I didn't demo anything--I simply showed a screenshot of an application. Second, if you reread your transcript, I never said "games" could be dragged and dropped--I said "content." If you were in the audience looking at the screenshot, you would have been able to see that the "content" in question was an RSS news feed. There was a huge button on the screen saying "GET MADDEN FEED NOW," which I pointed to as I talked--it couldn't have been more obvious to those in the audience. Again, characterizing this as a move against the carriers was both sensationalistic and wrong.

The original story:
EA to sell mobile games direct
At Wall Street meeting, EA Mobile boss Mitch Lasky outlines "off-portal" strategy that would bypass carriers and market games directly to consumers.

Today at the Harris Nesbitt Games Go Mobile Conference in New York City, EA Mobile senior vice president Mitch Lasky lobbed a bombshell. He revealed to analysts present that Will Wright's upcoming simulation game Spore was coming to mobile phones.

After the dust settled, Lasky let the second shoe drop, telling attendees EA could soon bypass mobile phone carriers and sell mobile games directly to consumers. He outlined a new "off-portal" strategy that will see the publisher create and launch "a series of integrated desktop, console, and mobile community applications...that is going to allow us to create network effects, leveraging EA's tremendous marketing reach and packaged goods reach."

He then demoed a "desktop to mobile" application where games, presumably bought from a retail area of a publisher's Web site, can be dragged and dropped onto a Java application that will immediately load the game code onto the memory of a consumer's connected cell phone.

"In addition to providing increased marketing relevance and a deeper emotional connection to our brands," Lasky said, "these remarkable new applications will open up new ways for us to sell content directly to our customers without the necessity of spending tens of millions of dollars running ads on MTV, etc."

An off-portal strategy is widely seen as more favorable to the game developer and publisher, as no revenue share with the carrier-as-distributor takes place. An off-portal strategy also frees developers and publishers from having to negotiate for the limited real estate on a carrier's game deck--the screen that subscribers first view when making a game-buying decision.

As for what the future might hold for distribution of games such as Spore or Medal of Honor, Lasky emphasized that "we're not standing still [at EA]...waiting for some mythical inflection point to create demand. We are actively trying to create new demand for mobile content, demand that we can monetize in a profitable, scalable, and defensible way."