Casual Games: Too Much Of A Good Thing?

Not so, says one prominent industry analyst who warns that even though a large supply is needed to satisfy all the various platforms that offer casual games -- from mobile devices and PC portals to video game consoles and even in-flight entertainment -- a glut may be on the horizon.

“Everyone is jumping onboard -- every media company, every small garage, even companies that you’d never suspect would be in gaming,” says Ben Schachter of UBS. “That’s because a small investment can get you into the business; there aren’t a ton of barriers to entry.”

For instance, says the analyst, “you ask why a company like Orbitz -- which sells travel products -- is in the casual games space with a popular site called OrbitzGames. Well, they’re using games as a marketing tool. Everyone has their own reasons for being in casual games.”

But an oversupply of casual games is likely to confuse people and lower the value of the best titles, notes Schachter. “No one will be able to keep track of what’s available or what is the difference between one game and another,” he says.

Indeed, some indie developers think there’s already a glut on the market.

“The space is so crowded with developers,” says Ben Lewis, head of marketing and sales at year-old Baton Rouge, LA-based Yatec Games. “There are thousands out there, with new and bigger players entering the market every day. We small developers need to make sure that we don’t fall in between the cracks.”

But Lewis is optimistic: “The growth spurt tends to legitimize the industry as a whole. Many people still view casual gaming as small potatoes, but we’re really a huge industry with a much wider market than hardcore games. If people now come to realize that, so much the better.”

Further evidence of casual games’ skyrocketing popularity is the surprising success of Nintendo’s Wii. The next-generation game console is proof positive that there are those consumers who don’t necessarily consider themselves gamers, who are outside the usual target demographic of 18-35-year-old males, and who will still go out and buy a game machine that doesn’t necessarily appeal to so-called hardcore gamers.

“It’s not that the hardcore gamers aren’t still out there,” notes Schachter. “They still want ‘Halo 3’ and ‘Grand Theft Auto.’ But it’s clear that there are a lot of other people who are willing to come back to video games if they’re easy to pick up and fun to play. That’s the lesson the Wii has taught us.”

Some might say that the games developed for the Wii don’t fit the usual definition of casual games, but UBS’ Schachter reports that definition is now expanding.

“While no one has agreed on a standard definition, I believe a casual game is any game that is easy to get into, gets to the fun quickly, and you don’t have to shell out a lot of money to play,” he explains.

Indeed, at Electronic Arts, the video game giant has broadened its own definition of casual games considerably. In June, EA reorganized and created a Casual Entertainment Group that now oversees not only the typical small, downloadable games that the company makes available on its Pogo.com Web portal, but also all of its mobile games, its kid-friendly games, and its all-family games.

The Group’s first offering was its recent release of “Boogie” for the Wii which allows gamers to use the packaged microphone to score points by showing off their karaoke and dancing skills.

Similarly, EA just signed an agreement with toy manufacturer Hasbro to create casual games based on some of its original IP, which includes Monopoly, Scrabble, Yahtzee, Nerf, and Tonka. The first several games -- none of which have been announced -- are scheduled to launch sometime next year on various platforms.

EA’s plan to release Hasbro games in a year or less is testimony to the fact that the development time for casual games is considerably quicker than the two or three years it takes to build a triple-A title for hardcore gamers.

“Because casual games are less man-hour intensive, they cost less to make, which is one of the opportunities EA sees in this space,” says Kathy Vrabeck, who was previously president of Activision’s publishing division and was just named president of EA’s Casual Entertainment Group. “But just because online games have an infinite amount of ‘retail space,’ doesn’t mean we intend to dump a bunch of games into the marketplace and create a glut. Our goal is to get behind and promote some really good games, to bring a little order to this category.”

Vrabeck says she is currently focusing on what sort of business model -- or models -- EA intends to apply to its casual games. In the past, the industry has been vexed by what is known as the “99% problem” -- for every 100 people downloading a casual game, only one actually purchases it; the others merely take advantage of the free trial period. That has led the industry to experiment with other business models -- including paid subscriptions, micro-transactions, and ad-supported -- all of which EA intends to try.

“The good news is that, in casual gaming, there’s no costly physical distribution,” adds Vrabeck. “Because it’s all virtual inventory, there’s a good profitability story here as long as you adjust your entire organizational model around that. That’s actually one of the reasons we created a different division for casual games -- because it needs to be organized separately outside of the rest of the company and resourced differently.”

With her division only four months old, Vrabeck says she prefers not to discuss its release schedule nor which business models she prefers. “We’re just not up to that yet,” she comments.

EA’s announcement to reorganize around casual games didn’t come as a complete surprise; after all, it has owned and operated Pogo.com since it purchased the site in 2001.

“What was so interesting about EA’s move,” says Schachter, “is that it was a statement by the 700-pound gorilla of the video games industry that casual games have become a critical focus of theirs and that they are, in fact, reorganizing the world’s largest games publisher in order to deal with casual games in a better way than they had in the past. In effect, EA was acknowledging how important casual games have become.”

Schachter believes that success in this newly expanded casual games sector will depend on two factors. The first is a developer or publisher’s ability to get their product in front of consumers. EA’s ownership of the popular games site Pogo.com will enable its success in that area, he says. And EA’s relationships with mobile carriers will also allow the company to have its games positioned on the top of the cell phone decks where sales are strongest.

The second success factor, says Schachter, involves owning strong licenses or original IP.

“If you have the World Tennis Association license, your casual tennis game tends to do better than a no-name tennis game,” he explains. “Similarly, if you’re selling ‘Britney Spears Solitaire,’ you’re more likely to do better than if you were selling a generic Solitaire game. Branding is going to become even more important, especially if you want to distinguish your game from the rest of the clutter, and that’s something the big publishers can do that five guys in a garage probably can’t.”

Yatec’s Lewis hopes that EA’s contribution to the casual games sector “won’t just be more licenses and franchises packaged for a different space,” he says. “I hope it means new, creative, quality games and not a lot of me-too stuff.”

With larger companies entering the casual games fray, Schachter foresees smaller developers having one of two choices: “Just as in the film industry, indie developers now can either go it alone, be creative and more ingenious than anyone else, and try to become a superstar by making the best game possible,” he adds. “Once in a while that occurs, as with a ‘Blair Witch Project,’ but the chances are few and far between. More likely, success will come if they partner with the larger players who can help get them the type of distribution they need.”

Schachter offers this advice to major companies still considering whether to invest in casual games: “Decide what you want to accomplish. Do you want to make money off of the games? Do you want to use games as a promotional vehicle? Are you willing to enter the space full steam ahead -- or is this some half-hearted attempt to be trendy? To be successful, you need to make a decision and stick with it.

“Is casual gaming a good place to be right now?” he asks. “Absolutely, I’d say it’s a great place to be.”