Why it Pays to Self-Publish, Own Your IP

Why it Pays to Self-Publish, Own Your IP

I will make a case here for the importance and strategic value of companies publishing their own intellectual property (IP) on new digital platforms like the emerging app stores.

In the old days, big companies could build strategic value by developing control over conventional channels of distribution. When you own the Golden Gate Bridge you can charge any kind of traffic to use your pipeline, but it loses value when everyone discovers how to fly. Browsing and social discovery are now the equivalent of flying, and conventional shelf space is declining as a form of leverage.

Moving to digital networks we still have the value of being on the front page and above the fold. This applies to any website and to mobile app stores. My browser still defaults to Yahoo! because I like to see their rotating news headlines. But I rarely look below the fold and I avoid 99% of the buttons and hotspots on the screen. This is one example of how much less valuable digital real estate is once you move below the fold or just one click away from the home screen. Google represents the newer way of thinking:  Consumers are entering search requests to discover what they are seeking. Google places so little value on conventional shelf space that they choose not to clutter up their home page like Yahoo!

Applying this reasoning to app stores, it means that “featured placement” is not scalable because you can only fit a handful of items on the home page and above the fold. For the industry to get 10 times larger it will depend on virality and social discovery alone because the home page with the mobile web is getting smaller, not larger. Big companies have again enjoyed an advantage in “featured placement,” because in many cases it either goes to established brands or to the highest bidders. So once again the trend is moving this advantage away from big companies. But who gets the advantage? Whoever has the best intellectual property that is worth talking about and sharing socially. And this will happen regardless of the sizes of the companies involved; in fact size may be a disadvantage because big companies are usually slower to adapt and more defensive about protecting old models. Case in point: Why didn’t a large music or video game company recognize the success of Guitar Hero and become the publisher of I am T-Pain?

If featured placement is not scalable, then we need to assess competitive performance based on viral spread and consumer behavior. Apple’s Top Free 100 and Top Paid 100 games provide a good Petri dish and a new form of “shelf space” that is based on the popular vote. To get on this kind of list, the public that is assessing 70,000 apps is voting on which 200 are worth a download. I also want to distinguish between licensed content and self-publishing, because there is no longer the same strategic value in publishing licensed content. This is simply because there is no longer a Golden Gate Bridge to build and own that can be financed through third-party distribution (which was a pillar of how I built EA in the first place). So while we can admire a publisher that is selecting the right third-party stuff to distribute, it is a tactical exercise and won’t create a sustainable strategic position in the value chain.

Self-publishing your own IP is another matter. Any company that can consistently get its apps to rise to the top of a list of 70,000 apps must be doing several things right and is developing brand relevance the way that Yahoo! and Google did in their early days. So let’s have a look and see what we find among these 200 slots of shelf space on the Apple App Store. (Note – this study was done from rankings in early September.)

U.S. VIDEO GAME PUBLISHERS – Aside from Electronic Arts (EA), this sector is relatively inactive and ineffective with only one slot out of 200 (Crash Bandicoot). Companies like THQ have published many iPhone apps, but are currently shut out of these 200 slots.

JAPANESE VIDEO GAME PUBLISHERS – Because mobile has been huge in Japan for some time, many companies are highly active and have made numerous iPhone game releases. But out of these 200 slots, we see Konami with only two and Namco, Capcom and Taito with only one each.

MOBILE GAME COMPANIES – Aside from Digital Chocolate, EA and Gameloft, this group shows poorly, especially in terms of owned, self-published IP: Korean startup Gamevil has two; another Korean leader, Com2Us, has one; Glu has one. Nobody else has any. In terms of licensed brands, Glu has two of those and so does I-Play, but considering that more than 500 licensed brands have been published for mobile this is also a poor showing.

CASUAL WEB GAME PORTALS – The iPhone is perhaps a better fit for casual games? They’ve all been aggressive publishers, but are also poorly represented as a group: PopCap has two; RealArcade and PlayFirst have one each; Big Fish Games, Pogo, Oberon Media and Reflexive have none.

VIRTUAL WORLDS –  None. This probably has more to do with platform constraints.

SOCIAL GAME COMPANIES –  Zynga has two, SGN has one. PlayFish and Playdom and others have none. There are a few iPhone-specific social game startups that have some free games that made the list. Addmired has three, but none of their paid versions made the list. Storm8 has eight free games, but again, no paid games. While that is fantastic in terms of brand development and trial, it is less impressive in terms of monetization and hard to assess the value.

APPLE DEVELOPERS –  Surely within this group of 20,000 “companies” we will find some new leaders. Well, not really. Chillingo has four, but they are all from third-party developers where Chillingo is the distributor, not the IP owner. Firemint and Ngmoco get a lot of buzz, but they have only two each. Backflip Studios has two games for which both the free and paid versions are ranking, so they have four slots.

BIG MEDIA – The music industry partners with Tapulous on two items that made this Top 200, both of which are variants of Tap Tap Revenge. Sony has two slots and Viacom has two, no other big media brands have anything.

Wow. Consider all those video game and software industry sectors that are not dominating the App Store – even when you count an entire sector and all of their games we get maybe 2% of shelf space, and the leaders seem to have no more than 1% each.  Is anybody dominating? Well, yes. See Part 2 of Why It Pays to Self-Publish, Own Your Own Video Game IP, which continues here.

Editor’s Note: To read more articles by Trip Hawkins, be sure to check out his OMG blog.

About Trip Hawkins
Trip Hawkins is CEO of Digital Chocolate, a top publisher of social applications like Millionaire City, MMA Pro Fighter and Tower Bloxx. A new media pioneer for 30 years, Trip helped define the personal computer at Apple and founded industry leaders Electronic Arts and 3DO.

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