Mobile Games: Way Beyond Phone Tag

Get your digits in shape: Moblie games are hot and getting hotter. Trip Hawkins was a pioneer of PC gaming as founder of Electronics Arts (ERTS), and of 3-D console gaming with 3DO. Now, as founder and chief executive of startup Digital Chocolate, he's helping to shape the nascent mobile gaming industry.

Digital Chocolate, headquartered in San Mateo, Calif., has published more than a dozen games, including Scarlotti's Mafia Wars 2, Mobile League Sports Network, Bubble Ducky, Tower Bloxx, and Johnny Crash. BusinessWeek Senior Writer Steve Hamm recently spoke with Hawkins. Here are edited excerpts of their conversation.

Give us a quick update on how Digital Chocolate is doing.

We have broken through recently to be one of the leaders in the industry. You see it in the growth of the company, the fact that we've won 20 industry awards in the past few months, and we have moved to the front of the list of companies that have the highest ratings from the critics that review mobile games.

Our growth has accelerated because we got to Europe very early through an acquisition of a small company in Finland. We have quadrupled the size of that office.

By having strong operations in Europe and Silicon Valley, we're a pretty efficient distributor throughout the Western markets. We're pretty much everywhere in the world except Japan, China, and Korea. We'd have to have a local office and do hosting there.

In many countries, though, it's a truly virtual economy. We can do business with leading carriers in Hong Kong and Singapore and support them out of our centers in Finland and Silicon Valley.

You consider mobile gaming to be a community experience. What do you mean by that?

We see the mobile phone as the social computer. In modern urban environments people have lost the social context they had in the old days when people lived in small villages. So they have become rabid adopters of social computing technologies.

This was born first on the Internet with dating services, and chat, and Neopets, and fantasy sports, and instant messaging. And you have now seen it spread like wildfire to the mobile phone with things like messaging, mobile e-mail, and personalization -- which is really about social identity.

The mobile phone is in a position to be the dominant platform in the same way the PC turned out to be the dominant platform of desktop computing. What the mobile phone has going for it as the social computer is ubiquity, because everybody has one, and because it supports the mobile lifestyle. When people are mobile they're feeling most needy because they're away from the cocoon of their home, school, or office, and they're surrounded by a bunch of strangers.

Also, mobile phone billing is seamless and frictionless. The customer has a voice plan with a carrier, and it's very easy to add small fees for other services to the same bill.

On the regular Internet, people are used to getting everything for free. But with the mobile phone, people are willing to pay for services. So there's a huge business opportunity.

At Digital Chocolate, we see the games as a jumping-off point. It's a way to start a conversation. People need something to talk about. The carriers run storefronts in the handsets, which people get to through a miniature browser.

We get our products listed with the carriers that way. We have 200 channel partners in over 60 countries. We look for the early adopter customer who likes to discover new products and services. Then you have the network effects you get on the Internet.

We have this new sports service called Mobile League Sports Network, or MLSN Sports Picks. The whole idea is you hang out with your buddies and argue about sports.

It's a really simple sports game where you predict the outcomes, like who's going to win the NCAA Final Four. You get points and rankings. The servers on the back end keep track of how everybody is doing. That's how you create a sense of community.

Mobile gaming has caught on in Asia, and, to a lesser degree, in Europe, yet it hasn't really taken off in the U.S. Why is that?

Truly, Japan is well ahead of other markets in practically every dimension. There is more e-mail by mobile in Japan than there is via PC. If you look at the monthly spending of a handset user in Japan on data services, it's about $25 a month. That's far higher than any other country.

China has the largest installed base of handsets, but they're not spending anywhere near as much money on data services. The game market is in its infancy. Korea is a smaller version of Japan.

You look at Europe. It established messaging interoperability early. So they had shocking success with messaging, and there has been a big ring tone business in Europe for quite some time.

The U.S. got a later start in some of these dimensions, but it's not really late, and it's not really behind on games -- other than in comparison to Japan. The U.S. mobile game market now is probably as big as the market in Europe, and, in some ways it's healthier.

Things are going to take off now. Around the world there are now something like a billion handsets that can play a game. As recently as three years ago it would have been well under 100 million.

You have had a long tradition of creating PC and console games. How is making games for mobile handsets different?

In some respects, it's back to the future. We're working with processors and screen sizes I'm familiar with from the early days of home computers. For example, 3-D gaming has been part of the console market for 10 years but is just now coming to the mobile market. It requires more processing power and memory.

I have been there and done that, so it's pretty easy to understand what ought to be done. At the same time, it's a different platform, and the user has a different way of using it.

Mobile life has a different tempo from what you're doing at home in the evening with a computer. A console gamer who loves Grand Theft Auto enjoys sitting at home and playing for three hours. That's never going to happen with a mobile phone.

Our slogan is "Seize the Minute." We respect the idea that people will be using these things when they're stuck waiting in line even for a minute, so we can deliver entertainment value and social connection in a minute.

It seems like one thing that mobile gaming does is fill in the little dead spots in people's lives.

Think back on the past week in your life. You have probably spent between 10 and 20 hours waiting. So waiting time is a really big potential market. Our Tower Bloxx game is a good example of games that you can play for a very short time. People say it's one of the best games for mobile.

You have a construction crane on the screen, and it's holding a story of a building that looks like a block, and as it swings back and forth you're supposed to drop it into the middle of the scene. You pile more blocks on top until the pile falls over. You can enjoy doing it for a few seconds or for hours because it's very addictive.

Does it work to take existing PC or console games and just adapt them to mobile gaming?

It's a controversial topic. Every time a new medium comes along the traditional thinkers and the established powers in the old media immediately just want to adapt the content they have and put it on the new medium in a derivative form.

Usually that's just plain wrong. It also denigrates mobile to be a second-class platform. When you try to jam something made for TV on a mobile phone, you know it's going to be a second-rate TV. That's the wrong way to think about it.

You can treat mobile as a first-rate platform that's the best in the world at doing certain things. So you have to change the way you think about the content.

You have a new game coming out called The Hook Up, which has a lot of social networking in it. Tell us a bit about that.

It's going to come out in the early summer. You create an avatar. You decide what it looks like and its clothing. The avatar actually has an independent life of its own. It lives on your handset.

Every time you look on your phone your avatar presents a different mood, because it has just been on a date with another avatar. It might be really grumpy because it has been a crummy date. The date will be crummy or not based on how you programmed your avatar's personality.

Or your avatar might be jumping up and down with excitement about this really hot girl avatar he found in this club you sent him to. Or he's saying these other avatars invited him to Las Vegas and he wants your permission to go.

That's the casual game play component of it. But we have these communications features, too, where you can send a message to a friend that has your avatar in it. You can say: "Look at my grumpy avatar. He had a bad date."

Or you can send a happy birthday and have the avatar jumping up and down with excitement. It's just another way to reach out and touch someone. The other exciting potential you have is the opportunity to chat with the owners of the avatars that your avatar gets to know. It's a way for young people to expand their social networks. It addresses the mating instinct.

Are any new hardware, software, or networking technologies coming down the road that will make mobile gaming a richer and more fun experience?

It's going to get better. The next important change will be be going to faster networks, so the shopping experience gets a lot better. Right now, on an older network, it can take a long time to download a game once you buy it. There will be a quantum leap as we go from 2G to 3G networks.

Before it's here, it's on the Bloomberg Terminal.