Microtransaction Games Hit iPhone As Ngmoco Goes Social

Today mobile game developer ngmoco announced the hire of former MySpace SVP of Business Development Jason Oberfest. Among Oberfest's new duties as ngmoco's Vice President of Social Applications will be helping ngmoco plan strategy for its new social games initiative. Ngmoco wants to bring its catalog of popular iPhone games to social network platforms like Facebook and MySpace according to a statement released by the company yesterday. This marks a significant change of the direction for the company, which was formed specifically to develop for the iPhone platform.

The change of direction is likely driven by recent changes in the turbulent iPhone gaming landscape. After early successes like Rolando and Topple, more recent ngmoco's game like Star Defense have begun to struggle as iPhone app prices have plunged. Right now most of the top apps on the iPhone top lists are cheap $.99 games while most ngmoco games are priced at $5 or higher. The lowering prices seem to be driving more iPhone titles (including ngmoco's own Eliminate) to incorporate microtransactions sales of virtual items as much-needed revenue streams.

Among the high-profile new iPhone releases emphasizing microtransactions are the highly anticipated titles My Brute and Pocket God. In My Brute, the microtransaction items will include more character slots, additional character sets, convenience features, and "unlimited combats" that will work similarly to the ability to purchase extra turns or energy in your average social game. Pocket God is offering "skin packs" that let players completely customize the appearance of the island where the game takes place and the T-Rex that players use in the course of play.

While both My Brute developer Bulkypix and Pocket God creator Bolt Creative promise to keep updating both games with free content, the companies make it clear that without some revenue from virtual item sales further development on the games simply won't be possible. Both companies are trying to keep microtransaction costs low, charging the minimum possible $.99 for the additional virtual items. Representatives of both companies stated in interviews with Pocket Gamer that they would charge less for smaller items if it was possible to do so.

While mobile phones that monetize primarily through sales of virtual items are common in Korea, Korean game publisher Gamevil has stated to Pocket Gamer that the iPhone's $.99 minimum on in-app microtransaction prices is going to make it difficult for the model to take off in the US. In its Korean titles, $.99 would be the price of the highest-end microtransactions in a range that went as low as $.10. To iPhone users, $.99 is increasingly thought of as the price you should pay for an entire game, let alone for a collection of virtual items for use in a game.

Gamevil notes that revenue from microtransaction sales in such games usually ends up being roughly equal to revenues generated by direct sales of the game (which users also pay for). Gamevil notes that generally item and currency sales are the way to go when monetizing mobile content this way. Selling additional game content through microtransaction tends to upset players, who tend to believe that the "extra" content was planned all along by a greedy developer who wants to make them pay twice for one game.

The iPhone price tumble had not yet taken its full toll when microtransactions were announced as part of iPhone OS 3.0 earlier this year. It hadn't yet been foreseen how the $.99 minimum prices on both content and games would affect the viability of the otherwise-proven virtual goods model. What seems clear now is that the promise of Apple's in-app transactions is not playing out entirely as expected. With stalwart developers like ngmoco beginning to look at platforms other than iPhone for profit, it must be wondering if the great iPhone boom of the past few years is passing.

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