Trip Hawkins: Broken business models, the importance of social, and industry forecasts

“We have seriously broken business models that are very frustrating,” says former EA CEO and founder Trip Hawkins.

Speaking during a talk at Games First Helsinki today, Hawkins covered a number of topics, from industry challenges, the importance of social elements and convenience in games and tech, and his thoughts on where the games sector is headed.

Do top grossing charts change?

On the topic of broken business models, Hawkins said that when analysing the top 100 grossing charts on any platform, “you’ll notice that if you look for a game that’s come out in the last year, there’s only going to be one such game on that whole list”.

“The other 99 games are going to be versions of Call of Duty, Fortnite, and other mobile games and basically things that have been around for a long time,” he said.

That sentiment for the mobile games market has been around for many years, with titles like Honor of Kings, Candy Crush Saga and PUBG Mobile dominating the global charts.

It’s worth noting, however, that a number of titles have still broken through over the years, including Dream Games’ Royal Match, MiHoYo’s Genshin Impact, FirstFun’s Last War, Century Games’ Whiteout Survival and Nexon’s Dungeon & Fighter Mobile (though the latter is based on a multi-billion dollar IP).

Walled gardens

Hawkins said that 98% of users that download and try a game for free end up never spending money. “That’s kind of a rejection,” he noted.

“One of the reasons for the rejection is that the platforms are these walled gardens, and they’re taking the 30% share,” he continued. 

“But in order to do that, if I want to get one euro from the customer, I have to charge the customer $1.43. You then take 30% of that, that’s 43 cents, so that’s what Apple, Android or Sony would get, and then I get the dollar I was looking for.

“But you as the consumer had to spend 43% more money. If you think the most recent years of inflation are bad, how about 43%? So that is a serious, serious problem.”

Hawkins, who previously served as director of product marketing at Apple, also took a shot at the iOS giant during his talk over the company’s privacy changes, which he stated had made it “really hard” to target that low minority of spenders.

We recently interviewed Antihero Studios CEO Brice Laville Saint-Martin about his new company and why, in the team’s opinion, Apple’s IDFA changes were actually a “positive turn” for the mobile games industry.

VR’s inconvenience

Hawkins discussed a number of new emerging markets in the industry, including esports, augmented reality, virtual reality, mixed reality.

He said, right now, “none of these markets have a particularly great business model”.

He explained that  for VR, the devices are very inconvenient. The most important thing in games now, he said, is the social value and then the convenience.

He highlighted examples that poorer quality experiences, if convenient, can still be favoured by consumers. He highlighted shrinking media experiences onto a phone screen and the poor sound on mobile devices not being a problem for consumers - as the device is convenient.

“I don’t mean to bash VR … I love the concept of it,” said Hawkins. “But we’re really not there yet.”

Future forecasts

Looking into the future of the industry, Hawkins highlighted areas of opportunity including AI for game development and user-generated content, and the potential of browser gaming.

He said while governments pressure monopolies over their 30% platform taxes, browser gaming offers a “great opportunity” for developers.

“I believe browser crossplay, with HTML5 and webGL, I think that’s one of the next waves,” said Hawkins.

“New hills to go after, not really crowded. Right now you can’t really think of a leading company that’s doing that, period.”