Unity, the Riccitiello riddle, and mobile gaming's $40B future

hello i'm john jordan and welcome to pocketgamer.busy's weekly news digest this for the week ending uh october the 24th 2014. um so there has been some pretty uh kind of interesting big and speculative news this week but uh before we kind of kind of get onto unity and what's going on there um i kind of thought there was a another story that um in a sense it's kind of bigger really um even though it's not like like a a a news event related story but it's um it's a prediction of the s of the scale of the mobile games industry which even though i've been writing about it for a long time now it was kind of quite surprising for me so as um probably people know who've been reading my stuff i'm fairly skeptical about people who predict um kind of the future um there's a kind of well-known kind of kind of a mathematical or a kind of

statistical approach to things where you shouldn't really predict things you should predict the probability of things happening so we shouldn't necessarily say this is going to happen tomorrow but we could say there's a 50 chance that's happening tomorrow market predictors haven't really got around to this kind of um kind of way of dealing with things which is now actually becoming quite quite prevalent in stuff like political um predictions but um if you're if you're a market uh analytic firm or predictions company you tend to predict the market will be worth xx billion in year 20 xx um so in in this case there's a company called um called muzu who are you know fairly very well regarded they're not they're not some kind of fly-by-night kind of company they do lots of predictions just about games industry so they're kind of fairly well kind of clued into what's going on and early in the year they did some predictions about um as these companies tend to do they predicted over a four year period so they were looking um they had their um numbers for 2013 and then they predicted 2014 15 16 17. so it's five years isn't it and they've reached it for five years um

and um it kind of seemed all well and good i mean they were still numbers but still pretty impressive so you're predicting for 2000 that they kind of thought revenue would be 21.7 billion dollars you know that's a kind of large amount of money um but now they've kind of re after six months after they they did their initial estimates for for this period they've actually kind of revisited them and actually raised them fairly significantly so um for 2014 the year that's almost ended they've gone from 21 uh 21.7 billion dollars of revenue globally from mobile games that's that's that's um that's a smartphones and tablets um and they've increases to 25 billion dollars so that's kind of three well i was saying um 3.3 billion increase in their estimate which which is um and they kind of generally say they're trying to be fairly conservative in their estimates anyway so a fairly a fairly significant change um and the roll-on effect is actually for

now for 2017 they see the mobile games uh industry global worth as being worth about about 41 just a shy of 41 billion dollars now obviously that's a bit different you can say you can argue in 2014 we've only got really two months to go so um you're not really predicting very much if if if 10 10 12th of the year is already done but um 2017 is obviously a bit of a way off and we don't we can't really tell what's going to happen um i always kind of find it um interesting where obviously people uh try to predict the size of the of the mobile games industry the year before apple announced ipad um and no one could no one pricked the ipad so the fact they predicted money uh the scale of this industry the industry without knowing ipod was going to be meant all their predictions were absolutely rubbish so in a sense i'm saying prediction is a bit of a mugs game um even though nuzu are as good as anyone at doing it but it even even if the the case of 40 41 billion doesn't happen silica 25 billion

dollars in this year is is absolutely enormous really it's kind of to the degree it's kind of crept up on us a little bit um and i guess we've had these companies like kind of supercell and people like um uh the uh trying to think of the name um gung-ho the puzzle and zombies uh person zombies that's making things like puzzling dragons guys in japan um and they had a brilliant that's a billion dollar franchise now um so yeah we kind of have these big numbers um but i guess sometimes we kind of think oh there's a few big companies there's like king and supercell and and gung-ho who do these big billion dollar kind of annual revenues but there's a lot of other kind of companies maybe we don't think about who are doing hundreds of millions of dollars now so i guess it all adds up i guess the the the interesting thing in the long term is if new zealand's prediction is correct for 2017 and we hit around 41 billion of mobile revenue that's normally split between two um mobile smartphone and a third tablet that's pretty much what people are predicting throughout the um

the next kind of four years or so um but if mobile games got to 41 billion that would actually make them the biggest sector of any game so bigger than console gaming bigger than pc gaming um and and the interesting thing i guess is mainly that new zoo is suggesting this is mobile as an industry is growing via growth so it's just more people are playing mobile games there's some there's some cannibalistic element that people are kind of not playing console games anymore and some so some of them some of the dollars that would have been spent in console games are now moving into mobile games but but the majority of mobile's growth comes from what they say organic growth so again another maybe surprising thing is that nz was saying kind of uh western europe and north america which are fairly big and fairly fairly mature markets it's expecting growth of about kind of 45 kind of high 30s 45 in those markets obviously in places like china um they're predicting growth uh this year of 85 percent and that kind of seems to chime with what the chinese people are saying that chinese kind of um companies are saying they're kind of looking around about 90 growth this year

now i guess i guess the bottom line is we're saying his mobile is very big bigger than we kind of expected um which i guess is good news for for for all of us really um but even though i'd say yes i was a bit surprised that the numbers were coming out kind of kind of that big although obviously as you say these are all predictions so it's not actually um kind of a fact yet anyway so that was a bit of a long-winded start to the fact that mobile games are very big now um and i guess moving on to the the news that was the news um but was it actually news really um so unity technologies company that have been um going about 12 years now they started out with a unity engine that was actually a plug-in engine like a browser a browser engine for for pc games and they kind of made nice business kind of doing that and they kind of slowly moved into into consoles um and then probably so i think five five years ago started did i start doing iphone and basically what they've done now is is they have a engine technology that pretty much covers any any time of any type of gaming platform you would want to write a game for so from consoles to pc

to mobile um and handheld um pretty much everything supported okay it gets a bit more interesting um the developer's point of view it's not just an engine so it has all the sources of the lighting and the ai and the physics what kind of stuff but there i think what units have been very good at one they're very cheap which is a good good for kind of increasing market share but they've been very good at is actually kind of providing a platform so they kind of have deployment they have have a big thing they have is called the asset store so it's basically develop game developers can create little nodules nodules modules of code and assets and things that kind of plug into unity so other unity developers can kind of buy kind of bits of code effectively or kind of subsystems for their games that's been pretty successful for them um so the kind of the news and it was um i mean it is big news in the sense that the founder and and the guy who's been ceo of unity um for their entire career is it david helgeson you know pretty well known going in industry very um kind of charming and and um but very much like the spokesman of the

company as you would be with the ceo he kind of announced he was stepping i mean not really down he's stepping kind of sideways so he's going to move to what what is now a a bit of a weird americanism role but executive vice president um so he's going to effectively keep doing what he does but he says he loves talking to developers who are using unity and finding out what they want and um and kind of looking at strategy um but the ceo role which is a kind of the the main figurehead role he's gonna he's gonna be replacing that by a guy called john rickacello now he's an industry veteran he's done in his career there's a lot of things that he started off working for pepsicola and haagen-dazs and then went on to work for wilson wilson sporting goods who made kind of tennis and golf clubs and all kind of weird stuff anyway he's special in the game industry but for what he he ran ea over two stints as ceo um and it's a bit unfortunate for him and it's i guess it's one of these big kind of conflagration little things that that a company like ea with thousands of staff making hundreds of games a year anything that went wrong was kind of seen as john riccichello's kind of fault

um he joined ea um kind of a difficult time for them they were moving from from from retail goods to digital goods um which is the transition he kind of dealt had to deal with and through that time they were kind of lost making and their share price went down and um he had to make lots of kind of difficult decisions um some of them maybe he he made well some of them maybe didn't make so well but we kind of had this interesting interesting kind of thing now that john because jonathan has taken over from david hillson who's who's basically this kind of like a the kind of a um i mean the satan of the games industry is kind of wrong but but that kind of like a very lauded figure he's kind of quite humble he's come from from denmark as the companies are kind of quite scandinavian in his kind of self-depreciation um and being replaced by an american or seen as an american's kind of ceo suit and so i would say a lot of people but a certain number of vociferous people which tend to be the way on the internet these days are kind of suggesting that this is the end for unity and and this this terrible man who destroyed ea is going to come in and destroy unity um and so there's been some kind of interesting

this the news was quite a surprise i think for most people um and talking to david hills and he said he said the decision was actually made um pretty pretty quickly it wasn't it wasn't something they um generally have been on the board for unity for for a number of years for a number of month about year and a half i think um and so they got to know each other during that time um and i think very quickly david decided that now was the time to step down and and john could step up and as soon as they made that decision they kind of announced it and kind of got on with the change so i think people were kind of surprised by happening the other interesting thing i guess in to give the trend to what's happening with unity is there's been lots of rumors um they're a privately owned company they've had some vc money not a lot of vc money actually much less than people kind of expect but because they've been so successful they've got over um three million um developers are using their technology so there's an assumption that they're the industry standards so they'll either kind of sell out so some big company will buy them there's been rumors that people like amazon home and google or facebook or you know all the usual suspects potentially might have been trying to buy them or been asking how

much they cost and then the other option is of course when you get to a certain scale you can ipo and because john ricachello worked at ea who are a public company um there's kind of this assumption that he's been brought into to get community ready to ipo so david hilton said that's a load of old rubbish um maybe you'd expect him to say that um but um he he seems to he for his point of view he kind of says the next big thing for unity is they know how to make tools they're pretty good at that and now they need to they've made developers made it easier for developers to make games now they've got to make it easier for developers to find success with their games um and obviously john ricochet working at ea working at a company that that is very successful at selling games to consumers that's kind of one of the things he has been brought on to do so we're waiting to see i mean that's a long term kind of or a medium-term thing i guess but uh kind of making an interesting week for us with them speculation and interviews and lots of stuff like that flying around so anyway i'm sure next week won't be quite so um fascinating but there will be one or two things i'm sure that you'll want to come back and see how we discuss see you next week