Transitioning from a Developer to a Distributor of Mobile Games: Lon Otremba, CEO of Tylted (Part 5)

Sramana: When you market to your audience, do you have to do revenue sharing?

Lon Otremba: If we are marketing we do not have to do revenue sharing because we are acquiring users directly. If AOL decides that they want to feature our games in their environment simply because our games monetize well, then we will encourage them to market our games in their environment. In that case we would share revenue back to AOL because they are promoting our content and the acquired user is an AOL user. If I am going out directly and marketing to get new users, then those are our users. We have acquired them directly, and we do not share that revenue.

Sramana: We are seeing in-game advertising everywhere. You can cross-promote games from within your environment. I am assuming that is one of the ways you promote your games and the games of the developers whom you are essentially the publisher for?

Lon Otremba: Yes. There are a couple of things I have observed in regards to how advertising fits within this ecosystem which has led to us take action. In some ways, the existing advertising within the mobile game ecosystem is dysfunctional. In some cases it does not realize its full potential, and in those cases we have taken some pretty bold steps to do things that we think are not dysfunctional and are, instead, highly capable of being leveraged.

I will give you some examples. Why do I think it is a bit dysfunctional? I think that the bulk of advertising, as a category, that is occurring on mobile in general is games. These game companies have to advertise in order to capture users. The costs that are required are growing. The results are sinking. Consequently, what is happening is a funding of a death spiral. Developers and publishers have to keep spending more to generate greater and greater inventory. This inventory is increasingly less effectively monetized by the only aspect of the ecosystem established to monetize games, the ad networks. Ad networks have to encourage selling to gamer developers because they are willing to spend to acquire other players from other games. This is not a virtuous cycle.

We have to go outside this ecosystem of gamers talking to gamers because it is a death spiral. That is going nowhere. We have to make mobile advertising environment appealing to brands. That is something that mobile in general needs to figure out anyways. This is confronting Zynga, Facebook, and all the little guys. Everybody needs to figure out how to effectively monetize the enormous amount of mobile traffic out there. That is not going to happen solely by gamers talking and advertising just to games. It has to break out of that cycle.

We have to think of ways to make our environment, and our audiences environments, appealing to major brands. That is beginning to happen, but it needs to happen in a creative and effective way. It has to be in a way that the advertising ecosystem in general can absorb. It took the infrastructure for desktop digital advertising ten years to look and feel like the growing, successful industry that it has become. It will take mobile less than that, but we are still in the first inning of a very long game.

This segment is part 5 in the series : Transitioning from a Developer to a Distributor of Mobile Games: Lon Otremba, CEO of Tylted
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