Interview: Mobile Game Guru Trip Hawkins Transforms Strategy; Denies Digital Chocolate Was For Sale

Trip Hawkins is in the middle of transitioning Digital Chocolate from a company he started almost five years ago as a pureplay mobile game company to a social media company leveraging Facebook and others. “We sort of backed into it … In the beginning, we thought we were always going to be a mobile company.” Instead, Hawkins says he eventually tuned into a concept he calls “omnimedia,” a theme he also talked about in his CTIA keynote earlier this month. Digital Chocolate has a staff of more than 300 and has raised almost $44 million in three rounds led by Sequoia Capital, Sutter Hill and Bridgescale. In all, almost a dozen venture capital firms have invested as well as Bob Pittman, of MTV and AOL fame. The bulk of the company’s revenue comes from feature phone users, with Europe as its largest market. A year in, he talks to mocoNews, insisting he’s on the right path and knocking down reports that the company was for sale. Some highlights: ‘Never been on the block’: We and others have reported on Digital Chocolate possibly being for sale, but Hawkins dismisses everything along those lines: “I just want to not have this continuing speculation out there. The reality is that we have never been on the block. In the entire history of the company there’s never been an offer. We’ve never even had an unsolicited offer.” Still, it doesn’t negate the test Digital Chocolate is now facing as it transforms the company even further into the PC, virtual and console worlds over the next year. Always the believer, Hawkins concludes: “the future is brighter once you move over to more socially driven business models.” John the Baptist: When Hawkins formed Digital Chocolate he was one of the first gaming executives to talk about mobile games in the social aspect. Since then, an influx of social games launched on sites like Facebook has somewhat stolen his thunder, forcing him to begin building brand name awareness and a user base outside the mobile arena. Back in 2003, “it was such an alien idea and I could tell people were uncomfortable with me talking about it… I was the John [the] Baptist, who maybe got my head cut off.” Now Facebook and others have “delivered on that concept of social value.” And so the past year at Digital Chocolate has been all about gaining more attention from the 13-17 set through free trials and providing more opportunity for players to share the experience with others. Mobile-to-web from the bottom up: Hawkins: “We try to bring some of those web business practices over to the mobile side. All those same principles can be applied to mobile… it’s just a lot harder to understand… Eventually it’s all one big beautiful world. You would no longer see all these differences between how the mobile world works and how the PC world works.” Digital Chocolate had been designing to a mobile specification and it turns out there are a lot of similarities between the various platforms it’s going after now. “That’s kind of a pleasant surprise for us. That means we have great content across any platform.” Hawkins readily admits he wasn’t sure if their games would translate as well on richer, more capable machines like PCs and consoles. He’s found that it’s easier to begin at mobile and grow outward, rather than the other way around. “Generally speaking, software businesses pick a platform and they drill into that platform… It’s extremely difficult for a variety of reasons for big companies to innovate.” Take Electronic Arts for example: “EA’s never performed as well on the PC. EA had to make an acquisition to get into mobile.” Add to that the “very challenging business environment” that mobile is – “it’s chewed up and spit out a lot of companies.” Licenses are tapped out: Hawkins thinks big brand and license holders have been too accustomed to being overpaid for their titles and as long as someone’s willing to pay them for that they’ll continue to expect as much. “I think the license thing is kind of tapped out.” And those that are coming to mobile seem to get older and older. “Generally speaking, a lot of films and TV shows that have been brought to mobile are five years old… We’re really scraping the bottom of the barrel here… The industry has leaned very heavily on the last 100 years of brands and still leans very heavily on brands like Tetris. A lot of these brands have actually performed very poorly on mobile. It’s really hit or miss.” Transition Results: Digital Chocolate launched Tower Bloxx on Facebook 11 months ago and now it’s one of the 50 top performing apps on the site. Hawkins likens it to “sending out a probe to see if there was an intelligent life in the universe.” Since the company launched online, its carrier business has been growing faster as well. Hawkins: “It’s not like it just happened overnight. We just built up our reputation. More customers now recognize their brands on carrier decks because they’ve already played them online. “The operators wanted brands and that’s not what we brought to market.” Digital Chocolate never stood to lose any revenue online, but the instant marketing that the web brings (as well as converged platforms) outweigh any concerns about unintentionally cutting the value of the mobile products. “If social value is a linchpin benefit,then the consumer is more likely to want it on a platform that’s always with them.”

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