Capps, who spoke to IndustryGamers this week in advance of his GDC Europe keynote (Cologne, Germany from August 15-17), made it very clear that he still sees 99 cent apps as a very serious threat to the health of the traditional games business. You might recall that Capps told us several months ago, "If there's anything that's killing us [in the traditional games business] it's dollar apps."
He hasn't changed his mindset on this one bit, and in fact, when we asked him if this means he's literally worried about cheap mobile games hurting Gears of War 3 this holiday, he answered, "Yeah, it does. If you think about what many people are doing... What game did I play today? What game did I play yesterday? If I have 30 minutes to game, what am I going to play? That [time] more and more gets taken up with mobile games."
"I'm more worried that you can get a really good 99 cent game that occupies you for hours and hours on end and how that impacts $60 SKUs [like Gears]."
Capps continued, "And I think that can be said for movies. I think the biggest competition for [XBLA title] Shadow Complex was Netflix – not Castle Crashers (great game) or Limbo, but if you fired up your dashboard right there if you already bought Netflix you have tons and tons of awesome content that's bite sized in 1.5 to 2 hour chunks. So that was our competition, getting mindshare in the dashboard, more than it was against the other games in the space.
"I'm more worried that you can get a really good 99 cent game that occupies you for hours and hours on end and how that impacts $60 SKUs [like Gears]. I'm not as worried about how it impacts Infinity Blade – I think there will always be room for a premium SKU on a mobile platform. And I think as more buyers [enter the mobile market], there will be more people who are willing to spend a bit more for quality. But I do worry about what it means for the next generation of console games. Are people really going to want to spend $60 on a game? I mean, we're spending tens of millions of dollars making those games that they want to play... it's not a sustainable business model. I'm not sure how it all ends up," he said candidly.
How does Epic intend to make money in this environment you ask?
Originally Posted by IndustryGamers
And as much as Capps fears 99 cent apps, he also acknowledges that pricing on the App Store is very difficult to determine.
"The arguments we had internally were about pricing and what we should set it at, because nobody really knows. It makes sense that we're still confused about how to price appropriately in that market. We see a much higher micro-transaction rate on Infinity Blade than most phone games do. But we charge $6 to get in, and that pre-qualifies players as probably the kind of consumer that would be willing to spend a bit more money if they want to accelerate their game experience," he said.