E3: N-Gage boss talks price points and more
Interview Following Tuesday's announcement of launch details for Nokia's new console at an underwhelming press event in LA, gi.biz spoke frankly with N-Gage boss Ilkka Raiskinen about criticisms of the system.
The $299 price point announced on Tuesday has drawn flak from most quarters of the industry, but it's not the only area that's come in for widespread criticism, with the range of publishers working on the platform and the quality and pricing of the game software also in question.
We interviewed Mr Raiskinen, who is senior VP of the entertainment and media business unit at Nokia, who responded frankly to many of these criticisms and outlined exactly where Nokia is planning to go with the console and how flexible it is on its plans at this late stage in the development of the platform.
gi: You held your press conference yesterday for the N-Gage; what kind of reaction have you seen to the announcements yesterday, and to the console so far at the show?
Raiskinen: I haven't been able to follow what the exact reaction was, so I think that will have to wait until next Monday when I am back in Finland. Based on the discussions I think that mobile gaming seems to be one of the hot topics, there were quite a lot of announcements yesterday and the day before that about mobile gaming and the importance of that. I think that on top of mobile, the connectivity elements that we were able to demonstrate created quite a lot of interesting comments.
gi: As you said, mobile gaming has been quite a hot topic; obviously a lot of that is because of Sony's announcement yesterday. Does that change any of your plans for N-Gage?
Raiskinen: No, not at the moment. I think that it [PlayStation Portable] seems to be a great device but it's going to hit markets, like, Q4 2004, something like that, and I think the whole idea is a little bit different.
gi: Your business model and your pricing structure for the N-Gage is quite different to the other consoles, and that seems to have attracted quite a bit of criticism, particularly the price point you've decided on and the business model where you're not making a loss on the hardware. What makes you so confident that consumers are going to buy into the device at the kind of price point you're talking about?
Raiskinen: Obviously our background is with other types of mobile devices, i.e. phones, and we understand the phone price point and dynamics, and obviously when you have a device which is sort of like a hybrid between a consumer electronics device and a phone device, the question is what's the sort of price point, what's the price dynamics there that the consumer will understand. We believe that for a device with those kind of capabilities, $299 seems to be quite an interesting price point, and obviously we didn't invent that price point - we had quite a lot of research, global research, and we believe that with that price point we have enough consumer attraction in the beginning.
gi: That would suggest that you're aiming at a very different set of consumers from the general games industry - none of the home consoles cost even remotely close to that price, so you're launching the single most expensive piece of hardware in the console market. I still really don't understand how people are going to go for it at that kind of price point - you talk about the additional functionality, but people are going to judge this as a games console, aren't they?
Raiskinen: I think that people are going to judge it based on the experience they get from using the device in the games and the gaming-related services. Going out there and trying to do something new is always challenging and there are lots of risks, and we will know soon enough what consumers will think about this $299. I think we need to wait and see what the reaction will be.
gi: One last question on the pricing, then - does the fact that you're not prepared to subsidise the hardware, in the same way that other console manufacturers do, not suggest that perhaps you're hedging your bets here; that you're not prepared to make an initial loss on this device because you're not confident that the software sales will make that up?
Raiskinen: I think that it's not hedging the bets, but trying to create a business where value is attached where value belongs. It's a new segment and we believe that there's a good chance that this kind of strategy will be successful. It's not really hedging the bets, and I think that there are also other mobile gaming device manufacturers that also make profits based on hardware.
gi: Moving on to the games which you have running on the system. You announced a new partner yesterday, Ubi Soft Gameloft - do you expect to announce more new partnerships before the launch, or is this your full launch line-up of publishers?
Raiskinen: No, we will be expecting to launch with some more publishers, so basically yesterday we said that at the launch we will have 10+ titles, and we said also that by Christmas Eve or so that there will be 20+ titles, so the additional ten are missing, so you can expect to see announcements for at least ten more games and related partners before Christmas Eve.
gi: The software which you showed yesterday at the conference - was that final versions of any software or was that still in development?
Raiskinen: I think most of the software was still Alpha or Beta level software. I think the Tony Hawk title, some parts of that are quite good, and also Pandemonium - those games we have been working on the most, and are sort of more mature.
(Editor's Note: some of the criticism of the graphical quality of the titles on offer on the N-Gage yesterday seems to have been somewhat unfounded, as it was based on watching real-time demos of the games on large screens at the press conference. Hands-on play reveals that these screens were of poor quality and were responsible for the pitiful frame rates we witnessed, with the games (Tony Hawks and Tomb Raider) running very smoothly indeed on the game deck itself).
gi: In terms of the launch of the console, how do you plan to judge the success of that launch? What kind of level of unit sales are you expecting?
Raiskinen: For us, the volumes are not critical at the moment. Nokia's strategy is a long-term strategy, and N-Gage is the beginning. For us, therefore, the key is actually what's the end user reaction, is our claim that mobile connected games are really a different experience justified? If the consumers think and say that Nokia has something that makes sense in here, then we are successful; if not, we need to go back to the drawing board.
gi: If it is successful, will you be building the N-Gage hardware into other Nokia phones, or will the N-Gage remain an independent hardware platform, separate from the rest of your range?
Raiskinen: We will continue to have a strategy that we believe that games will be an important feature in each and every mobile phone that we have, but on top of that there is a clear demand for an optimised device that is optimised for mobile gaming. So we continue to have a horizontal strategy and a vertical strategy.
gi: Part of that strategy is that standard Symbian games will work on the N-Gage and will work on the other Series 60 phones - but the N-Gage games on show here will not work on any other Nokia phone at all though, will they?
Raiskinen: I think that it's mainly down to the copyright protection, we have been working with the publishers and they are extremely concerned about how and where their games are being played, so for copyright reasons and for compatibility reasons those games will only work on the Nokia N-Gage device. Basically the platform is the same so in theory the games could be available on other devices but, well, it would sort of be against our strategy to build this kind of a vertical experience, and I think that in the future, the gaming-optimised devices will also have such hardware components that will provide some unique features.
gi: One of the things that was mentioned a number of times at the conference yesterday is GPRS, as this is the networking system that most of the games will use. However, certainly in the UK and I think in much of Europe, GPRS is still a very expensive service. Is that a concern for Nokia?
Raiskinen: I think that GPRS will evolve; price-wise, service-wise, coverage-wise and so on and so forth. Our strategy is that the first set of games will use GPRS mainly for transactions or turn-based games or strategy games, and when we need more bandwidth, somewhere like 2004 or so, I think by that time the network and the pricing should be much more clear and we don't believe that pricing will be a showstopper there.
gi: Do you have any plans to release a version of N-Gage for the Japanese market or is that still something you're staying clear of?
Raiskinen: We haven't announced anything there. I think it's a big enough challenge to first go out with this concept and work across Asia, Europe and the USA.
gi: Without a PHS (Japanese mobile telephone system) version though, are you having difficulty in convincing Japanese developers to work on the platform?
Raiskinen: I think the Japanese developers see the opportunity to work with Nokia as an important one because we can use our distribution to bring their games to areas where they haven't been earlier, so we haven't seen that as a problem.
gi: What type of contracts do you see people buying with the N-Gage? Will there be N-Gage specific packages or will people be using existing tariffs?
Raiskinen: I think that we will probably see different kinds of pricing schemes. We know that there are some operators that will provide services for N-Gage and therefore also some pricing schemes for the device. The others have regular GPRS pricing schemes available.
gi: Do opportunities exist for operators and content aggregators to provide downloadable games for N-Gage in any form?
Raiskinen: I think that's clearly the future. I think the downloadable games have some challenges that we need to solve first, especially the security aspects. That's clearly the future and I believe, as I already said, that 2004 is when we'll see more rich online experiences - right now the downloads are more like levels and new weapons and new capabilities for the games, and already that will provide good opportunities. Obviously right now the installed base of N-Gage is zero, so this year the service element is more education, and as I said earlier, the key issue is to get consumers to understand and appreciate what online and wireless online gaming is all about.
gi: How important is N-Gage to Nokia? At the press conference in London a few months ago, the system was described as being the most important hardware launch since the first GSM phone - is that hype, or is this really something that Nokia is staking a great deal on?
Raiskinen: I think the gaming area is really important to Nokia, and we see that mobile entertainment is really something that the consumers want. As a company present in the mobile domain, we believe that it's quite natural that we continue to find and develop this kind of mobile user experience further, and mobile gaming is on top of the list.
gi: How flexible are Nokia's N-Gage plans at the moment? If you come away from this show and, as has happened to people launching new consoles before, the feedback from the show is negative, is Nokia prepared to go back and redesign elements of its strategy or hardware?
Raiskinen: We always take feedback seriously, and it's something that we have been doing throughout the years. We are flexible in details - like "fix this feature" or "get more content of that sort" or so on and so forth - but I think that the strategy, that mobile gaming is the way forward, I think that whatever happens in here that's something that we strongly believe in and will continue to work on.