GDC 2010: Backflip Studios' year in the App Store

He revealed that a full $1m in that actually came straight from ad sales -- he's made deals with AdMob and other companies to put ads in his popular Paper Toss app, and he uses those ads both for straight revenue, as well as to promote his own games (more on that later in the talk). Farrior offered up a frank and honest look at what it was like to run an iPhone app company for a year.

First, he talked about what Backflip did right last year. He said that he'd hired a talented team to work on his applications, and that the company had focused on distribution, which they'd "leveraged heavily" -- the more people playing their games, the better. They'd kept production cycles short, kicking out apps in no more than 12 weeks, and he said they'd made the good decision to "design for the medium" and the audience, making shorter, casual games that took advantage of the iPhone's hardware and touchscreen.

He also talked a bit about the balance he ran between "house ads" (using ads in their free apps to try and create paid app sales) and outside ads -- during the months of December and January of this year, he pointed out how he'd balanced house ads to try and take advantage of the "holiday jump" in sales. As you can see in the slide below, even though he had to take a hit in actual ad sales, he saw a huge boost in App Store sales by using his free app to encourage sales of the paid app Ragdoll Blaster. Farrior said this was important: as an App Store developer, you have to leverage everything you can, not just depend on sales numbers for revenue.

He showed another interesting slide as well about "download catalysts" -- specific events in the life of his app that encouraged major boosts or drops in downloads and sales. Apple's "What We're Playing" section in iTunes gave a big boost to app sales (which is something we've heard echoed from many developers here at the show), but the biggest boost actually came from when he used the free app to advertise the lite version of his paid app -- the spot marked as "RDB Lite House Ads in Paper Toss" below. Users downloaded the free app, saw that there was another free app to download, picked it up, and liked it enough to buy the paid version. Again, he made it clear that even if you've got a paid app on the App Store, using "free impressions" in a free app can encourage sales.

One more thing to note from the chart below: the app's price drop did almost nothing. Farrior again echoed something else we've heard: price on the App Store doesn't necessarily matter as much for sales as most developers think it does. The main factors seem to be quality and promotion -- if people know about your app and like it, they'll buy it almost independent of price.

Farrior also went over what went wrong in the past year. His company had a lot of problems with Harbor Havoc 3D, a paid app that they intended to be a "deeper, better version of Flight Control." Unfortunately, development ran a little long on the game, they missed some key features (there was no saving of the game's state when you kicked back out to the homescreen -- "I don't know how we missed that," Farrior admitted), and by the time it finally came to market (after an Apple rejection that wasted some press coverage they got), it got lost in the mix of line drawing games.

Additionally, Harbor Havoc actually suffered from the lite version release: Farrior said the lite version cut sales of the paid version in half. He says they're still working on figuring that one out -- there are a few levels in the paid game, and he mentioned possibly "picking the wrong one" for the lite version. But at any rate, Harbor Havoc, he said, shows that you "can't make an OK game and count on impressions" to pick up the slack. Before you even start thinking about splitting up revenue streams, the product has to support it.

For the future of Backflip, Farrior says he wants to grow the company -- this year, they hope to release five to ten free apps per quarter "to keep the pipe wide and the impressions high." They also want to test out in-app purchases, from adding extra content for players to possibly a model where they offer "a 99 cent buyout" to completely remove ads from their apps. He's also interested in turn-based gaming -- he says that Zynga and other companies have experimented with that form elsewhere, but that they're not quite there on the iPhone, and there's room for someone else to be. And he's also interested in licensed content -- even a simple game that would otherwise be anonymous can benefit from having a name or brand attached to it.

The panel was a very frank look at what Backflip Studios has done on the iPhone in the past year. Farrior mentioned that one of the things that drew him and his company to the platform was that he'd seen people who'd never played games before (his mom and sister) looking for game experiences on the platform. Clearly, their success is a result of providing exactly those experiences for customers.