Pangea Software was one of the more prolific early iPhone game companies. Quickly porting their Mac catalog over while re-inventing the games for touch controls gave them an early windfall as they filled a void for great games on the platform. Since then, Brian Greenstone, the President of Pangea, has remarked how they have had a much harder time getting games to sell at those amazing early levels.
I sent a few questions off to Mr. Greenstone about his experiences on the App Store in the past five years. We get some great stories about the first decisions for pricing of games, Steve Jobs's input on that, and the skinny on how Mr. Greenstone is sometimes thought of as the person the kicked off the drive to $0.99.
148Apps: You jumped on the App Store right at launch. What made you so sure of the App Store?
Brian Greenstone, President of Pangea Software: Actually, I wasn't sure of it at all. I got into it simply because I had always wanted a "handheld" version of some of my games, and my attempts at PSP and Gameboy versions never panned out. The iPhone looked like my chance, so I got into it just for fun. Never had any intention of making any money at all.
When we were at Apple before the 2008 WWDC Keynote preparing our presentations, I said to the Apple guys that I expected Enigmo and Cro-Mag Rally to maybe sell 10-20,000 units over their lifetimes. They responded, "No, they'll probably do 50-100k". Well, we did 100k units in the first few days! It really wasn't until then that we realized this could actually be a business for us.
148Apps: Pangea games were originally priced at $9.99; how was this initial price point decided? Did representatives from Apple have any input on the price point?
Mr. Greenstone: Back in 2008 there was a lot of speculation about what the price of the apps would be, and a lot of people were predicting $24.99 since that was about the price of the cheapest console or Gameboy game you could get at the time. During our rehearsals for the WWDC keynote I talked a lot with the Sega guys who were equally unsure what to charge. One day we decided to do an informal survey of coworkers and people we knew to see what they'd be willing to pay for our games on the iPhone. We came up with the same figure that Sega did which was "$15". That's what most people said they'd pay, so we decided that we'd both announce that price in our presentations.
However, the next day we did our presentations for Steve Jobs and he asked each of us what we were going to charge for the games. When I told him $15 he said "That's too much. It should be more like $4-$7". I wasn't about to tell Steve that I thought he was crazy, so I thanked him for his advice and that was that. After thinking about it we all separately decided that $10 was probably a good starting point. We thought $4-7 was insane, and that $10 was still crazy. I mean how could we sell a game for $4 on an iPhone that we were selling for $30 on other platforms? Seemed insane at the time.
Anyway, it ends up that $10 was a great starting point because at launch there were only a few dozen games, and people were hungry for everything so they were willing to pay $10 easily. Sales were so strong that first week that we had estimated that we were making a profit of $1.10 per second. It didn't take long, however, before all the Fart and Beer apps drove the prices down, and within a month we had cut our prices in half in order to remain visible in the rankings.
148Apps: What has surprised you most about the App Store in the five years since launch?
Mr. Greenstone: I'm shocked at how big it got. Even Apple was shocked at how things exploded - nobody expected that. I'm also shocked that it hasn't self-imploded from all of the competition. Back in 2007 there were around 2,000 PC games that came out every year, and that was considered to be crushing on the industry. Nobody was able to make any money, and everyone was complaining that the PC gaming industry was going to collapse. That all seems silly now because there are probably 100x that many iOS games each year yet the industry keeps growing and growing. True, only about 5% of all of those games ever make any money, and even fewer of them make enough to sustain a business, but it's such an easy and inexpensive platform to develop for that people keep trying. That's really the key to it all: throw enough darts at the dart board and eventually something will stick and you can go buy that Ferrari.
148Apps: In the five years since launch, the App Store has changed considerably. The number of users has skyrocketed along with downloads, prices for paid apps have stabilized at the lowest possible price point of $0.99, and free to play has dominated the top grossing charts. If current you could go back five years and talk to 2008 you, what would you say? What chances would you take?
Mr. Greenstone: I don't think I would have changed anything. I only wish that we'd had more than just Enigmo and Cro-Mag Rally out at launch, but there was no way. I was working 16 hour days for most of 2008, and we got as many of our Mac games over to iOS as quickly as we could. Had Nanosaur 2 been out at launch, however, we would have easily made another $10 million I'm sure!
148Apps: I consider Pangea as the first big company to take advantage of the ability to put apps on sale in the App Store. As early as September, 2008, some Pangea games were put on sale for $1.99. Then for "Black Friday" of 2008, all Pangea apps went to $0.99. You could be seen as the first developer to contribute to driving prices down on the App Store. Do you get any pushback from other developers about that?
Mr. Greenstone: So, Andy Hess, the Games Partnership Manager at Apple always blames me for starting the price war (partly in jest), but what I always tell him is that all I did was fire the first shot in a war that had already started. The prices were coming down whether I did anything or not, but I saw the chance to make a killing so I took it. Our best week ever was actually the week after Thanksgiving in 2008. We were making a profit of around $50,000 a day once we did that Black Friday sale. I really had expected everyone to do a Black Friday sale like that, so I was shocked when Pangea was the only company to do it. That week we had 5 our our games in the Top 10 apps list. Only EA has ever done that since then as far as I know.
148Apps: Any predictions for what the App Store will be like five years from now?
Mr. Greenstone: I'm going to keep my fingers crossed and say that Apple will have redesigned the App Store such that it's easier for customers to find things. I'd like to think there's a way to sell an app there without being in the Top 25.
148Apps: Thanks for you time, Mr. Greenstone.