In Part 1 of our Interview with Michael Schutzler, senior vice president, Games Division at RealNetworks, we discussed about how how RealArcade started in casual games and how a game gets picked to be offered to its millions of users. Today, we talk about what’s new coming from RealArcade in the future, casual games on multiple platforms, and most importantly — how casual games will save the world. That’s right, the WORLD. Read on.

In case you missed it, here is Part 1 of our interview.

New things in Real’s pipeline

What are your plans (if any) to offer multiplayer games in the future?

We’ve done some experiments with multiplayer game development. I can’t get specifically into timing yet since we have not said anything public. But, I can say that in the not too distant future, we will have an environment where multiplayer games make sense.

At this point and time, RealArcade is essentially a download manager for games. We are actively working on expanding upon our base of features for the past 8 months (ever since I first took a gig at RealArcade).

What is fascinating to me is micro-transactions and the way they have been successfully implemented in Korea. We have on the ground in China a very large assembly of people who are building games from scratch for the Chinese market. We are aggressively pursuing Asian-style multiplayer functionality.

Here in the US, I quite frankly find what Wild Tangent has done in terms of the model fascinating. Wild Coins are not technically micro-transactions, but they are inspired by micro-transactions. We also see a huge opportunity to monetize 700,000 downloads a day we give away. I mean, every one of those is a free hour of game play. Hmm . . . Lot of money out there.

At Casuality, Real announced a new initiative to add more advertising to games and extending the free time period. Is this one of the major ways you will be monetizing all those downloads?

Advertising is clearly something we’ve recently become experts at. Two years ago, RealNetworks really did not know how to sell advertising. Fast forward to today, we have a good competency at it and have become a respected supplier to the top 50 advertisers and agencies in the world. We are applying our skills of selling ads to the video side of the business to the games side now.

Gamers online, 24 – 7

RealNetworks entered the mobile space in the past year by acquiring Mr. GoodLiving and introducing innovative new subscription models. How successful have you been in mobile games so far and what are your future plans in the mobile space?

First of all, the mobile space is a really challenging marketplace. I think to be a serious casual games company we have to be in the mobile space, but it is really quite difficult. In the PC side of the business, the big porting question of the day is do we support the Mac or not (incidentally, we are one of the few companies that does support both PC and Mac).

When you want to get into mobile retail, there are a minimum of 300 hand sets to port, each of which is a completely different piece of hardware and operating system. On top of that, there are multiple different carrier implementations, and on top of that, there are least 10 – 11 languages as well.

So one game is 15,000 skus. That is really hard work.

We purchased Mr. GoodLiving specifically because they have a technology to automate all of that porting function, so our porting costs are one tenth of the industry average.

But that is really not the big story for mobile gaming. Mobile gaming is intriguing and has great potential, but it has not really taken off yet.

Why not?

There are two main reasons for this.

One, let’s pretend for a moment that I have a game on my cell phone that is really cool. I can’t really get you to try that game because I can’t forward the game to your cell phone number. Nor, can I show you the game and have you find it on your cell phone. It’s a painful process at this stage of the game. Now, that’s evolving and over the next couple of years, that will shake itself out.

The second thing that is holding back gaming on the mobile platform is that there has not been any knock-it-out-of-the-ballpark games on the mobile hand set yet. That’s not so much because the games aren’t cool, because the games are great. It’s that the platform itself is marginal in most cases. There are very few handsets that are really great for playing a game.

Now, we’ve had a great deal of success of translating our PC games onto mobile. Super Collapse and Luxor have done extremely well on mobile. But, for the most part, we’ve had to follow suit with everyone else in this space and the last couple of games that have been really successful for us have had nothing to do with PC games.

In our case, we did deals with the music band Gorillaz and with the TV show The Apprentice to create games leveraging brands specifically for the mobile platform.

It’s really quite interesting — the vast majority of games available on the mobile handset skews very heavily toward racing games and sports games. But the fact is most people don’t download or buy those games. Most people download and buy puzzle games and card games.

What do you believe accounts for the fact that people want to play casual games on the mobile phone?

The demand is there on the mobile phone for games that are fun. I’ve played over 100 games in the last 8 months but have yet to find a great implementation of a sports game on the handset. Sports games are really hard to play. I mean, if you are any good at a football game, on the PS2 or the Xbox, the handset is completely wrong for it.

On the other hand, a puzzle game is a puzzle game is a puzzle game. That’s pretty easy to implement on a handset. That is one of main reasons there is such a higher demand right now for puzzle games on the mobile handset than racing games.

So, we are in a position to do very well but I think frankly it’s a challenging marketplace. We’re committed to it, we’re investing in it, and we’ll continue to invest in it. I think in the end, when the mobile games marketplace shakes out in the next couple of years, we will be a major player.

What other platforms in addition to mobile phones do you believe are ideal for casual games?

I personally think that the Nintendo DS platform is a rock star platform for casual games. Obviously, at least statistically speaking, the Xbox Live Arcade seems to be a really compelling platform for casual games. I think a lot of people are surprised. But you never know.

We’re obligated to ship 6 games for the Xbox 360 platform. It was something we announced last fall and sometime this summer, early fall, we’ll launch our first game for the Xbox, and we’ll have a series of games following on the heels of that.

How Casual Games will Save the World

Suppose we fast-forward 5 years from now (the year 2011). What types of games and offerings am I playing on RealArcade?

I think you are going to get together with your friends and hook up with them for a quick game.

I think RealArcade is going to serve as the place to go to have fun. And there will be many different kind of fun things to do on Real Arcade. Whether you have 5 free minutes of your own, you want to connect with some friends, or want to meet some new friends. I think games are an excellent centerpiece for that social bonding.

So you see a huge trend in casual games moving to social gaming?

Yes, absolutely. You know why? One of the things I learned when I was the CEO of Classmates.com (where I previously worked at before coming to RealArcade) is that human beings are social animals. We like to connect with other people. There are very, very few human beings that want to sit on the mountaintop by themselves for a very long timeframe. We are social creatures. And there are basically two different kinds. There are voyeurs, and there are exhibitionists. Some people want to watch games being played. Some people like to play to win. And some people like to play on teams to beat other teams. I do believe that games are really a centerpiece to our humanity.

We will win noble prizes. ..

To Clone or Not to Clone: That is the Question

A big debate within the casual games industry is “cloning.” What is your opinion about “cloning”?

Speaking as a developer, it is frustrating to me that its so easy to knock off our games. But honestly, I think those days are numbered, because production values are going up and expectations are increasing on the part of more sophisticated game players. I think its going to be tough for the 2 person garage shop making a successful casual game. I don’t think it’ll ever be as bad as it in the video game industry, with a $50 million budget for each game. But, I think its going to get tougher and tougher to compete over time.

Closing thoughts

What are your favorite games to play? What game are you playing right now?

I am, of course, partial to Super Collapse 3. I don’t know why, but there is something I’ve always liked about that game since the first version came out.

I have seen some new games that PopCap is working on that are super cool. unfortunately, I’m not allowed to tell you anything about them. Also, I’m a word game freak, and I like a game Real released a few months ago called Acropolis. I have now achieved the highest level in Acropolis, which I feel very good about.

In case you missed it, here is Part 1 of our interview.