By Prince McLean

Published: 05:00 PM EST

Small and large game developers are meeting with venture capitalists and technology companies to talk about the future of gaming on the iPhone platform at the 2009 iGames Summit being held here in San Francisco at the UCSF Mission Bay complex.

The conference kicked off with a panel discussion named “Lessons Learned: Why iPhone Games Work,” with Neil Young of ngmoco, Andrew Lacy of Tapulous, Steve Demeter of Demiforce LLC (the developer of Trism featured in the iPhone 3.0 presentation held by Apple two days ago), and Keith Lee of Booyah. The panel was moderated by Ken Gullicksen of Morgenthaler Ventures, a venture capital firm.

Gullicksen first asked what kinds of games are working on the iPhone, if it can be a replacement for the Nintendo DS, and what kinds of games resonate with a significant volume of users.

Young answered that the iPhone's design leans toward short gaming sessions that can be interrupted by phone calls, pointing out average play session time for Maze Finger is eight minutes. However, the play time for ngmoco's new rolando is 22.6 minutes, demonstrating that longer and more engaging games are becoming feasible and more popular too.

Gullicksen then asked about how games will be monetized. Lacy answered that "Apple has done a phenomenal job" of creating a successful mobile platform in short length of time, but added that things are still developing and that Apple's iPhone 3.0 announcements show that the company is focused on the long term future of the platform.

Lee brought up using free apps to bring attention to paid version, adding that there is a "huge fall off in conversion" from free apps to the paid version of apps. Lacy added that offering free apps does help to dramatically add to the developer's user base, something that would be much harder to accomplish with only paid titles.

Asked about Apple's iTunes market place for mobile apps, Young replied that the "App Store is awesome," adding that "it's like having WalMart and Best Buy in your pocket" and that it will continue to develop over time.

Getting titles to stand out from the huge volume of apps available in the App Store will require attention to developing a user base, Young said, including attention to global language localization since around half of mobile apps' sales often come from buyers outside the US. Being able to create relationships with customers will be an important way to market new games to an installed base.

Demeter made the point that one reason why gaming has taken off on the iPhone in ways that it hasn't on the Nintendo DS and Sony PSP, particularly among small developers, relates to the fact that game development for the iPhone is fun, saying, "I think it's because Apple has put the power in the people's hands."

Lacy noted that small, single developer operations are currently able to reach the same kind of traction and attention as larger firms with a hundred developers. "I think they are going to become more rare," Lacy said, stressing the need for developers to professionalize.

Young mentioned "the birth of new development talent" as a factor that could help take iPhone development to a new level. "We really admire Nintendo," he said, particularly because the company works to get so much out of its hardware. He pointed out the rich potential for more sophistication available to the iPhone, calling it "really really exciting."

Asked about larger game companies that haven't yet targeted the iPhone, Lacy explained, "It's such a different device from everything out there." Existing gaming companies are stuck in "the old way of thinking of things" and "coding for the lowest common denominator." As they get more comfortable with the iPhone and its differences, there will be more attention from the large developers Lacy said.

Lee, speaking of Blizzard Interactive, talked about the choices involved in porting existing titles to the Phone, such as a tie-in to World of Warcraft, versus developing entirely new IP, saying "it's all about supporting the biggest breadwinners."

Gullicksen noted that Nintendo recently announced sales of 100 million units in four years for its Nintendo DS. Asked when the iPhone would hit 100 million, Young answered, "I don't think the iPhone and iPod touch is slowing down. The iPhone has gone Wii." Lee said he "wouldn't be surprised if the iPhone hit 100 million by the end of next year."

Speaking of the social and viral aspects of iPhone gaming, Lacy mentioned the question of "how strategically important its it to be on other platforms," whether other phone platforms or social network sites such as Facebook. Developing for other platforms requires more resources and time, a difficulty for small developers.

Asked what roll big publishers can play in iPhone gaming, who bring marketing, polish, and QA, Young said the role of the publisher would be different but accomplish the same things to get developers' titles in front of more customers. Young described his company, ngmoco, as a value added publisher, not just taking a cut to provide developers with a wider audience, but also contributing a gaming platform to handle shared features, expertise on the iPhone, and related support.

Asked by an audience member, "without being actively promoted by Apple, how successful do you think you'd have been?" Demeter said he thought Apple promotion in iTunes was critically important, and said if he used a publisher, he would use ngmoco, implying that Apple had reason to promote its titles because of its affiliation with the iFund.

Young and Lee, both connected to the iFund, countered that they do not think Apple has offers any favoritism to iFund supported companies, instead stressing that the App Store promotes good work and describing it a "level playing field."

Asked about how Apple compared to Sony, Microsoft, and Nintendo in gaming, Young replied that he originally anticipated that Apple would act more like those companies, with "significant first party publishing," long TRC approval times and limited slots for third party offerings. Instead, Young said Apple was focusing on its platform, saying he was "very thankful" of that, and that Apple's ability to offer the "best development tools and environment" were related to the fact that Apple is promoting its platform as a way to support third party developers rather than as a way to push its own software and make money from software.

Console gaming platforms typically lose money on hardware while the game makers, including Sony, Microsoft, and Nintendo, earn much of their revenue by charging game developers significant fees to license their titles to run on their gaming platforms. Apple is going the opposite, making its money on hardware sales while aiming running the App Store at a break even to induce developer interest.

A mobile developer in the audience replied that having such a level playing field actually made it harder to stand out among all the titles available simply because there was no favoritism, describing the resulting marketplace as a "fantastic experience."