In a talk at GDC China in Shanghai, Ngmoco VP Alan Yu discussed the formation of the iPhone-focused studio and the state of the App store, suggesting that social-focused, microtransaction based Apps are the way forward.

iPhone is different to many other systems, said Yu as he introduced the subject to the Chinese audience, because it’s “bringing about an era of frictionless development and distribution.” There are 85,000 Apps in the App Store and “that’s a lot, by any measure”. He admitted that “this is a very challenging marketplace.”

Frictionless distribution has some massive advantages, but, as Yu notes, you need some way to differentiate. His magic three criteria? Concept, quality, and price.

Some other notable takeaways — iPhone game piracy is a big issue, with 50%-90% piracy estimated in the first week of release on Ngmoco games. For awareness drivers for iPhone games, Yu believes that #1 is word of mouth, #2 is Apple promotions, and #3 is cross-promotions with other games.

He particularly noted that price dropping your game was “not necessarily good, and not necessarily bad either”. But overall, the average iPhone game price is decreasing over time.

Read more about it here [Gamasutra]