CEO & Co-Founder, G5 Entertainment AB (publ)
Mobile Downloadable to Mobile Social | Vlad SUGLOBOV
In only a few months, G5 brought its most popular downloadable franchise Virtual City to mobile social with the new product -- Virtual City Playground. After millions of downloads and millions of dollars made in a few months after the release, G5 is sharing the experience of taking a popular casual downloadable game to mobile social on iPhone, iPad, Android, Mac App Store and other platforms.
Delivered at Casual Connect Seattle, July 2012.
Download Slides: http://casualconnect.org/lectures/des...
About Vlad Suglobov
Vlad Suglobov, CEO and co-founder of G5 Entertainment AB, has stated that the company plans to spend between 17 and 22 percent of its revenue on user acquisition in any given quarter, with a goal of not exceeding 22 percent. He noted that G5's development capacity continues to grow, citing a "very strong base in Eastern Europe" that allows the company to hire developers at a "fraction of the cost" compared to some developed countries, which he described as a "tremendous advantage." Suglobov also said that the company capitalizes development costs on its balance sheet and writes them off evenly over two years after a game's release, adding that G5's games typically generate revenue "well beyond even three years." Suglobov has described the company's strategy as continuing to release four to six new games per year, testing ideas in the market to eventually produce larger successes. He characterized the success rate among new releases as "very healthy," noting that over the last 10 years, only about five games lost money, while a similar number generated "amazing returns" of hundreds of millions of dollars in revenue. He also stated that the company's target audience is women aged 35 and older, a demographic he described as "quite untypical" for a gaming company.
Transcript (24 segments)
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Vlad Suglobov0:08
So I will be telling about our experience of going from what we started with — downloadable casual games on mobile — to free-to-play games on mobile. G5, since 2009, is in the business of developing and publishing casual and now free-to-play games on smartphones and tablets. You can find our games in the iTunes App Store, the Mac App Store, Google Play, Amazon Kindle Store, and we're going to be adding more distribution channels this year. We believe in the vision of about 10 billion mobile connected devices by 2020, which is going to be the largest video game platform ever, and we are already making over 90% of our revenue from smartphones and tablets, so we're getting ready for that future.
G5 started working on mobile games back in 2003 when we released our first mobile game. Since then we worked a few years as a developer for publishers, then in 2006 we went public in Stockholm. In 2009 we started publishing casual games on iOS — self-publishing and later publishing games from other developers as well. We started selling casual games on Android channels in 2011 and also launched our first free-to-play games last year. We've been doubling our revenue pretty much every year for the past three years. We have offices in Stockholm, San Francisco, Moscow, and Kharkiv, and the total staff is over 120 people right now.
As a publisher, we help developers reach the audience of people interested in casual games. We have had over 60 million game downloads, millions of daily active users, over 150 apps in our portfolio. We do a lot of cross-selling to make it easier for players to find similar games to what they like. So if you're publishing your game through us, it's really easy to get your game in front of a lot of people playing similar games. We have already paid millions of dollars to developers in royalties and revenue share, and we're working with over 60 studios now — the list is growing quite fast. We have a number of casual games that have made over a million dollars on smartphones and tablets.
Our revenue is rather global — about 33–35% from North America, a similar amount from Western Europe, and a similar amount from Asia and the rest of the world. In the last year we started releasing casual games on Android, released 20 of them, had 20 million downloads — which is, by the way, a lot more than Big Fish — and made some millions of dollars from that. There is money on Android. I've been telling it before: do not assume that Android does not make any money. Don't give out Android rights along with iOS rights — make sure you're placing your Android rights in the right hands.
The topic: we had this casual game called Virtual City which wasn't a big success on PC, but when we converted it to iOS and released it in September 2010, it became a top 10 grossing game in 34 countries and made us over a million dollars total in revenue with lots of downloads. At the same time we noticed the growing popularity of free-to-play games, so we set out to create a free-to-play version out of Virtual City, which we called Virtual City Playground. This game was free and you paid only for virtual goods inside the game. It was released in December 2011 across a number of platforms.
It became a top 10 grossing game in 100 countries, and a million downloads and a million in revenue was achieved within a couple of months only. What we noticed is that with the free-to-play version, although the core mechanics and gameplay were exactly the same, the engagement of players was much higher — they spent more time in the game and were really playing it more — and monetization was better as well. For the casual game, the revenue fell off to a certain level where it stayed — it's not zero, it's still selling well for casual games — but with the free-to-play game, the revenue did not really fall off. We are even able to raise the revenue by introducing updates with new features. The game doesn't seem to be going over the peak; it's just going up right now.
The takeaway is that you can actually take a successful casual game with addictive mechanics, convert it to a free-to-play game, and actually have a hit on mobile platforms. Here you can compare the number of countries where the game was ranked top 10 grossing: for Virtual City Playground it's 100; for CityVille from Zynga it's only 82. For a relatively unknown IP coming from a casual downloadable game, this is a really great result compared to a very popular IP coming from a platform where it had crazy tens of millions of installs.
I will try to tell you our process for converting a good but relatively unknown casual game into a free-to-play game which can become a hit on mobile platforms. These five steps were made incrementally — in each step you actually get a build which you're able to play and look at.
Step one is creating a sandbox. With the usual casual game format you have a number of missions and levels, and each time a player goes from a mission to a mission their progress is erased — each new mission is started from scratch. This is not what you need in a free-to-play game. In a free-to-play game you have to create a certain real estate, a certain equity into which the user will invest and then return. You need one large map — we call it a sandbox — and you want to make sure only a part of it is available to the player initially, then you unlock other parts later. Make sure the player is not lost; they start in a small corner. The idea is that players need something to return to — they don't want their progress erased every time they complete a mission. There will be no missions. The bigger the sandbox you can provide to your players, the better, because it gives them more space to build. You quickly run into memory issues, so be careful, but the larger the map you can give them the better, given that you control how they unlock it.
Step two is rather counterintuitive. In casual games, especially those with construction or resource management, the resource production cycles are really small — seconds or fractions of seconds. Everything is instant: you build something, it's instant; you produce a resource, it's instant. That's not how it works in the real world and it's not really intuitive. What you want to do is slow down the construction and resource production cycles — instead of seconds, make it hours — and raise prices dramatically so that saving for a new building would take the player hours, not seconds. This is actually quite good because nobody expects to save for a new house in seconds. Once you've created that, you've also created the opportunity to monetize the user when they want to speed things up. So now imagine you have this build with one large map and everything happens really slowly on it.
Because the game was initially launched with the idea that the existing audience of the casual game would play it, we made sure to explain the differences we were introducing. On this screenshot, for example, the upgrade for the bakery in the casual game was $300 and in the free-to-play version it was $27,000. That gives you an idea of the scale of changes we had to make to game balance.
Third step: you want to make it real-time. By that I mean the game world should be alive even when the game is minimized, even when players are not playing. We want to create a situation where a player puts the device aside and returns to the game to see some progress in their city during the time they were asleep, for example. Instead of creating a client-server system, we were saving a timestamp every time the application was minimized, and on launch we'd take that timestamp, calculate the time difference, recalculate the progress in the city, and show the updated city. We're creating an incentive for the player to come back the next day — they start certain processes and return to see the results.
What we achieved is stretching this three-hour casual gameplay into separate half-hour sessions over a longer period of time. This justifies spending much more money on the game for the players, because if you play a casual game for a few hours and then you're done, it's hard to justify spending $20 or $50 on it. But if you end up with a game you play for three months — every time you're commuting to work — there are a lot of moments for monetization and it's much easier to justify spending $20 a month. We also made sure to give this information to players on the loading screen — hints about the changes in the gameplay process and all the major changes.
Fourth step: monetization. Now that you have created this real-time city with really long production and development cycles, you want to think about how to monetize. You've already created everything you need, because people would want to pay to speed up progress — build buildings faster, speed up resource production, unlock new content, unlock new places on the map, expand their city, and build exclusive buildings which we'll cover in step five.
Did I mention energy? I'm sorry. You have to make sure to introduce energy. This was our way of doing it — we introduced energy to limit session time, which is important to actually split the gameplay experience as I mentioned. When you're creating monetization moments, you have to make sure that people who want to play your game for free can still play it for free. You can use those players playing for free to create a viral distribution for your game in the future. So make sure people can play it for free, but make sure it's inconvenient enough for them every now and then to feel like spending a few dollars on speeding up a construction process or unlocking something ahead of the usual pace.
For example, with Virtual City Playground we had premium buildings at the bottom of the screen — you could purchase landmarks and energy. This is a standard screen for buying currency. What's interesting is we had both premium currency and regular in-game currency which you could produce in your city. If you're smart enough to play the game, you will never be in a situation where you need city credits — the credits produced by the city itself, even while you sleep, as advertised. But a lot of players actually do purchase city credits. It seems like sometimes people don't feel like thinking about the game or how to play it — all they want to do is buy some currency and build some stuff. There needs to be a way for a person who doesn't want to really play the game or think to just buy their way through. A lot of people don't want to figure out the peculiarities of game mechanics; sometimes they just want to see progress.
Step five: the original game was still in the App Store and we didn't plan on taking it down, so we wanted to introduce new content into the free-to-play game to give the existing audience something to go for. We wanted to make this new content really awesome — looking good but also with functionality — to make sure people really want to spend money on it. We created landmarks that were nice to have in the city but also had functionality: they increase the capacity of your energy bar, so by building those you actually invest in spending less money later or having longer gameplay sessions. Of course, they have a decorative function as well.
When you have a build after step five, you have a working and playable free-to-play game with monetization, and people can really enjoy playing it. You'll see some revenue coming in. We released the game at that point, but I can tell you there have been a lot of other things we had to go through during the year to get the game where it is now — a number of updates to figure things out: quest design, pricing of in-app purchases, special deals, viral distribution, interactions between players, customer acquisition, user retention, and cross-platform aspects of deploying the game.
What G5 can do for you if you're set on this journey to create a free-to-play game from your successful casual game: we can share our experience with you in a more detailed way and we provide great terms and advances to make this transition. We have cross-platform technology, cross-platform QA to make sure your game is well tested on Android, iOS, and Mac. We can make sure you maximize revenue across all platforms, and of course cross-selling with existing G5 games to reach millions of users. This free-to-play approach can be applied to other genres as well — hidden object, adventure, or puzzle games. Free-to-play is really working for all genres. If you have a great casual game franchise and you want to go this direction, please talk to us.
I cannot stress this enough: you can take a relatively unknown casual game which was not really successful in the PC casual portal world, and if you do it right — if the core mechanics are great and you were just struggling to find your audience — and you do the conversion to free-to-play well, you can successfully compete with, for example, Zynga on mobile. I encourage you to make this step. Please contact our licensing team at this email address.
Thank you very much.
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Audience Member22:10
Artifex Mundi — you told us that you are a 120-plus company. How many of those work in community management, customer support, technical support, et cetera? Do you want to include quality assurance, or is it just marketing support?
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Vlad Suglobov22:31
It's about 25 to 30 people right now. It's the number of people involved in basically publishing all these games and supporting the users. Customer support is included. We are very efficient at customer support — all our games have like four and a half to five stars.
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Moderator22:58
Any other questions for Vlad? Wow, thank you very much. Thank you. This is the next speaker.