Photo: 6waves Lolapps
There are a few approaches to making a successful Facebook gaming company.Zynga has one — make a ton of games and get a ton of users. EA’s approach is to throw your weight behind an acquisition and bet on those games.
6waves Lolapps has another one — publish games, find out which ones are good, and then make them on its own.
It’s the product of the merger between 6waves, a publishing company, and Lolapps, a Facebook app development company. It does about half publishing and half game development.
Now they’re expanding into mobile with the acquisition of Escalation Studios. We spoke with Lolapps founder and 6waves Lolapps product head Arjun Sethi, to figure out what’s going on at the company.
Here’s what we learned:
- 6waves Lolapps takes a two-pronged approach. They publish a ton of Facebook apps to figure out which games are popular among users, and then turn around and develop games that are just like that.
- The international markets are huge. A big chunk of 6waves Lolapps’ staff is outside of the country and the company publishes and makes games for other social networks to stay competitive.
- The company has access to a huge range of developers. That gives 6waves Lolapps a good look at the general development ecosystem.
- It’s now expanding into mobile. 6waves Lolapps just bought Escalation Games, a mobile game developer, after publishing games for it for a while.
And here’s a full transcript of the interview:BUSINESS INSIDER: What makes you guys different from other Facebook developers?
ARJUN SETHI: We are the largest publisher of games on Facebook. We publish other developers’ games on the Facebook platform, we publish in China and Japan. With the acquisition of Escalation Games, we’re publishing on Android and iOS as well. On Facebook and Tencent we’re the largest publisher of games. We’ve launched about 140 games on the platform.
In July of 2011, Lolapps had merged with 6waves. Lolapps was the development side of the company that had built games like Ravenwood Fair. From a Facebook developer and publisher standpoints, they regard us as one of the top companies on the platform after Zynga and EA. We were founded in 2008 and have about 230 people in Hong Kong, Beijing, Japan, Dallas and London.
We have raised $32 million to date. It’s been for marketing, it’s been for scaling out the organisation and it’s been for strategic acquisitions. We also made an acquisition in China.
We’ve worked with about 50 studios altogether. About 50% of those are international and 50% of them are built in the United States. There area lot of games we publish just for Japan and just for China. A lot of those developers are coming to Facebook now, they’re in eastern europe. With offices all over the world, that’s pretty key.
BI: So Zynga focuses on quick-fire games, and companies like Kabam and Kixeye focus on pretty, hardcore games. Where do you guys fall?
AS: What Zynga does and what we do fairly well is take a data approach. What we are able to do is work with all the publishers, publish their games and market their games. We have to churn through games that don’t work, but we’re able to see the whole spectrum of games that exist. To a certain extent, we’re even gambling. There are so many games that we want to publish, able to think about what our users want and what they’re yearning. Then we develop the games that cater to a specific audience that we think can do a good job service after we’ve published a number of those games.
I would say that some of the games that Zynga has made are not high quality. With EA you’ve seen them take an acquisition approach — buy PopCap’s games and get all the best quality games possible that I can buy. Playfish still has yet to be determined what they’re gonna be building and what the advantage has been for that acquisition. They didn’t have a data approach.
We publish other developers games, whereas EA and Zynga only develop internal games. A lot of people have talked about how it’s a hits driven industry, we’re able to decipher what games work and what games don’t.
BI: How is that approach better than EA’s and Zynga’s?
AS: It’s not just good developers, and also good for consumers. We’re able to hit a larger network. Instead of saying I only cater to females, I can say we cater to males and females.
Kabam was a huge player in the hardcore games, we publish their games, all their games on the Facebook platform. We got those users, we got them that network and that consistency. Game Insights is another big company. Nexon, who we received funding from, also publishes on that platform. There’s a huge variety of developers that publish with us. We talked to other developers and a had a lot of data about the market and where they wanted to go. We still speak the same language as the developers.
BI: How important do you think mobile is in this battle?
AS: We’re about 50-50 on publishing and development and when we decided to get into mobile, we were late to the game. We wanted to make sure our model was working correctly and able to scale it correctly and making sure we’re learning from our mistakes and applying all that knowledge to mobile.
We started publishing on mobile before we started developing and we were getting our feet wet. A lot of our services that we have on mobile are actually far more extensive than what we have on a social platform. There’s not a lot of social connectivity, there’s not a lot of friend connections, not a lot of ways to initiate yourself. We’re tackling a lot of those issues for developers from a platform perspective
When we met escalation studios it was on the guise of partnering and publishing but we realised they have a very similar vision. We thought it would be an added advantage bringing their knowledge of mobile. We wanted to bring that know-how into the company so we could do a better job of bringing our publishing into the system.
BI: How big of a role do other social networks play in your success, outside of Facebook?
AS: You’ve seen EA and Zynga already fail in those international markets. Half our team and company is international, and it’s an advantage. We have over 50 people in Hong Kong and 30 people in Beijing. They’ve been there for a long time, it’s not like we just shipped people off. The relationships we have with the Japanese networks as well, it’s a little different doing business in China.
A lot of it has to do with timing too. If you focus on one area and grow there before anywhere else. China and Japan, we were there before everyone else. Tencent’s networks, they have similar user numbers as Facebook, they’re above 500m users. That’s just in China alone.
BI: How many of your users are actually paying users?
AS: The games have a different user base. Some of the hardcore games we published in Korea and Taiwan, because of the culture, some of them have conversions of almost 10 per cent. Games we have here in english-speaking countries, you typically see two to three per cent. Two years ago it was 0.5% per cent, so you are seeing that trend lines.
BI: So you just bought Escalation studios. Why? Where are you headed now?
AS: Mark and his team and escalation studios was that stopgap for us. They primarily focus on development, they’re based in Dallas and have 30 people there. They were bootstrapped from the beginning and didn’t take any outside funding.
We started off publishing Escalation’s games — Yeti Town and Splode, they made it to the top 5 in a couple days. That was just a test but really solidified our goals on how we want to work together in a longer term. That’s what our company does today and where we are.
They have similar DNA to us, it’s not about the market. For us, it was very easy to make a decision fairly quickly instead of partnering and publishing with them to just bring them in-house. There are lots of developers internationally, longer-term as well we may decide to acquire more companies. For the time being escalation just filled a very large hole we have.