GamersGate Sees 50% Sales Growth, Opens NY OfficeGamersGate had a very successful 2011, growing its sales by 50% and now the digital distribution firm is opening a New York office to spur on further growth, IndustryGamers has learned. The plan is to open an office in the Big Apple early on in 2012, and GamersGate also will be launching its new free-to-play platform called Void next year.
If you work in the industry and would like to join GamersGate's NY team, the company is currently taking applications. IndustryGamers chatted with CEO Theo Bergquist all about his company's expansion and future digital plans.
IG: There aren't a ton of games companies in NY compared to the West Coast or Montreal or Austin, Texas. What's the reasoning behind a NY office?
TB: Although GamersGate is headquartered in Stockholm, GamersGate has built a strong client base in the US, generating more than 50% of our revenue. It was an easy choice to break ground in the US, but we needed a city that was logistically easily accessible to us and still feel like we would have a strong foothold – thus, New York. We do have some bold plans for a LA office down the road, but first things first.
IG: You say you have "major publisher support" for your ad-supported free games platform - can you specify which companies are providing content and how many?
TB: So far we have more than 100 games from 15 or so publishers. At launch, we’re aiming for 300 games from 30+ publishers. Unfortunately, we can't disclose any details until closer to launch.
IG: What's your business model on the ad-supported games? What percentage of ad revenues do you take? Are there micro-transactions, and do you get a cut of those too?
TB: The business model is simple and straightforward. We split ad revenues depending on the popularity of the game. Because popular games are downloaded more often, they receive more of the ad revenue. There are no micro-transactions thus far, but members will be able to use GamersGate's virtual currency, Blue Coins, to upgrade their slots and make them better (Members can fill their slots with games every month. A member can have between one and five slots at a time.).
IG: Why call the ad-supported free games section Void, and was this section spurred on by the booming free-to-play market in social and mobile?
TB: We need to differentiate it from free-to-play services. This is a premium service where you play premium games to no cost. The rationale behind calling it Void is to create a sub brand as it is clearly different from the core GamersGate product.
IG: What percentage of your business do you expect Void to account for over the next few years?
TB: We see the "combined" offer with pay-and-download (GamersGate’s regular business) and Void (don't pay, just play business) as a powerful combination, whereas Void drives traffic to sell full price release games. We aim at having 10 million Void users within 24 months after release. We took it as a great sign when we first announced the news and over 30,000 users registered for the beta within the first hour.
IG: You've been critical of Valve's Steam in the past, but Steam continues to dominate digital distribution. What's your take on their position - do they have a weakness?
TB: I don’t think I’ve been overly critical, but it could appear that way when everyone tends to just hail them. I've said it before and I’ll say it again, Steam's market share can only shrink. Just look at Origin. It came from nowhere and is now a player in the industry. Steam is doing a good job for the super hard-core audience, but everyone knows that's not where the money is. The market is mostly made up of people who buy 2-3 games a year and want a fast, easy and seamless way of buying games. They don’t want a bulky client.
IG: Speaking of Origin, since we talked last, EA's been making a big push with its Origin service, opening up to publishing third-party content, effectively placing them in the field as competition. You concerned?
TB: I must say I'm very impressed by the speed and determination they've launched Orgin. Hats off to them! But I’m not sure I see them as a competitor as I do Steam.
IG: Does GamersGate have any ambitions to enter the cloud gaming space a la OnLive or Gaikai, or will you stick completely with downloads to gamers' local hard drives?
TB: Streaming or any other way of distributing a game is just technology, not something you build a business model around. Having said that, streaming, as a distribution method is something we look at and evaluate all the time. Right now, GamersGate's business is growing rapidly and there is no reason to change a winning concept. As far as I know, OnLive still struggles with their revenue and business model. In theory it's a nice business, but is that really what the customers want or something made for VC-firms? I don't know. Time will tell.
IG: Thanks Theo.
