Kixeye: '10x to 20x per user' Over ZyngaKixeye is a social game company that's making games for gamers who don't like social games. Known for titles like Desktop Defender, Backyard Monsters, and Battle Pirates, Kixeye is building a dedicated audience that monetizes their games at rates far exceeding Zynga's. IndustryGamers talked with Kixeye CEO Will Harbin recently about their success and what they're planning next.
IndustryGamers: I think a lot of hardcore gamers have looked down on social games; they think of all of them being like FarmVille.
Will Harbin: That's true 99% of the time. That's why we hope to be a champion for the browser platform, just to make people see that you aren't … I think they've put kind of these fake restrictions on ourselves, at least some companies have, that they can only make one kind of game. A lot of people don't want to take a lot of risks. They'll see FarmVille do well, CityVille do well, they see Gardens of Time do well, and they say 'Oh, well, we'll just get out the exact same thing.' When really, all you have to do is make a good game. Battle Pirates is the first ever true MMO RTS that's in a full 24/7 persistent environment. That's something that we're very proud of, not just from a browser gaming standpoint but from a gaming industry standpoint.
IG: Aren't there a lot of difficult design questions involved when you're trying to do something that usually depends on having a synchronous opponent in a largely asynchronous environment?
WH: Yep, and we've done it. We've got 50,000 people playing every second in Battle Pirates. It's our highest engaging game, people love it, and we're doubling down on that game. Right now, it's been officially in beta for the last nine to ten months, but we'll be going full gold release with a bunch of new features and the finished product in a couple of months. There are tons of articles out there that say a persistent RTS can't be done, but in my opinion we're pretty close to it.
IG: Do you think that there are other types of games that people say you can't really do that on a browser, on a social platform, that can indeed be done if you try hard enough?
WH: I just don't think people try. I think people are really going to be blown away when we launch our RPG in September. It's full 3D in Flash, so hyper-accessible, and it looks awesome in the early play builds we're looking at. Our official concept is there's no buying energy to play, you just come in and play it. It looks and feels like a download game. Thankfully with Flash 11, that allows access to hardware acceleration for graphics, we're getting further and further down the path of better technology and in-browser rendering. For us it's really about accessibility; that's why we've chosen this path. The platform shouldn't be influencing game design. Certainly it influences technology limitations. Our approach is we're willing to sacrifice some fit and polish in order to make it hyper-accessible to people, which is via the browser.
IG: With Facebook's IPO, do you see any impact on games and game development just because they're going public?
WH: I think it's going to have a positive impact. If you've read their S-1 it certainly shows that games are a very large piece of Facebook's revenue. It drives advertising spend on both ends, and they're getting a 30% cut of all the gaming revenue. Some would say it's a symbiotic relationship; actually, I think, especially for our quadrant, that Facebook needs us more than we need them. Since we're not really going after mass-market like Zynga, we have our games on a few other platforms that are working pretty well, and we're working on our own platform. I think the upcoming Facebook IPO will just in general be pretty positive for all gaming.
IG: Do you see any other platforms aside from Facebook as being important? Google+ or anything like that?
WH: Google+ is a dog. There are some interesting international sites; VZ in Germany is very high on the engagement scale and definitely has a lot of passionate gamers. Obviously there are some interesting Asian destinations, which are kind of hard to crack without the right partner; we're seeing that way down our road map. Really we're going to be hyper-focused on our own platform. It just delivers a very pure browser gaming experience; there's not a lot of fluff. Obviously Facebook has to balance lots of users' needs; gaming's just one of those quadrants. For us it's just going to be all about gaming, so we can deliver a pure experience.
IG: With your more highly selected audience, are you seeing different kinds of numbers than Zynga does in the percentage that actually spend money, or the amount of time they spend engaged with your games?
WH: Absolutely. On average, our games monetize 10x to 20x per user what a Zynga game would do.
IG: That's pretty impressive.
WH: We think so.
IG: Obviously that's something you want to keep pushing on, and do as much of that as you can.
"On average, our games monetize 10x to 20x per user what a Zynga game would do."
WH: It's just a natural result of the product and how people love the product. We didn't start at 2 times what Zynga is doing and say, 'OK, how do we get up to 10 or 20 times?' It started that way without a lot of optimization. We don't focus on gaming the user, we just focus on adding content and features that people will think are fun. The core mechanics of the game resonate well with people, it's fully synchronous, it's fully real-time, there's action, you customize and build your ships and take them out to battle, and you're engaging with the other player. It's not just a battle summary screen that says you won or lost, then go back to your spreadsheet interface and manipulate whatever troops you're trying to build. It plays and feels like a real game, or what I would consider a real game. We have all those elements in there, then you allow users to invest in the little world that they're building and their empire. You leave it turned on 24/7 and people tend to come back and really love the experience.
IG: What do you think the biggest challenge for you is in 2012?
WH: It's very simple, it's always going to be one challenge. It's finding the best people, it's definitely a war for talent. This is a cash-efficient business and there are companies out there making a good bit of money so they can afford to pay good salaries. Certainly we're competitive on the compensation piece, but we try to differentiate ourselves based on 'Hey, would you like to make games that you'd want to play?' That's yielded pretty good results. We've grown from 12 people in a year to 130 as of this week. We expect to grow to at least 300 people by the end of the year.
IG: That is difficult to manage, too.
WH: That is a lot slower than some of our competitors, some people have added 350 people over a 90 day period, and I think that's relatively reckless. I've scaled businesses before and I think that we're doing it at roughly the right pace. I mean, I need people. This isn't like, OK, let's figure out how to scale and grow the business. We have opportunities, servers are blowing up all over the place, we need people on the ground right now to manage the growth. The growth is being driven by the user base, it's not being driven artificially by a business plan in front of the board. We've got demand for the product, we need people on the ground to do this. It's been fun. We've been profitable for over a year, we're not relying on external sources of funding, we don't need to sell, we don't need to look for an exit, this is just about us making good games and continuing to do that for years to come.
IG: If your problem is adding more servers you probably don't have to worry too much about marketing spending.
WH: We definitely do marketing. We always want more quality users. We do hyper-targeted focused user acquisition. Facebook is a great platform to do that. They've got an awesome ad platform where you can really zero in on the demographic that works for your platform.
IG: That's another advantage of having a highly targeted audience is that it does make it easier to find them.
WH: Expensive, but easier.
IG: Are you seeing acquisition costs rising?
WH: We've changed our advertising strategy over the last year so it's very focused and we only purchase quality. There's some natural rise in costs, but most of it's just a factor of how thoughtful we are with the kind of user that we want to target.
IG: Where do you think the big growth opportunities are for you: expanding current titles, adding new titles, different platforms?
WH: The sky's the limit. We're definitely going to remain focused on browsers, there's so many genres that have not been touched. There are no good RPGs in browser, there are no good simulations in browser, there are no good adventure games, and I still think we have a ways to go to get the ultimate persistent RTS. I'm not going to let that product line rest until I think we've achieved that. We're planting seeds now in RPG and as we add more bandwidth we'll be expanding elsewhere. We're hyper-focused on browser, we're not looking at mobile. I think there's a ton of runway in browser if you know what you're doing.
IG: One of the things that's been in the news a lot recently has been cloning games in mobile and social. Do you have any comment on that?
WH: I could talk for 48 hours straight about it, but I'll give you the high level. We've certainly been the victim of that; Backyard Monsters was copied by Kabam as Edgeworld, but I think what we've seen is two things. Copying in our space, given how wide and broad and open the market is it's doubtful that you're going to see a direct impact to your business when someone copies you. What we're more worried about is that it just kind of sours the water when a user comes in and sees that all the games are the same. That's not really good for the platform, it's not good for the space. That's what I'm mostly concerned about. I'm not worried about someone doing something better than us, or finding success off of our backs, I'm worried about longer-tern viability of the platform and this market. That's why I'm preaching about focusing on good, quality, passionate game design for games that you'd like to make. There's so many games that just don't exist and aren't out there, I can't believe that people are still copying these things. It shows a lack of creativity on their parts. They're not gamers at heart, they're just trying to make a buck. I hope users and potential employees see through that.
IG: I'm afraid the issue isn't going to go away soon.
WH: No, and it's always been there, and unfortunately this is a more cash-efficient platform, it's easier to launch products, so naturally there's going to be more of it. I think in the AAA market people are going to be less inclined to spend $5 million to $20 million on a clone unless they're really sure that they can differentiate themselves and get some publishing. There's a little bit less risk associated in this market which is why we see it. I don't think I'm going to change their minds, I'm just hoping we get more quality developers developing on the platform and making good games.
IG: Do you see your competition more as console games rather than other social games?
WH: Competition is a funny thing. Previous businesses would be laser-focused on what the competition is doing because it had a very real cost in terms of your market opportunity. In this case, gamers play lots of games. Some games are going to resonate with some users and some games aren't. I'm not worried that some competitor is going to come in and put us out of business overnight, the space is just too big and people are always looking for new forms of entertainment. It'd be a little bit different if I were Zynga and my whole business plan was predicated on 'I need hundreds of millions of players to make this thing work.' I don't need hundreds of millions of players, I have just over 4 million a month and we're running a very successful business. I don't necessarily need to expand my broader playing base. In terms of competition, what I worry about are the copycats. I worry about companies like Kabam just doing the same thing over and over again, and not adding any innovation into the space. It's sad, because there are hundreds of resources being sucked into doing that when they could be working on more interesting, creative titles and adding more diversity to the ecosystem. That's what I worry about in terms of competition.
