Entrepreneurial insights team visited the Wooga office in Berlin, the mobile and social game developer. In the interview with Wooga COO Jan Miczaika, Jan shares his opinion on the very competitive gaming industry and provided some insights on following:
(1) Introduction and Jan’s background
(2) The business model of Wooga (including games, revenue model, marketing strategies)
(3) Corporate strategy
(4) Market development and trends in gaming industry
(5) Advice on creating a good corporate culture and on how to perform well as an indie game developer.
Martin: Today we are in the office of Wooga, a Berlin company. Next to me is sitting Jan. Jan, who are you and what do you do?
Jan: My name is Jan Miczaika, and I am the COO at Wooga, that’s the official title. If you look at Wooga, Jens – our founder and CEO – is responsible for deciding what games to make; Philip – our CTO – how to make them; and then once those two have made a great game I try to make it as big as possible, which involves being responsible for things like marketing, PR, localization, community management, customer care, everything you need to make a good game really large.
Martin: What did you do before you started at Wooga?
Jan: I’ve been at Wooga for three and a half years now, and before that I had started my own company Hitmeister in Cologne. So I worked in e-commerce before coming into gaming.
Martin: Let’s briefly talk about the business model of Wooga. Can you briefly explain the major model drivers and how you think you tried to improve on them?
Jan: Wooga develops games for smartphones, for iPhones, iPads, Android devices. We originally started making social games for Facebook on the PC, but that has shifted quite strongly over the past years. We believe this year about 70-80% of our revenue will be on mobile. So Wooga is a mobile games company. The way we earn money is through in-app purchases, a bit of money also through advertising, but it’s 90% in-app purchases. So what people can do is play our games for free – and the vast majority plays our games for free – but then in the app you can buy upgrades, boosts, etc. to advance faster, and that’s how we earn our money.
Martin: Why did you shift the platform, just for diversification purposes?
Jan: Facebook at the time was still growing, as it is today, so Facebook has always been a very good platform for us to develop games. But the growth of mobile has been much much faster in the past few years. So we saw that it really made sense for us to develop mobile first, and then if the game is successful on mobile we will bring it to Facebook as well. So ‘Jelly Splash’ is a good example, which is available on iPhone, Android and Facebook. What we did is we changed the order.
Martin: In terms of the revenue model that you use, can you tell us whether you’re doing only advertising or in-app purchases?
Jan: Advertising is a small part of our revenue. The vast majority is in-app purchases. What people typically do is they spend small amounts of money on in-app purchases like boosts and upgrades.
Martin: Let’s take a step back to a smaller Wooga, because you’re quite big right now. When you started off, how did you acquire the first customers? You said that you were using Facebook, but how did you acquire the critical mass so you can grow based on this network effect?
Jan: The first Wooga game was ‘Brain Buddies’, some people may remember it. ‘Brain buddies’ was a viral hit. There was no money spent on advertising, it was a great game, and I think it satisfied one core human need, which is to figure out who is smarter, you or your friends? And that led to a really rapid viral growth. In the beginning Wooga very consciously decided to not include any monetization features but to simply grow the audience. I think it was quite smart to say, okay this is the growth phase, and then this is the monetization phase, and not limit your initial growth by immediately charging money for everything.
Martin: How did you determine the switching point between growth and monetization?
Jan: That’s a good question. I think there are games like ‘Brain Buddies’, where monetization just doesn’t work very well, because if we’re trying to figure out which one of us is smarter, then by introducing an element which allows me to pay more and it looks like I’m smarter than you, then that would break the game. So the shift came with new games, like ‘Diamond Dash’, ‘Bubble Island’, or ‘Monster World’, where paying for items was part of the core game mood.
Martin: Let’s switch corporate strategy. In terms of the gaming industry, what do you think are the major drivers for being competitive in this industry?
Jan: The gaming market is very very difficult, because there’s estimates – it’s hard to get exact numbers – but let’s assume there are around one thousand new games launched every week, obviously the vast majority are not very good, but there are very good games coming up every week. At the same time, you have a small set of games, for example most people know ‘Candy Crush’ or ‘Clash of Clans’, which have been successful for quite a long time. So on the one hand you have a ton of new games coming up, and on the other hand these very long, evergreen titles. And that makes gaming a very competitive market.
Martin: If you would like to split the portfolio of Wooga in terms of long usage games and shorter period usage games, how would you put a percentage on them?
Jan: If you look at our current games, we have a certain set of casual, arcade-style titles, for example, ‘Diamond Dash’, ‘Bubble Island’, ‘Jelly Splash’, these are games which people play for long periods of time, but often just a few minutes every day, or once a week or something. And then we have games like ‘Monster World’, or ‘Pearl’s Peril’, which was one of our big hits last year, where we see much heavier usage, because ‘Pearl’s Peril’ has weekly content, episodic story-telling, and if you get pulled into the story you really want to know what happens. So there we see higher usage patterns. And for this year we will have a number of launches, some of which will be in the genre that we know very well, and some will be for us new genres.
Martin: If I am looking at this gaming portfolio, and you have these low engagement games and then there are high engagement games, my hypothesis would be that you acquire customers for the low engagement games in order to convert them to the high engagement games to earn money off them, or is this something else that you’re trying to do in having this kind of portfolio of games?
Jan: There are a number of reasons. One could be that once you have people in your network, you can of course promote your games. But even the casual games can be run profitably as the monetized ones. So it’s not only for that. For me the portfolio approach is also important, because the gaming industry is young but it’s constantly changing. And if you focus too much on any genre or any kind of game you could be hit, because our games can take one to one and half years to develop. If we said let’s only build gem swapping games because they’re successful now, who knows how the market will be in one and a half years?
Martin: Also the games look quite easy or simple, and you tell me that it takes one to one and half years to develop. Why does it take so long?
Jan: It’s one of the big things, they’re easy to learn, hard to master. And if you look deeper, there is a lot of complexity which goes into a making a game. It starts with the product design, for example, the level design, the difficulty, balancing, frustration – which can be fun if it’s a challenge – but it can’t be too frustrating, or else you stop playing. So you have the whole product design complexity, art, graphics, music, all this has to be done. And you have to make a game which is playable all over the world for a huge number of people, which involves a lot of user testing and so on. So the games are actually pretty complicated, even if they don’t look that way sometimes from the outside.
Martin: Sure, because you internationalize them and you have to address them to maybe regional types of players, for example?
Jan: Yes, that’s it.
Martin: Let’s talk about the market development for the gaming industry. How did the gaming industry develop over the last years, let’s say five years or so? And which segments grew and which regions grew in terms of sales?
Jan: You have a number of shifts going on. The first ship is the platforms. It used to be all about consoles and PC gaming, but that was heavily focused on a certain demographic, typically predominantly male, 15 to 35 group, and that’s what traditional gaming companies focused on, and they were also very good at making games for this type of group. Then, especially as Facebook gaming came up, suddenly you have all the demographics and you have more females, slightly older, and not only this 15% to 20% of the population, but a lot more. That was also the original idea for Wooga to focus on people who are currently underserved or were by gaming companies. So that was the first big shift. And then what people started noticing was that in this new demographic the gaming patterns are different. People play less and they play shorter sessions and so on, and then the idea was why don’t we bring that to cellphones or to smartphones, which people have in their pockets and can playing the subway, in the supermarket cashier line. So that’s the second shift to take gaming out of the computer into the device people have in their pocket the whole time.
Martin: What do you think would be the third shift that could appear?
Jan: I don’t think it will be device based. Obviously we are experimenting as everybody else. You have the next generation of watches and glasses, I’m not sure gaming on these devices will be the next big thing. I think on mobile there are still a number of genres which are not there yet, which are open for exploitation.
Martin: If you core capabilities are designing and distributing games, have you ever thought about virtual gaming, like this Oculus deal from Facebook, for example. Would this be something that you think is really the shifting phase?
Jan: By the way, the device is really cool to wear to and try it out, but I think that’s for core gamers, because our usage scenario is someone who has two to five minutes to play a bit, he wants a bit of distraction, or she wants to get out of the stress of everyday life, and wearing a headset you can’t do that for just a short gaming session while you are in the subway. So I think that’s a very cool device for gaming for more traditional core companies.
Martin: Next we would like to share some insights with our audience from Entrepreneurial Insights, and we have two topics that we would like to talk about with Jan. First one is how to create a good corporate culture, and the second one is how can you create and distribute games with a low budget? So the first one, everyone knows that Wooga has a great corporate culture. For first-time entrepreneurs, what advice can you give them in how to create their own corporate culture?
Jan: I think corporate culture is extremely important for any founder or CEO, and it requires time and effort to be put into it, so it’s not something you can delegate. I don’t believe you can say this is employee number 10 and he’ll start building the culture. I think it has to start with the first employees and at the very beginning. And it requires an investment of time and attention, and maybe money as well, but definitely time and attention.
Martin: What type of tools could they use to do so?
Jan: I would be very – I don’t want to say opportunistic – but experimental in trying out things, because I believe there is no such thing that fits everyone, so just because, I don’t know, Google gives 20% time, I don’t believe every startup should do that and copy that. And especially it doesn’t mean if you copy everything Google does that you will have the same corporate culture. To me these corporate culture tools are like the toolbox you can pick from. For example, we do mystery lunches, so everyone in the company once a month goes out to lunch with a group of five other people, six in total, and we have a little software algorithm which mixes up people to make sure it’s different teams, different roles, different countries, and so on, so it’s random, and Wooga pays for the lunch, it’s like 10 Euros per person budget. So it’s not a huge financial investment, but for example there the feedback we get is extremely good, because it really fosters collaboration and contact within the company. And there are more tools like this. So what I do is I look, listen, learn, read blogs, and think about these tools and think which ones work for a company and which ones don’t, try it out, tell people we’ll be doing this twice and then we will evaluate. And then also don’t be afraid of stopping projects. If you say this doesn’t fit us, then don’t be afraid to stop it. So copy, copy wisely, and then evaluate.
Martin: The second things would be, imagine a young programmer knocks on your door and says, “I’ve got $5,000 in my pocket and I would like to spend two or three months building a small kind of game.” What would you advise them?
Jan: I think you have indies who are very successful. Once in a while you have the – I can’t remember his name – the ‘Hill Climb Racing’ guy from Finland, or ‘Tiny Wings’ or things like that. So once a while you have an indie in it, but they’re completely unpredictable, I believe. An indie developer, especially with a small budget, really needs to have a unique combination, not only of gameplay, but also of timing, PR, buzz, everything around that, and that’s very difficult to achieve. But there are always examples of successful indie developers. But if you are asking about the $5,000, I’d invest them into a product, because there is no way you can do a large marketing campaign with that kind of money. So I’d invest them into product, try and get bloggers, the industry, Apple interested, and launch it that way, or speak to a publishing partner. We do that with a very small number of games we really like, so we are open to publishing deals, and then there are other companies who do that as well.
Martin: Thank you very much Jan. That’s it from Entrepreneurial Insights.