Noah, from Gambit, discusses monetizing social games
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Interviewer: I’m here at the Engage Expo in San Jose, California, and with me today is a special guest. How about you introduce yourself?
Noah: Hi, I’m Noah Kagan, the President of Gambit.
Interviewer: What’s Gambit about?
Noah: That’s a good question. So, we were game developers for about a year and a half, and we wanted to build a solution to help monetize our audience. So, we built the system that does credit cards, PayPal, alternate payments and, basically, makes it really easy to monetize your audience with virtual goods.
Interviewer: You know, what services then do you offer? How would game developers use your service if they have a social game on Facebook or any other place? Is this only for social networks, or is it something else?
Noah: Yeah, so it’s really for anything on the web that needs to monetize. We specialize right now in online games. So, it’s kind of like, if you have a broken car, you’re not going to go fix it yourself. You take it to a me-chanic, so the value we provide is that if you’re building a game, build your game, optimize it, grow it, and if you want to monetize it, you could do it yourself and hire the people or work with us where we spent the past year and a half developing the technology, optimization, fraud, all the other buzz words, but really managing and growing your revenue side and trying to be a partner for that because we understand what game develop-ers want.
Interviewer: So, a developer then develops a role-playing game on Face-book.
Interviewer: And how would they use your service?
Noah: It’s really easy. It’s a plug-and-play solution. You can drop it in. It takes about less than 30 minutes, kind of Domino’s pizza style to get it set up, and you can start selling your virtual currency.
I think the real value that we can provide on top of that is, besides the sys-tem performs higher than most of the rest in the industry, we have an expertise in building games and saying, “Alright, these are good things that you actually do and not do while you’re developing your game”.
Interviewer: Can you talk about some of the strategies that developers can use to improve their game, raise monetization and enhance the experience for players?
Noah: So, actually I was meeting with a game company a few days ago, and they’re like, “Hey, let’s monetize, let’s monetize”. I was like, “You have 10,000 users”. So, that’s great if every user is worth a thousand dol-lars, but it’s a social game so it’s more of a volume play. And the thing with that is that you need to have focus and priority.
So, what we help people do, is what is your priority? And so, his actual priority was not revenue. It was actually growth. And so, it was identify-ing – you can put an offer in our payment system, but it was like, “Here are the things you need to look for in your notifications”.
You know, the retention system is kind of crappy, so you need to get them back to a certain period, like seven days. Now, you know at that point you are more likely to invite friends and then spend the money. So, it’s really more of a complete solution versus just like, “Hey, we’re a PayPay button or we’ll manage your payments for you”.
Interviewer: Can you talk about other strategies that developers use for retention? Have you seen any techniques that have worked pretty well?
Noah: Yeah, I mean, a lot of the stuff that is specifically on the Facebook level. It’s less about spamming your friends and getting them to do it, but basically get into certain points in the game and retention – it’s a lot about… Bejeweled Blitz is a game I’m personally addicted to, and the rea-son what they’ve done that is real smart is three things.
One, they make a weekly contest. So, every week it’s a reset, and so I’m like, I get my notification. It’s a weekly thing. I’ve got to go back and do it. And there’s that social aspect of I want to do it because my friends are go-ing to see my score and I want to beat them.
Secondly, what they do, which is really smart which is what I think a lot of people should be doing, is looking at notifications when a friend or someone close to you has passed you in the system. They do it all the time. So, I get like Ash has beat me and that’s when I want to come back to it.
On the retention level, the biggest thing – I hate when people say metrics because it’s so generic and easy. Other things on retention stuff that are to consider are just the mindset of why does someone want to come back and why does it make sense when someone actually comes back.
You know, a lot of these farm games and RPG social stuff?
Noah: You have to tend your garden every 15 minutes, or things are going to go bad. Or you have to go tend your friend’s garden and you can watch out for them. So, those are the kind of standard tactics that people are us-ing today.
Interviewer: Do you have any other suggestions for other things that de-velopers can use to enhance or raise the amount of people that they’re serving with their games?
Noah: I think people are not recognizing that the market is beginning to get really saturated, and I think there’s still tons of money to be made. The question is if I were not doing payments, what would I be doing as a game developer? I would be going where people aren’t, so building on Open Social, Hives, MySpace. It doesn’t have the appeal and the significant growth as Facebook which is really strong.
Within the Facebook ecosystem I would go to international countries, something we talked about before. These countries have an average reve-nue per user significantly comparable to the U. S. They don’t have the vol-ume, but would you rather be a big fish in a small pond or basically create something that’s going to be copied and dominated versus you have a really nice business that no one else knows about it.
Interviewer: So, aside from internationalization, what else do you see eve-rything going in terms of games, social games?
Noah: I study and play this up way too much. It’s a little obsessive. The challenge now is when we were building games, it was mostly about spam, viral, instant growth, build a user base and then we’re like, oh, oh, now it’s retention. Then, we were through with retention and then it was, oh, money, so let’s sell them something.
Now, you’re really competing against companies, like if you look at the top 15 Facebook apps, over 40 percent are funded companies that have developed million dollar games.
Noah: So, you have to consider where you’re really going to have a chance at winning against that. So, if you really want to have a long-term strategy you need to be spending a significant amount of money or figuring out opportunities.
The two opportunities actually right now that are still available. Actually three. One is infrastructure, so build revenue streams. So, if you’re a game developer, build additional ways that other game developers can make money. So, there’s payment solutions. There’s way too many but focus on ways that they could utilize those payment solutions better.
Secondly, sports stuff. There’s really not that much of it, and it’s a huge opportunity, third is like gambling and skilled gaming.
Noah: There’s a lot of money to be made in that, and no one has really tackled that stuff.
Interviewer: Can you talk about the transition from text-based to Flash-based? Have you seen any differences in terms of revenue per user for text-based versus Flash-based? Does it even matter?
Noah: You know, I feel like people quote all of these numbers. Oh, get women; they’re 35, in the Midwest. That’s the only way to make a lot of money. But what I’ve seen, it’s kind of like a common sense thing. You put more into the game; you’re going to get more out.
Noah: And that’s the kind of thing that you see in Flash where it’s a much more rich experience. The graphics are much more detailed. The user play is a lot different than a standard text-based MMO game.
And the challenge with developers today is that, unless you have a big team of 30-50 people, you’re not going to be able to produce the amount of content that a large company is going to do. If you are an individual Flash developer that’s been building the kind of non-persistent, one time, Flash games, I think there’s opportunity to build something unique that has a chance of making a lot of money versus just the standard text thing.
I would say the text thing is kind of easy money now, but still. As much as I want to harp on it, you could build a text game, put a certain niche on it. Like, it’s for kids, that are African, and they’re 15 to 19. One tip I would suggest is that Facebook advertising – no one is advertising specifically to international users. So, if you actually look at rates, you can get same value of user in a foreign country as you could in America, but you get one third of the cost.
Interviewer: Sure. So, you really think that the text-based MMOs still have legs?
Noah: I don’t want them to; I want them to die. The thing is, so I played them pretty obsessively for a few weeks. My girlfriend was pretty annoyed with it, and what happened though I’m just bored. Then, I go to the next one and yeah I get it. It’s ice creams and there’s different flavors so, I get it, a mafia one is different than a vampire one. But it’s still the same system that you plug-and-play.
And I feel that unless you have a really deep experience and you have a lot of people that build it, your stuff is going to get boring, and it’s going to die out.
Interviewer: You know, there’s this standard RPG template. Is that some-thing that should even be considered for developers? I mean, have you seen other types of game mechanics or game interaction structures that actually monetize better?
Noah: That’s a really good question. So, in terms of the tech stuff, it just does well. Other versions are doing well, like tending to people’s things, like the garden stuff, the farm stuff, you know, the restaurant stuff. There’s even something around fishing, like fish stuff, like an aquarium.
I still think… So, that’s the genres that are doing really well. Virtual worlds. So, basically, anything that’s taking a significant amount of up-front investment, the average revenue is going to be a lot higher. So, like virtual worlds, like Habbo and WeeWorld and things like that, the users are just a lot more addicted and committed.
I do have a theory that probably needs to be fleshed out. You need about three years to build a really significant business or stake hold within a game or social community. So, like Zynga has taken two years to actually build. So, it’s maybe two to three. And the overnight successes, like Farm Town, are few and far between. It’s just what we hear about.
Interviewer: I hear a lot about offers, free offers, and alternative payments. What are those about?
Noah: So, when we were game developers, we were using providers that had offers. And what’s really great about it is that people who are never going to pay, they are either freeloaders, they’re international or they’re really young. You’re never going to make money on them, so this is an opportunity where they can sign up or pay for a service that you get the affiliate for.
That’s basically the bottom line. Let’s say Netflix is one of the major ex-amples. Netflix, let’s say, pays $20.00. So, the user is not going to pay you but, maybe, they want Netflix so they buy Netflix, you get the 20 bucks, they get the coins and they get the Netflix service.
So, it’s a really good situation for everyone, and Netflix gets a new cus-tomer. So, there’s good and bad about it. That’s a really great scenario and I think the future of the industry is about relevance where personally I like burritos. So, if I could go buy burrito coupons and at the same time get my vampire points, that’s a good situation.
There are some negative offers where the users are signing up for free things and nothing in life is free. You have to be careful about your com-munity, and that’s why we provide a lot of tools to, basically, see what things are working and what aren’t and control that for long-term success.
We’re seeing people increase revenue of 10 to 20 percent just by adding alternative payment and “offers”.
Interviewer: Can you talk about other ways that you’ve seen revenue spike up 10, 20, 50 percent?
Noah: That’s a really great question. So, one of the studies that I like to talk about is a few clients have implemented a blue light special. So, what you do on a random day you tell them right in the morning. You don’t an-nounce it, that your exchange rate for that significant day is going to be doubled. You send a mass mail or notifications or you put up a post, and we’ve actually seen revenue increase 5x.
So, for 2x you get a 5x, so it definitely makes sense. We haven’t seen where it over compensates because if it goes up 5x it’s going down 5x. And it actually stays higher for the next few days, even from having that exchange rate. I think there’s a lot of opportunity for people to test that kind of system out. I think that’s a really easy win if you’re looking to in-crease revenue.
I think you need to think long-term about how do you build micro-transactions, the best thing for me is how do you sell toilet paper where they are going to need it every few weeks or, at least, every day.
Interviewer: How can developers get started then with your service?
Noah: Oh, with our service. Developers, it depends on different stages. If you’re a new developer, you need to be focused on growing, retaining, en-gaging your game, right? And then, throw us in. It takes five minutes. Start monetizing, but your priority really should really be growth.
A larger studio, we work with them with more of a custom solution that’s fully integrated. You have no idea it’s us, and it’s just really about how we make the user experience as well as maximizing revenue at the same time. You always hear people like, there’s money and there isn’t money. I just say, go do it. That’s the bottom line. You never know. Don’t make excuses and go try to build anything. Start with something simple like a text-based game. If that works and you make some money, then you can even hire people or flesh out more into different ideas.
Interviewer: What’s the website that people can visit to get started?
Noah: Yeah, It’s getgambit.com.
Interviewer: How do you spell that?
Noah: g-e-t-g-a-m-b-i-t .com.
Interviewer: Thank you very much.