GameStop’s Kongregate division learns how to publish free-to-play mobile games

GameStop, the world’s biggest game retailer, made its move into digital gaming in 2010 when it acquired online indie game portal Kongregate. And as it expanded into mobile publishing, Kongregate has led the way in learning about the free-to-play business model that is sweeping through gaming.

Emily Greer, who started Kongregate in 2006 with her brother Jim, stayed on as executive leader to help navigate Kongregate through the mobile transition. Kongregate launched its mobile game publishing business about 18 months ago, and it has now published 15 games on iOS and Android. Those games have done well, but they haven’t dislodged the major mobile gaming leaders like Supercell, King, and Machine Zone.

But GameStop’s customers are a different breed. They are hardcore console and PC gamers who go into GameStop stores regularly. They also play mobile games, and they’re more likely to spend money in free-to-play games than your average mobile user. Kongregate can market its games to these gamers, either through promotions in stores or in other ways. Greer said that this helps the games published by Kongregate get discovered by valuable users more easily. That’s her pitch when she tries to get independent game developers to publish through Kongregate.

We caught up with Greer at the Game Developers Conference in San Francisco last week. We talked about the mobile game business and Greer’s views on women in the game industry. Here’s an edited transcript of our conversation.

Above: Emily Greer, head of Kongregate

Image Credit: Dean Takahashi

GamesBeat: How has Kongregate been doing since we last spoke?

Emily Greer: We’re doing well. The big story of the last year, we launched mobile publishing about 18 months ago and it’s done very well. It’s becoming the focus of our business, even as the web business has continued to grow. We’ve published 15 games on iOS and Android across the last 18 months. We have another five or six that are likely to launch in the next couple of months.

We released Adventure Capitalist a couple of weeks ago. It got a big feature from Apple, a big feature from Google last week, and then another feature from Apple this week. It’s a very simple incremental game, if you’ve played something like Cookie Clicker, but it has a lot of personality and humor, as well as an interesting amount of strategy. It’s a small game that was put up on Kongregate web last summer, and we immediately saw grew numbers on it, so we started working with the team. They added in-app purchases and that worked well, so we made a deal and brought it to mobile. It’s a small team up in B.C., only four developers, and it’s in the top 150 grossing for iOS and Android.

GamesBeat: This is free-to-play?

Greer: All the games we do are free, mostly with in-app purchases. Some just have advertising. The story of mobile in the last few years, of course, has been total domination by free-to-play. Relatively few incumbents can outspend everybody. But there’s a structural problem where there’s such a power curve on performance and revenue on iOS that everyone’s chasing the top 10 grossing. That means people are just copying the same games and making slight iterations. They’re investing more in terms of polish, but it’s stifling innovation.

Smaller developers are still making great games and having trouble getting exposure. It’s been good for us to be able work with small developers across a wide variety of genres, people doing a bit more experimentation, and help them compete and be successful within such a competitive marketplace.

Above: One of Kongregate’s first mobile games was Sheep Happens.

Image Credit: Kongregate

GamesBeat: I had a conversation with one of those top mobile game executives. Some of the arguments are very depressing. I want to think that there’s some flaw in their master plan to keep everyone else at bay. But the assertion is that the top three companies can each of them buy every single ad in the mobile game industry. If anyone shows promise going up the top-grossing ranks, they can buy out all the ads and watch that game fall. Virality is maybe the only way to succeed, but the viral titles go up and down.

Greer: I think you can succeed. One of the ways is how we’re approaching it. We’re working with a broad variety of titles — the deep, long-lived games that can potentially be top-grossing games, as well as smaller, more viral games. We’re creating a network of cross-promotion. The viral game goes up the charts. A lot of people install it. We’re able to have that game succeed, but also feed the overall network. Someone like Machine Zone can’t buy every single ad here.

Kongregate is a game discovery brand on the web and on mobile. We see our portfolio lift with each title. Every time a title gets featured, every time we see a lift with one title, we see a lift in the installs for other titles. People are discovering more games by the same developer or other cross-promotions.

If you’re going after the top 10, you can’t just do the same things and have it work. You attack with innovation, with figuring out your own part of the market.

GamesBeat: You have users with a certain propensity, too. They’re people who go to game stores and play console games. They’re more likely to spend.

Greer: Yep. We’re driving traffic from the web. We’re driving traffic through GameStop. One of the more successful things we’ve done recently is giving GameStop customers coupons for installing Kongregate games. It’s good for GameStop. It helps bring people into the stores, a higher quality of customer. GameStop customers are among the best game customers that exist in the world. We have a chance to bring them over to mobile games.

GamesBeat: That conversion rate is a way to move the needle on revenue.

Greer: Right. We’ve seen it become quite a significant source of customers and revenue for several games. Generally what we see in both Kongregate and GameStop is that cross-promotion is the single largest source of installs to our games, larger than any ad network. Or rather organic is still the biggest, but after it’s Kongregate.

It’s good for the industry because we’re publishing a diversity of games, including smaller titles like Adventure Capitalist. It isn’t another multiplayer empire-building game. We’re taking things in a different direction and looking at new genres and gameplay. We’re giving that a chance to succeed.

GamesBeat: If user acquisition is blocked at the highest level, do you think about things like engagement and retention as ways to improve revenue too?

Greer: Retention is about game systems and working with developers to create deep, interesting metagames in titles. But it’s also about continuing cadence of events and content, pushing new things for players to do. That’s definitely something we focus on. But to clarify, I wouldn’t say that I feel that user acquisition is blocked. We’re able to buy ads successfully. There’s a scale at which it’s happening for certain games, but personally I doubt whether that’s sustainable as well.

GamesBeat: I was arguing that the monopoly will eventually fall, because if they drive up CPIs, they’re putting dollars in the pockets of their competition. Ad-supported games will reap the revenue.

Greer: We’re definitely seeing that. We’re seeing good ad revenue for a lot of games, which helps the smaller games especially. The other thing is, I mentioned cross-promotion and various other GameStop-related tactics. They can block apps out of ad networks, but TV is still an open platform. It takes deep pockets, but we have the backing of GameStop, which is not insubstantial.

Other games that have that backing will break through. It’ll be fewer than we’ve seen in the past, but honestly, if you look at the web, which is much more open, the big games tend to stay the big games for a very long time — League of Legends, World of Tanks. The best games, the ones that have deep systems and know how to push content for a long time, will be successful for a long time. That’s the nature of things regardless of the competitive environment.

There’s also a lot of opportunity at different levels. Success for a small four-person studio looks different. A few million installs and a few million dollars is probably more meaningful to them than a top-20 grossing title would be for a large company.