Pocket Gems grows fast with its “mobile first” game business

Pocket Gems was one of the early “mobile first” game companies that did nothing but make games for mobile devices. The company was founded by Stanford University students in 2009 and it has never stopped running.

All 13 of the company’s games, from Tap Farm to Tap Pet Hotel, have been big hits on the Apple App Store. Three games are available on Android. Yet another game, the ambitious Paradise Cove title, is launching today.

A year ago, San Francisco-based Pocket Gems had around 10 people. Now it has more than 100. And the strategy of running fast, doing original games, and getting them out before rivals is paying off, said Ben Liu (pictured right) chief operating officer of Pocket Gems, in an interview with VentureBeat. The company’s games have been downloaded more than 60 million times.

“We had an amazing year in 2011,” Liu said. “We went through four different offices, and we’re still growing.”

Liu says that it’s a great time to be an app developer because the transition to mobile gaming is well under way, with engagement and monetization growing. Plenty of imitators have piled into the app stores. On Apple’s store, there are 100,779 active games. Copycat games are rampant. Tons of mobile game competitors are growing by the day. They include Gameloft, Electronic Arts, Zynga, TinyCo, DeNA-Ngmoco, Digital Chocolate, Glu Mobile, Backflip Studios and others.

But this is an environment where San Francisco-based Pocket Gems thrives.

“It does bother us that there are so many imitators, but that happens with success,” Liu said. “We focus less on what others are doing. We try to see what’s next in gaming. Our best defense is creativity and innovation. Those things are hard to copy. Any specific genre can be cloned. But the fundamental engine of innovation is hard to copy.”

Daniel Terry, chief executive, and Harlan Crystal, chief technology officer, founded Pocket Gems in 2009 while Terry was still an MBA student at Stanford University. Their first game was Tap Farm, an idea borrowed from Facebook farm games such as FarmVille, but executed in an original way for the iPhone’s touchscreen. The title was a big hit and it enabled Pocket Gems to get on the growth treadmill. In December 2010, the company raised $5 million from Sequoia Capital and others.

In a number of cases, Pocket Gems has created the first successful title in a genre, even if it doesn’t invent the genres.

“We follow the principle of ‘mobile first,’ creating things that make good use of the device,” Liu said. “We don’t worry about competition because the opportunity is huge. The shift from the PC to mobile computing is irreversible. The tide is with us.”

Other developers have been hurt by the rising cost of user acquisition. Ad costs are going up and it often costs more to get a new user than the amount of revenues that user generates. But Liu says the best solution for that is to have popular games. That way, each new game you launch can be cross-promoted inexpensively to existing users.

“Everything flows from having good games,” he said.

Pocket Gems still makes use of ad networks and promotional platforms such as Tapjoy. And Pocket Gems would like to take advantage of a mobile social network.

Discovery is still a large industry problem. Liu looks forward to seeing new social layers from companies such as Gree, Facebook, Apple, Google, Tencent and DeNA/Ngmoco. But he isn’t quite sure who will build the most successful social layer that makes it less expensive to promote games and get them noticed.

Over time, Liu expects the quality bar to rise for mobile games. That’s why the company spend considerable time creating its first exploration simulation game on mobile: Paradise Cove. The title has lots of moving objects on the screen and effects such as moving cloud that are semi-transparent.

In that game, two explorers are stranded on a desert island. They build a house to survive, find food, and then start exploring. They clear the jungle and build a fleet of ships. Then they uncover artifacts from a lost civilization and the game story proceeds from there, said Rich Cooluris, creative director, and Niels Hoven (both pictured), head of a new game studio and project lead for the title. The game map is large and the title has dozens of levels.

“This is the kind of game you have to do to stay competitive,” Liu said.