Kohler: Brian, now that you’ve heard all this about Raptr, compare and contrast with Kiip. What’s similar and what is different?
Wong: I think what’s really important to realize is that our business models are very different. I think Raptr is catering to a very hardcore gaming audience. It’s a utility that’s allowing people to aggregate their achievement data, and that information is incredibly important for these game companies, to be able to find their loyal customers and make them feel very appreciated.
The angle that we’ve taken, and of course it comprises the way we’ve positioned ourselves in the marketplace, is about the everyday consumer on their mobile phones playing games and using apps. I want you to close your eyes for a bit and imagine that around this building right now, in this hotel, and in a mile radius, there’s probably hundreds if not thousands of people already on their phones, already doing something. Our insight was why don’t we take that achievement moment, we call it the “E moment.” It’s this dopamine rush, like “Yeah!” Then, how do we bring brands into those moments? Of course, there’s an advertising component to it. But when you look at the overall size and scale of this stuff. For example, I was checking the numbers recently in one of our case studies. On a daily basis, right now, we’re showing about 430,000 rewards every single day across our network. We have 400 apps that are integrated directly into our network. It uses an SDK that uses a distributed presence. That’s the beauty of it. We’re not asking people to go to one app or one destination. We actually help reward you in the things that you’re naturally in already. The mechanism we use is through this reward unit that’s based on your choice. Hey, Chris, you just got something from Pepsi. If you want it, you tap on it, and then you have the opportunity to redeem it on the spot.
Kohler: And this is happening without me having to sign up for a service. I just happened to have downloaded an app and, I’m guessing, said yes when a dialog box popped up saying, “Do you want rewards?”
Wong: No need to sign up, yeah. Again, it’s part of that moment. And the beauty of the reward network as a play for the user is that people actually love this stuff. I’m specifically talking about redemption. We look at our overall network average. Right now these things are double digits. They range between 14 to 18 percent. But what’s even more interesting, and this is something that we’ve never really shared before, is we started recently looking at the cohort. During our statistical analysis, we said, “Hey, let’s look at the cohort of users that have already redeemed, or have seen, a key reward.”
These are people who are now familiar with Kiip as a consumer brand. This is really important, because rewards is all about trust and, ultimately, relevancy. Trust and relevancy are key in this whole model. What we’ve done is, because Kiip is recognizable, people know that this stuff is trusted, that we curate. We have specific brands that are large consumer brands. Those are the only brands that we work with. That’s important. So the cohort, actually, when we measured it, they were redeeming at over 50 percent. One out of two times, someone would redeem a reward. And that was very telling to us, that when you look at this distributed model.
With Foursquare and all these guys, you’ll get rewards within the app, or you’ll be in that app experience. But I like to say that we’re kind of like a thousand Foursquares. We’re a thousand of these apps, because we’re in multiple apps. We’re in all the apps that you would be using on a regular basis anyway. The vision is, if we can be there, I don’t care if you’re downloading our app. We don’t really care. So this is the type of thing that looks to: How do we deliver a consistent, trusted rewards experience to you that is relevant as well?
Rewards is a massive industry, and unfortunately, there’s a lot of companies right now that are taking a giant dump on that concept. They’re abusing the word “rewards.” Rewards are supposed to be something you actually feel rewarded by. That’s fundamentally the definition. You don’t feel rewarded when you’re being rewarded with a video cue, right? That doesn’t make any sense. We realized that we have to create something that genuinely taps into what you appreciate as a regular, everyday, going-through-life consumer. That’s incredibly important.
Kohler: So let’s drill down a little bit, then, for you guys. We had the case study with World of Warcraft: Mists of Pandaria. What would be the typical… Or maybe there’s no typical reward. What would be an example you can give us, just a little bit more concrete, of what I might receive as a player? What is the benefit for me as the gamer, and then what is the benefit for the person who’s giving me this free reward?
Wong: I won’t list out too many, but I’ll start out giving you a typical reward scenario. We have gift cards, $5 or $10 gift cards to American Apparel, $5 or $10 gift cards to Best Buy, bottles of Pepsi. We’ve got Dr. Pepper, bags of Pop Chips, free songs you can download at Amazon: There’s a whole series of things that we look at, and ultimately…this is something that you actually wrote about late last year, where it’s a Guinness world record….
Kohler: Tell us a little more about this.
Wong: One of the things that we realized late last year, especially in gaming — and especially this whole phenomenon of democratized access — is being able to show off who you are as a true, top gamer. We said, “What’s the ultimate reward?” It’s to be a world-record holder, frankly. So we said, “Hey, let’s go to Guinness, and see if we can set something up.” So we have a partnership with them where the games that are integrated into Kiip have the potential to be able to feature their top players as world-record holders. We’ve found, so far in our history, four Guinness world records for users who have played games that are Kiip-enabled. If you see last year’s Gamers Edition, you’ll see us right in the back.
Kohler: And it serves as a verification method, too, because you’re watching what the player is doing. The player isn’t reporting to Guinness with their high score, you are. You’re able to verify the record.
Wong: Yeah. We’re a third party. But I think what’s really key here is, because we’re able to observe and be this trusted layer, again, that’s really important for the user to realize, that, “Hey, Kiip is running this game. I can get a Guinness world record. I can get these rewards.” Again, it’s trying to show them that you can trust this system, and that we’re doing things for you as the user in your consumer experience, and not the other way around. Because there’s a lot of easy ways to make money nowadays, right? You go ahead an put videos in the reward interstitials; you give away free virtual currency if they fill out a survey and give away their social security number and their credit card and their soul…. How do we do this without making people need to go out of their way, just because we wanted them to make some kind of action? The action in the game is playing the game. The action is not to watch a video. I think what’s important is that we’re able to take that existing pattern of behavior and bring brands genuinely to that experience. It’s incredibly important.
Kohler: The fundamental back-and-forth that I see here is that you don’t necessarily want to. If playing games is supposed to be rewarding in and of itself, you have a danger of essentially telling people, “This is something where there has to be a carrot here. There has to be a reward for doing this.” And that might decrease the intrinsic reward that you feel from playing the game. You start feeling like, “Oh, this is drudgery. I have to do it so I can get this reward here.” How do you incorporate that in the design of Raptr and try to prevent that?
Fong: Well, we’re not a game developer, so we don’t actually design any games for rewards. Nor do we tell players how to qualify for the rewards that are coming out. We just kind of tease them and say, “We’re giving away 10,000 copies of Rift next week!”
I think another way to look at the question: Is it a bad thing for companies to offer loyalty programs for their customers? Because that’s basically how we look at rewards. And again, in the games as a service kind of world, which we’re clearly in today, you really have to understand your customers. You have to know who your most loyal customers are. You have to hand-hold them into becoming more and more loyal. That’s how we view rewards.
So I’ll give you another example. For a lot of the free-to-play companies that we work with, one of the big challenges is trying to flip them enough. Ninety-five percent of [players] are free and will always be free. You’re trying to flip that 5 percent into being paying customers. Well, after a certain number of hours of playing a game, you know that they’re engaged with the game. So why not offer a reward at that time? Say, “Hey, here’s a 75 percent off discount on your first purchase.” It comes at a time when we say, “Hey, you just ranked up. You’re now experienced in this game. Congratulations.” You have this moment of “Hey, that’s cool.” It’s something you might want to share. You’re proud of it, and now you’re getting something for it. You can kind of handhold the users into becoming more loyal, which is what a lot of these loyalty programs do. It’s what we help our partners do.
Wong: When we assess the space right now, there’s this amalgamation, almost a blurring of lines, between rewards, promotion, loyalty, and incentives. Is it a promotion? Is it a reward? You’ve kind of merged it in your business model. We’ve kind of merged it here, too. I think it’s understanding the delineation between those business models and showing the user that, again, there’s a difference between the two as well, which I think is very key.
When you look at intrinsic motivation, it’s serendipity. The psychological term for it is “positive intermittent reinforcement.” You have this notion in marketer-speak of “surprise and delight” being the equivalent. We call it “serendipity.” And so I think it’s really important that, when you have a user who’s engaging…. And again, why did they do the thing that they wanted to do? When you realize that you can separate the two and show them what’s what, I think users will respect that. I think ultimately respecting their time that’s incredibly important.
Fong: When I think about rewards systems and ones that are kind of dirty, I think back to the old days of…I remember in the original dot-com boom, a company called iWon, which was like a search engine where the more you searched, they gave you credits for it. You could enter into a lottery. That’s where it’s kind of dirty, right? You’re using this crappy search engine that you wouldn’t otherwise use, and it returns crappy results, but you know that you’re building up points and getting rewards, basically, for using it. That’s not what we’re doing at all. We’re not telling you to go play some crappy game. You play the games that you already play on whatever platform you’re playing on, and you’ll get rewarded for it.
Kohler: I think what you’re hitting on here is, as games move toward games as a service, loyalty programs become so much more important. You don’t need a loyalty program when you’re a triple-A developer and all you do is sell a game on a disc every year. Having a loyalty program is good, but when it’s something where every day you can get somebody to pay a little bit more money, eventually you have the big mass of people who don’t pay. You have the small group of people who pay, and within that you have this smaller group of people who pay a lot. So if you can use a program like this to move the people who don’t pay toward paying, and the people who are paying toward paying even more, because they’re feeling like they’re part of this big community, more connected to the service, you have the potential to be really successful.
Fong: Yeah, and I think the biggest challenge that a lot of companies have is that it’s actually scary how little a lot of game companies know about their users. Who are their loyal users? What makes them loyal? What games have they come from? What do they do after they stop playing their games? I think the basis of a successful loyalty program is data analytics first and foremost.
Kohler: It’s only in the last few years that, if you were a traditional video game maker, you became aware of the fact that you had users in the first place. You didn’t sell things to users. You sold things to wholesalers. You had a little bit of interaction with them, but there were no community managers. There was no Club Nintendo or Uplay, no customer loyalty programs or anything of that nature.
Wong: There’s obviously that rule where you have 96 percent or 97 percent of users that normally don’t buy anything, especially in free-to-play games. You have the small percentage that does end up paying. I think as we’ve been talking about, it’s a very hot ecosystem. Mobile monetization is a huge hot topic right now. This is really the angle that we’ve taken, because we do work with a lot of advertisers, and Madison Avenue is a big portion of our revenues. You have to understand that thinking outside the box, looking at what people truly appreciate.
And, you know, here’s a novel idea: Why don’t you make it so people don’t hate your brand? Maybe if you represent something in an appropriate way, maybe it’s a win-win. We call it a postmodern business. We can create that win-win, where everybody sees that benefit, and then also create that other benefit with the developer being able to monetize while also retaining their users through this loyalty dynamic. I believe that’s something that’s very powerful as well.