How Storm8 can score millions of mobile game downloads with zero marketing cost (interview)

Perry Tam wasn’t a seasoned game developer when he co-founded Storm8, a mobile social game developer, in March 2009. He was a Facebook platform developer who worked on payment technology, but he could see that it was turning into a real game platform. Then the iPhone came out, and Storm8 jumped on the opportunity to become a “mobile first” game company.

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Now Storm8 has stolen a march on a lot of rivals, reaching more than 300 million downloads and more than 100 million users. Each day, more than 6 million people play a Storm8 game (that figure is up 20 percent from the prior quarter). And the company leads in role-playing games on iOS (Apple iPad, iPod Touch, and iPhone) and Android. Its hit titles include World War, Racing Live,Pets Live, iMobsters, and Vampires Live from Storm8. It also has a second studio, Team Lava, that has created Bakery Story, Restaurant Story, City Story, Farm Story and Fashion Story. The company has quadrupled its staff in the past year to 150 people, and it did so by bootstrapping itself, with no outside investment. Some rivals have anonymously accused Storm8 of cheating in its marketing tactics, using unfair tricks such as automated bots. But Tam denies that and says the company has earned all of its users.

And while other mobile game publishers are selling out, Tam is positioning the company so that it can stay independent and jump fast on the latest trends in mobile games. The company recently launched its Bubble Mania arcade shooter game (a fresh genre for Storm8), and it hit a million downloads in just three days with zero dollars spent on marketing. We caught up with Tam in a recent interview. Here’s a transcript of our talk.

GamesBeat: I wondered if you could talk about the beginning of Storm8, how you guys got together and what prompted you to form the company.

Perry Tam: We started back in March of 2009. At the time, I was working at Facebook on the payments team, building their credits system. The whole Facebook credits system was part of my work back in those days. We saw that social gaming was really taking off on the Facebook platform. Social games back in early 2009… It was basically just Mafia Wars. It was even before FarmVille happened. But we already could see that social games really worked. Games were so much more fun when you played with friends, and how these games worked, at the time, was totally new.

Also, the iPhone had just come out a short time before. They’d opened up the software development kit (SDK) and opened up the platform for people to start making apps for the App Store. We looked at the iPhone and said, wow, this is going to change how people interact with their mobile devices. This is a game-changing device. So we combined those two ideas, social games and mobile — it was a great way to bring social games to people — and we formed Storm8. We added a couple of other people, I dragged a few people from Facebook, and we formed this company. We literally started out in my living room.

Now we have 150 people. In fact, we just quadrupled in size last year, and we’re on track to double it this year. Right now we occupy half of a building, about 30,000 square feet, but we recently signed a lease, starting this October, to occupy the full 50,000 square feet of the building. There’s a lot of room for us to grow even bigger. That’s where we are. So I think you’re aware of the million-dollar day we had last year. We also announced recently that we have more than 300 million downloads across 100 million devices in our network. Most recently, with the Bubble Mania launch, we announced that we have over six million daily active users (DAU) in our network.

GamesBeat: That’s all been pretty organic, right? You’ve grown it all from the ground up.

Tam: It’s not just organic. It’s also strongly bootstrapped, as far as funding the company. We have no outside capital supporting us. Every single dollar that we spend is our own money that the company made. We haven’t done any acquisitions, so every hire that we get is organically grown.

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GamesBeat: Is everybody located in the one Redwood Shores area, or do you have other offices now?

Tam: No, everyone is in one area, in this office. We don’t have other offices elsewhere. We believe that it’s very important for us to put everyone under the same roof, for multiple reasons. First and foremost, we care about our culture. If we start building offices outside here, it gets harder to communicate that culture to those teams. Second, there’s the speed of development. Our dev cycle is very short. In order for us to execute that fast, to create a high-quality game at a fast pace, we need people to be paying attention all the time. They need to be sitting next to each other. They need to share ideas. We need to solve problems as soon as possible. Having everyone under the same roof is very important to us.

GamesBeat: As you get bigger, as you expand, what are your priorities? How do you choose to expand? There’s a lot of different strategies you could pursue. A lot of your rival companies have already sold out, right? Like ngmoco, they’re part of DeNA now. Funzio was just acquired by Gree for $210 million. Zynga has bought a lot of companies as well. But you’ve deliberately chosen to stay independent here.

Tam: Our strategy is definitely to stay independent. From our perspective… Some things might make sense to grow the company faster. We’ve self-funded, we haven’t raised funding. But with this kind of structure, we have a lot of freedom. We control our own destiny. That’s a good thing in terms of growing the company for us.

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GamesBeat: What about the kinds of platforms you’re making games for?

Tam: We’re constantly looking to expand on the game front. Different genres of games. We can talk about Bubble Mania in a second, which is a totally new genre of game that we’re coming to. That’s one way to expand. The other way is onto different platforms. We’ve always pushed into different platforms. For example, we came to iOS really early, back in 2009. We went to Android in 2010. That was before anyone offered a lot of competition there. We also launched with Amazon just earlier this year. That’s another platform expansion. We’re constantly looking to work on other platforms as they become a significant part of the mobile ecosystem. The one thing that I want to stress here is that we do have a fairly strict focus on mobile. Anything that’s mobile-related, we’ll pay a lot of attention to it.

GamesBeat: Tell me more about the Amazon launch. You had a pretty good first month. How is it going now?

Tam: It’s going really well. We were a launch partner with them on the in-app purchases. We integrated our games with their in-app purchases and the first month was amazing for us. I think we made over $700,000 dollars in the first month of integration. Ever since then, we’re constantly seeing very good traction on the Amazon platform.

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GamesBeat: They’ve got an event they scheduled for September 6. I wonder if they’re going to get into the phone business there…

Tam: [laughs] Yeah, I’m eager to see what they’re going to share in September. Any mobile devices that they’re creating will definitely be a win for the mobile ecosystem.

GamesBeat: Once you get really big, people like to take shots at you. You guys are almost in that category now. I could put these questions in the category of “things your competitors say about you.” One is, a lot of the games look pretty generic, I guess? They look like clone games. A lot of Storm8’s games look like clones. Do you have a response to that?

Tam: Sure. I want everyone out there to understand… We’re not a one-trick pony here. We’re actually very multitalented. I’d like to point out that when we first started in 2009, we started with the Storm8 brand, which… We made RPG games. And then in 2010 we started another brand called TeamLava, and that makes all the Story games that people really enjoy. Restaurant Story, Farm Story. And then in 2011, we opened another brand called FireMocha, which makes core games. They combine the TeamLava presentation with the Storm8 RPG game mechanics. So that’s again another example of us reinventing ourselves.

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In 2012, we’ve come up with two different new genres that we’re stepping into. One is called Shark Party, which holds our casino games. We have two games right now underneath that brand. One is Slots and the other is Poker. That’s a totally new genre for us. It’s not something that we’ve done before, but we’re stepping into that. And then most recently is this Bubble Mania game that we shared with you early on. That, again, proved to everyone that we can consistently step into new genres and we can really make use of that. The way that I think we’re different, in terms of making those games, is when we decide to go into a genre, when we decide to make a new game, we always keep in mind that we want to make the best game in that category. I think a lot of companies out there that try to clone other people’s games, they don’t have that in mind. Their job is just to clone. For us, our job is to make it the best in that category. When we made Bubble Mania, we put a lot of attention into the details. I have to give a lot of praise to the team for making it so polished. It’s the best bubble-shooting game on mobile, period. That contributed a lot to its success, on top of every other important asset that we have. Our platform technology allows us to create games of a pretty high quality at a much lower cost.

GamesBeat: Another category where competitors complain about you is… Your games grow so fast that you much be using bots. Or you must be promoting them with armies of people in other countries or something like that.

Tam: [laughs] Right. It’s a very interesting comment there. I don’t know if you’re aware that there was a question on the forums that asked about that…

GamesBeat: Yeah, I saw that. [Your co-founder] William [Siu] put up an answer to that, right?

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Tam: Exactly. I think we’ve done a great job of answering that question. [Editor’s note: Perry added later, “I did want to quickly come back to your question about bots. In case my answer wasn’t clear, Storm8 doesn’t use bots and never has. We drive downloads as fast as we do by building great games and marketing them through our proprietary network of 6M+ daily active users (DAU).]

Basically, over the years we’ve built up this network of users. More than six million daily active users playing all our games, every single day. I’d point to Bubble Mania. We announced that we’ve accumulated over one million downloads in three days, and we’ve done that with zero marketing dollars. To be honest, if you use bots, you still have to spend some money on it. We haven’t spent any. That kicks the bot thing out of the picture. Nobody can do that. The key thing here is, we really leverage our DAU, our network, actively. As William pointed out, if you have six million DAU, you need only one percent of them to get interested in the game, and you’ve got 60,000 installs right away.

Our conversion rate is much better than that, because our users are very targeted. They all love social games. They have a certain expectation when it comes to TeamLava games, because we’ve trained them that high-quality games really matter. They have high expectations for every game we release. When we put a game in front of them, they say, great, I’ll try it out. That’s very important for everyone to understand. It’s the reason why Storm8 is doing better in this space. It’s because we’ve built up this network. To give some more color to that… If a competitor, who does not have this network, would want to buy those users, using paid user acquisition, what it boils down to is that it takes at least, maybe two dollars, per download to buy those. Let’s say the game’s ARPPU is one cent. If it takes you two dollars to get a user and the (average revenue per paying user) ARPPU is one cent, you need 200 days to recoup that cost, assuming that the user even stays that long. Most people don’t stay for 200 days, so it’s a losing proposition for a lot of our competitors to do user acquisition. We just get it for free.

GamesBeat: That amount of users is enough to push a game into the top 25, I suppose? The number of referral users you get from your own games.

Tam: Yeah. From our perspective, it’s not about the ranking. It’s about whether our users really like the game. Yes, we have this cross-promotional marketing power, but at the same time, we pay a lot of attention to make sure that we have the right users for the game. By doing that, by creating games we think our users will like… It makes more sense as far as cross-promoting with them.

GamesBeat: I know there was a time a while ago when your games were taken down by Apple. Is there some lesson you drew out of that experience, as far as how you need to have a strong relationship with the platform owner?

Tam: That was the really early days, going back to 2009. Over the years, as the platform’s evolved, a lot of policies have solidified, and policies have changed over time. From that experience, we learned that the platform, specifically Apple, is actually very fair. When they see a problem, they let people know. As soon as it comes up you’re on the phone with them. You let them know, okay, here’s the problem, we can fix it together, and we do it. That’s why our games went back to the App Store right after the problem was resolved. I think a lot of platforms nowadays take an approach where, basically, their job is to maintain the integrity of the ecosystem. Storm8 is certainly aligned with that goal, because that’s the best for everyone.

GamesBeat: It’s interesting that your background… A lot of the startups that have moved into the online, social, and mobile space have a lot of game industry veterans. Sometimes the whole team is coming from the triple-A console game market. You guys are a contrast to that, at least as far as how you started. How do you feel about the talent that can make mobile games?

Tam: The team at Storm8 is a very talented one. We’re well-positioned for making mobile games. Let me give you an example. When I came from Facebook to mobile, the first thing I noticed is that mobile is totally different from the Facebook environment. First off, you have this multiplatform approach. On Facebook, everyone was very focused on the one platform. On mobile, you have to be aware of all the different platforms at the same time. We invested a lot into the technology, so that we were able to take advantage of that. A great example of that is the newest game that we launched, Monster Story. It launched a week, two weeks ago? This is the first game we released the same day on both iOS and Android. The way we make that happen is we invest heavily in the technology, so we can take advantage of the different platforms. We’ve had that mentality since day one.

We’ve built this engine, called the Dolphin engine, that allows us to take advantage of the different platforms and maximize the user experience here. It’s different from other people’s cross-platform engines. Oftentimes, when people say they have a cross-platform engine, what they mean is that they only write the game once and then they can port to different platforms. We don’t agree with that, and here’s the reason. Each platform has its unique offerings that can totally enhance the user experience for that platform. We don’t want to limit ourselves by not tapping into that. Our approach is different here. We said, for each platform, we’re going to build natively for each one, so we can take advantage of them. But we don’t want to compromise on the development cycle. We don’t want to compromise on the time to market. What we do is, we made the engine such that it can accelerate each development process by 100 percent. For someone who wants to build on this engine, it’s only going to take you half as long to do it for iOS and half as long to do it for Android. In combination, we’re actually on par or even gaining time when we want to launch on multiple platforms, compared to our competitors. That’s how we achieve that. I think it’s a perfect solution, because it allows us to tap… For example, the user interface. Android and iOS have slightly different offerings for the user interface, and we want to make sure that the user who comes to the game feels it fits very seamlessly with their platform. We’ve built this engine so we can do that on both platforms in the same amount of development time.

GamesBeat: It sounds like HTML 5 as a universal solution isn’t going to work for you guys. Or something that’s a hybrid of HTML 5. It’s been proposed as a universal format for games on mobile devices or Facebook, but it sounds like, from what you just said, that that’s probably not an approach you’re going to take.

Tam: No, you’re right. Right now we do native development for iOS and native development for Android. We’ve experimented with HTML 5. We actually worked on it with Facebook initially… If we want to do HTML 5 we’ll do it natively. We’ll take advantage of all the good things that are unique to HTML 5. Our engine actually allows us to do that. We’ve done that with some of our games… I think it was in 2011 we did that. If we want to go into HTML 5 our technology totally allows that, and it will be unique and native to HTML 5.

GamesBeat: You may have missed one part of the question about whether you like to hire seasoned game developers from the core, triple-A industry… Do you like to do that?

Tam: Sure. When we hire people, we have a very strong focus on hiring the best talent, and the best talent for us will be someone who can learn. One thing we’ve learned so far in the mobile space is that it moves so fast. It changes very quickly. The only way to stay on top is knowing that the most important knowledge that comes with you is your ability to learn. My answer to your earlier question is yes, we will hire and we have hired people who come from triple-A experience, with the thinking that they have the capability to learn. That’s what we care about. It’s not really about whether you have 10 years of experience in social games, because nobody has 10 years of experience in social games. What matters is whether they can learn.

GamesBeat: I can see the circumstances under which your kind of company is one of the best to have. The mobile game industry changes quickly, and if you have to have small teams that move fast and get a game out in a very short period of time, then that is ideal. I don’t know what your average is and how big your team sizes are. Actually, what are those?

Tam: Right now, in total, the whole company has 150 people. Right now we’re averaging one game a month. I’d say the dev cycle for us is between two and three months, from conception to shipping the game. The one thing you need in mobile social games is… Our job doesn’t stop after launch. Our job just gets started. We’re constantly using metrics to tune the game. We constantly push out more content. We keep adding new features after launch. That’s why we’re able to have a dev cycle of a two to three months to launch a game, and then constantly tune it and make it better. The team size for making a game in that amount of time is actually very small. Usually it’s less than 10 people. I’d say it hovers around six to eight.

GamesBeat: That’s the way it was in the early days of the console games. The question is, what happens if the market moves toward the direction that the triple-A games moved, where they have 50 or 100 people doing very high-end 3D graphics? If the market wants games like Infinity Blade, and will accept nothing less than that, what happens then for your kind of company? How do you compete?

Tam: That’s a really good question. I like to separate out the high quality and the timeliness. Back in the day, 2009, when we first started with less than 10 people, we were launching one game a month. We certainly gained some traction there. Today, we have 150 people and we’re still launching one game a month. We have more people, but we’re not launching faster. Our quality has stepped up tremendously. At least 10, 15 times, if you just do the simple math of 10 people doing one game then and 150 people doing one game now. I think that’s the right way to go. You’ll see mobile gaming, as it matures… The production values are going to keep pushing up, and that’s what we’re about to do. That’s definitely happening. Two things that makes us so unique and different, though… The first thing is, we have this network that I talk about. What it allows us to do is, we save money on the marketing front, because we don’t have to put that much into marketing. That means we can hire more talented people. We can put all that money we saved on marketing into production values and innovating with mobile gaming. That’s what’s happening. Second, we push on the technology. The Dolphin engine that I talk about is one of many things we’ve built here that will allow us to constantly push the production values up at a fairly decent cost, and also at a fairly rapid pace. Part of it is the graphics engine. It’s totally proprietary, but you can compare it to the Cocos2d engine out there. We built a graphics engine and a game development engine to help us keep getting better and better graphics. If you look at the latest game we have, Monster Story, the quality in there is just day and night compared to the games we launched two years ago, or even a year ago. The number of animations, the frame rate, all that stuff is advancing.

GamesBeat: I guess the good thing is that the market is getting bigger all the time. A lot more devices are being sold every day.

Tam: Definitely. We estimate at least 1.7 million new devices are activated every day. That’s why we keep pushing on getting our games to the market as soon as possible. Every day we don’t push the game out, we lose 1.7 million potential customers. That’s absolutely true.

GamesBeat: How do you feel about Windows 8?

Tam: We’ve taken a look into it. Right now we’re not developing for it, but I think it has a lot to offer to the mobile ecosystem.

GamesBeat: And what about expanding more into different territories? Japan or China or wherever else?

Tam: It’s definitely on our minds. For the longest time, we’ve been dominating in the U.S. and the western world. English-speaking countries. We certainly understand that the Asian world and other countries have a higher growth rate than some more developed countries. We’re currently working on it.

GamesBeat: Where do you see Storm8 in, maybe, a year or two from now?

Tam: We’re definitely expanding. We’re not just expanding on one vertical. We’re actually expanding on at least three different verticals. One is genres. We’re expanding with Bubble Mania… This company’s DNA is always reinventing itself. We’re constantly stepping into new genres, from RPGs to casual to core to arcade… The second vertical is more platforms. We started with iOS, then we moved to Android, we’re moving to Amazon, we’re on Facebook as well. Another platform is another audience. We’ve built the network from zero to six million plus in three years, and I think there’s still a lot for us to do.

GamesBeat: How do you feel about the state of the whole game industry right now? There’s a lot of attention focused on some big problems, like Zynga’s stock price and OnLive’s collapse…

Tam: I’ve certainly seen a lot of news stories about those. I think everyone can see that mobile is the new frontier for gaming. A lot of companies talk about how they’re expanding to mobile… Right now, at Storm8 we’re seeing a lot of growth. We’re not slowing down. We’re hiring even faster than we used to be, and our user base is growing very rapidly. The story here is, anyone who doesn’t get mobile right is going to suffer. A lot of companies are trying their best to gain traction on mobile. We’re in a unique position where our focus was on mobile since day one. We have the first hard part out of the way. We have that traction already. We can keep moving, keep innovating. I think the future’s very bright for Storm8.