Will Harbin is one of the pirates of Silicon Valley. He’s the chief executive of Kixeye, which only has around 4.8 million monthly active users on Facebook. But it’s one of the most profitable game companies on the social network because it makes free-to-play hardcore games that monetize exceedingly well. But Kixeye isn’t marrying itself to the giant social network. The publisher is expanding from Facebook to its own website, and it’s moving into mobile, too.
[aditude-amp id="flyingcarpet" targeting='{"env":"staging","page_type":"article","post_id":489583,"post_type":"story","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"games,","session":"D"}']The web-based games use new middleware such as Adobe’s Flash 11.4, which means the games can use a computer’s 3D graphics hardware. Playing console-quality 3D games on a browser with a free-to-play business model represents a very real threat to the traditional publishers, Harbin says.
I interviewed Harbin in a fireside chat at our GamesBeat 2012 conference. He was quite disappointed there wasn’t actually a hearth with burning logs. Here’s an edited transcript of our conversation.
GamesBeat: Tell us about some of your background, how you started Kixeye.
Will Harbin: Prior to Kixeye, I had absolutely no special experience in games. But I was a longtime passionate gamer. I started gaming when I was 7 years old. I started programming at a very early age, and I found shortly after college that the gaming industry was something very difficult to break into. So I ended up pursuing other ventures. And then three years ago, I had the opportunity to team up with Dave [Scott] and Paul [Preece] and restart a company, at the time, called Casual Collective. That became Kixeye. They had done the original Desktop Tower Defense game.
GamesBeat: How did you proceed there? What led you to Facebook?
Harbin: At the time we had $300,000 in the bank. There weren’t a lot of options for publishing games in a major way. Facebook was a cheap way to publish these lightweight Flash games. Time and advertising was cheap, and the viral channels were relatively unregulated, so you could have a reasonable stream of traffic. The first six months of the company, after we launched Desktop Defender and the early version of Backyard Monsters, it was all free traffic. And that’s what got us started.
GamesBeat: And these games are different. They’re appeal to a different kind of person, more of a hardcore audience?
[aditude-amp id="medium1" targeting='{"env":"staging","page_type":"article","post_id":489583,"post_type":"story","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"games,","session":"D"}']
Harbin: Yes. Initially, when we started Kixeye, we took a look at the landscape and realized that, hey, Zynga has certainly proven that you can monetize North America and Western hemisphere users with virtual goods. But what I found was that there weren’t many games that would appeal to someone like me, who used to play games like Command and Conquer and Quake and whatever, real-time strategy, first-person shooter games and that sort. Nothing like that existed. We wanted to do something that would appeal to us as users, rather than the 45-year-old soccer mom.
GamesBeat: So fast-forward to now. Tell us where you are. You’re also making a lot of money.
Harbin: Yep. We have three active games on Facebook: Battle Pirates, War Commander, and Backyard Monsters, which is 2.5 years old. We’ve grown from three people in the last 2.5 years to about 250. We’ve been profitable for the last two years. All with just raising, I’d say, a relatively modest sum of around $22 million from investors, relative to some of our other competitors. We are hiring maybe 15 or 20 people a month, and we have maybe four new games in the works.
GamesBeat: And one of the most profitable game companies on Facebook, right?
[aditude-amp id="medium2" targeting='{"env":"staging","page_type":"article","post_id":489583,"post_type":"story","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"games,","session":"D"}']
Harbin: As far as I know.
GamesBeat: Kabam had a similar focus on hardcore gamers as well. Did you expand in a different way from what they did?
Harbin: I never worked at Kabam, so I’m not sure how their decisions were made. But I think what separates us from our competitors is our passion. We’re in the business making games for ourselves. We made Backyard Monsters, War Commander, and Battle Pirates out of the desire to create a 24/7 persistent massively multiplayer online real-time strategy game. That didn’t exist anywhere, not just on a browser or on Facebook. These are games that we’re making that I think are disruptive in terms of not just platform but also just the genre in general.
[aditude-amp id="medium3" targeting='{"env":"staging","page_type":"article","post_id":489583,"post_type":"story","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"games,","session":"D"}']
Harbin: There’s been some ebbs and flows in the number of users on Facebook. One was about a year ago, I don’t know if you recall, when we changed the way we reported monthly active and daily active users. But also, a lot of that has come from experimenting with the market in general. At the end of the day, the segment of users that we care about and the ones that engage the most with the games, that has grown significantly. Which is why we’re encouraged to make more games.
GamesBeat: So part of the math is you can make a lot of money off of a few million users because they’re buying more. Or a larger percentage of them are buying compared to a typical casual game, where 2 percent of the base is buying something.
Harbin: Yeah, absolutely. I’d say roughly 7 to 10 percent of our audience ends up spending money on the game. You take a look at a traditional aggregate of your daily active users for a casual game, we monetize up to 20 or sometimes 40 times better.
GamesBeat: Now that you have this base and this machine rolling here, where do you want to go next? And let’s get to our title, consoles versus browsers.
[aditude-amp id="medium4" targeting='{"env":"staging","page_type":"article","post_id":489583,"post_type":"story","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"games,","session":"D"}']
Harbin: We have four games, and it’s about reaching more users with more games and providing new experiences. We have a platform launching by the end of August, hopefully. Some time in the near future. This isn’t a means for us to leave Facebook, but we’ve definitely discovered that there’s a large segment of users that just refuse to play any kind of game on Facebook. They refuse to recognize that there are games worth their while on Facebook. The waters on Facebook have been tainted a bit for our audience. We will still continue to operate on Facebook, purchase traffic and release our games on Facebook, but we’re not expanding that way.
GamesBeat: A little like Zynga.com, or is this different in some ways?
[aditude-amp id="medium5" targeting='{"env":"staging","page_type":"article","post_id":489583,"post_type":"story","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"games,","session":"D"}']
GamesBeat: You’re also going to try to do more 3D graphics, more intense games, and synchronous play and up the ante on this?
Harbin: War Commander will become fully synchronous by the end of this month. After that, every single game we have on our road map is fully synchronous. Three of the four games are 3D.
GamesBeat: Normally, you’d need something like a console to do this. What’s making this possible on the web?
Harbin: A lot of it has to do with platform. We’re not necessarily a Flash shop. We’re always going to choose the best tool for the job. If a better technology is available, we’re going to leverage something else. Maybe HTML 5 might get to the point where we can deliver the appropriate amount of quality and fidelity. Flash 11 is opening a lot of doors as far as hardware acceleration and things like that.
GamesBeat: Flash 11 came out in the fall, and it did introduce the idea that you can tap the 3D graphics hardware on any computer that it’s running on.
Harbin: So there is definitely something there. Flash 11.3 is great. We’re waiting for 11.4, which is supposed to be launched for the public in September. That’s when we’ll launch our first 3D game, late September or October.
But at the end of the day, it’s about the intersection of accessibility and technology. Touching on what Mitch [Lasky of Benchmark Capital] was saying, we’re in the middle of a massive disruption of platforms and business models in publishing. We’re trying to come at it from all over the place. Especially there on the platform side. If you look at the history of disruption across other industries, taking music for an example, accessibility certainly trumped fidelity with the iPod. People put away their high-end stereos and CDs and whatever. They were willing to sacrifice an amount of fidelity for accessibility.
But the good news is, we certainly nailed the physical accessibility piece, where players can reach us through their browser. Fidelity is definitely lacking, but with Flash 11 and other tools on the horizon, we’re going to be able to absolutely rival downloadable PC and console titles in the future.
Harbin: What if League of Legends was in the browser? That’s disruptive. We need to do that.
GamesBeat: So free-to-play, web-based, no download games? Look out, consoles. Then what happens? There’s a whole new ballgame, right?
Harbin: Then what happens? I don’t know. Ask us in five years.
At the end of the day, we just want to make great games. I think that some of the old guard in this industry has been resting on their laurels, and they haven’t really had the same passion for quality that some of these new companies have. We want to set ourselves up so we have a platform to produce new, great, exciting games. We don’t want to have any publisher in our way. We don’t want to have anything in our way that provides friction between us and in the user. Right now, we’re in the middle of removing all of those barriers.
GamesBeat: With the switch to 3D here, are you having to scale up the size of your teams until they rival the size of console teams?
GamesBeat: Why would people still want to buy $60 console games after this? Does anybody have a question from the audience?
Question from audience: With the strength of MMOs in China, Japan, and South Korea, how do you view your opportunities in those markets?
Harbin: I think there’s a lot of opportunity in those markets. But there’s still a lot of opportunity in the markets that we’re currently executing on. I think in a world of concerning resources, you just have to do what you know, and then when you’ve exhausted the opportunities there, then you start attacking the other areas. You should never spread yourself too thin. It’s important to deal with what you know and build upon those strengths before you attack new opportunities. There’s absolutely opportunities in a lot of other demographics; there’s a lot of opportunity in other platforms. But right now, we’re going to stick with what we know.
GamesBeat: You picked up a team in Australia. What’s your strategy behind this move?
Harbin: Yeah, we acquired a small developer there, but it has nothing to do with attacking another market. The Australian market has a lot in common with our market here. We’ve been serving countries in that region for a while. It was purely a talent acquisition. They did bits of the Total War series.
Harbin: RTS has always been a passion of mine. It’ll continue to be something the company focuses on. Two of the four titles that we’re working on are going into the RPG realm. Again, we’re starting from the pillar of RTS, and now we’ve started on RPG and something else.
GamesBeat: You also just started a mobile effort.
Harbin: Sort of. The mobile effort is really a test. We have a mobile version of Backyard Monsters coming out relatively soon. But it’s really just dipping our toe in the water. Part of finding the intersection between accessibility and fidelity relies on creating an immersive experience, and when you have a small form factor device like a cellphone, it’s hard to develop a truly immersive experience.
Tablets are something entirely different. Tablets are a great gaming device, and we’ll probably have a version of our first RPG in tablet form shortly after the initial launch.
Question: You mentioned that dedicated gamers might have a bias against Facebook. Are you concerned that they might also just have a bias against browser games in general?
Harbin: I’m sure there will be some friction there, but it will certainly be less friction. I think a lot of gamers hear the term “Facebook game,” and they think Farmville. When they hear “browser game,” they think of a more blank canvas. There are certainly other competitors I’m aware of that are successful in browser outside of Facebook. Companies like Bigpoint, they’ve been doing this for a very long time. And certainly a lot of the companies in China, Japan, and Korea as well. So I’m not as worried.