We caught up with Crowdstar’s chief executive Peter Relan after the company announced yesterday that it’s now bringing in about 50 percent of its revenues from mobile games.
In the short Q-and-A below, one of the most interesting things we heard from Relan was that after launching an Android app at the beginning of the month, it’s seeing that ARPU or average-revenue-per-user on Amazon’s appstore is five times higher than it is in Android Market. Relan says that because Amazon has millions of credit cards on file, its users are more willing and able to pay than general Android owners.
The caveats to Crowdstar’s data are: it’s been three weeks since Top Girl’s exclusive launch on Amazon and one week since the general Android launch — so the data is super early. Plus, Amazon’s base is also still small since the Kindle Fire only started shipping this fall. Plus, Crowdstar probably got some extra promotion since it gave Amazon the early exclusive — and we hear those deals are key for having any meaningful usage at all on the Fire.
IN: What do you think of Zynga’s IPO? And what do you think it portends for other social gaming companies that have been approached by investment bankers for public offerings in the last several months?
Relan: Zynga’s done a fantastic job over the past four years. As for the IPO, there’s not too much to blame them for. There are macro issues like Europe, which is still looking very messy. I think that scares investors. A few big tech companies like Oracle have also missed earnings. The fact that they went public in this environment is a credit to them.
There’s also the industry comparables problem. Right before Zynga went public, Nexon also did at around a 7 billion valuation on similar top line revenues. Their performance may have tempered Zynga’s valuation. [Editor’s notes: Nexon has declined more than 16 percent since its debut on the Tokyo Stock Exchange on Dec. 13.]
IN: How does it affect the possibility of other social gaming companies going public? I mean, regardless of Zynga’s share performance, they now have $1 billion at their disposal to dominate mobile via original games or acquisitions.
Relan: We don’t even see it as a competitive situation. Zynga was such a big, dominant player in the Facebook space that there was no way to compete given their capital, their control and market share.
We’re not trying to go public next year.
We started Project Trident [a strategy to diversify onto mobile and abroad] because we had this vision of play anytime and anywhere. Think about what percentage of the time you’re in front of a PC versus your phone. Zynga’s business model is mostly Facebook. Our model is to go more global and mobile. The combined user base of these other platforms — Android, iOS and then the Asian networks — exceeds Facebook.
When we were competing with Zynga through 2009 and 2010 with Happy Aquarium, FishVille, Farmville and so on we realized that this was a hard company to keep up with. We made a strategic change. They had a demographic of older females, so we went for the young female demographic. At the same time, Kabam went for the male, hardcore demographic.
The other difference on mobile is that unlike Facebook, where there was this big standoff between Mark Pincus and Mark Zuckerberg, mobile is a much more level-playing field.
Pincus brought so much engagement to Facebook that if he had left, Facebook would have suffered on engagement metrics with its core audience. They had to work out a deal which ultimately made Zynga the major player. As a young company, Facebook needed Zynga.
But on mobile, Google and Apple are the two primary platforms. There isn’t this fundamental need between them and any single gaming company. Gaming had already taken off on iOS. Zynga didn’t make mobile gaming happen. It was already a thriving industry and you don’t need a market maker like Zynga. What is Zynga to a company that has a $370 billion market cap and that earns more than $100 billion in a single year? Mobile is much more fair and it’s a very fertile.
IN: So far on iOS, you have the Top Girl and Social Girl games, which are really similar to each other. How many titles and what kinds of games could we expect going into 2012?
Relan: When we launched Top Girl in June, it became a top-grossing game overnight. Then we brought it to Amazon and the Kindle Fire exclusively. Then we launched Top Girl in Android Market.
Both Top Girl and Social Girl have captured the imagination of our audience. We will be spending a fair amount of time on these games. There will be new titles, but let’s not forget that brand integration and sequels seem to be easier on iOS.
We do have other stuff in the pipeline, but assume that we’ll also be maintaining our existing titles.
IN: How do your users from the Amazon appstore and Android Market compare so far?
Relan: First of all, Android is not for the faint of heart. You need a high-quality software team and you have to get through all of the quality assurance for the different screen sizes and densities.
As for the Android stores, it’s kind of self-selected. Amazon appstore users are self-selected to be better from a monetization perspective. ARPU on Amazon is higher, but volume is lower. They’ve probably sold 4 to 5 million devices while Google has seen more than 200 million activations.
IN: How much better is monetization on Amazon? Like is it twice as good?
Relan: It’s all relative rather than absolute right now, but we’re seeing initial revenue per user on Amazon coming in at about 5X what we’re seeing on Android. But we haven’t run it long enough to know for sure.
We’re seeing this trend for a couple of reasons. If somebody shells out $200 for a Kindle Fire, getting them to shell out another few bucks for apps is not so hard. When somebody is paying nothing for an Android phone, then it’s harder to get them to pay. In the user’s mind, psychographically speaking, they’ve never paid Google. They have to get over that hump.
Honestly the bigger issue is probably payments data. Amazon has your credit card on file. If you’re using a Kindle Fire, an in-app purchase is trivial. It’s frictionless. Google needs to do better with direct carrier billing.
IN: How are international efforts going so far?
Relan: While we’ve done a great job on mobile this year, global is really going to be a marathon. We’re talking about many countries where the phones, languages and social networks are all different. We’re just trying to position ourselves early.
In South Korea, we partnered with NHN, which runs Cyworld and Naver [the big domestic social networks]. We might see results in 2012, but this year was about figuring it out.
IN: You said you were earning 50 percent of revenue from mobile? That’s not for the full year. That’s just this month, right?
Relan: Yeah, we have four products on mobile right now through iOS, Android and Amazon app store. Next year, we’ll probably see 50 percent of revenue come from mobile for the whole year. Next year might be 30 percent Facebook, 50 percent mobile and 20 percent international.
IN: Will we see you take more funding soon?
Relan: I’ll have a better answer for you on that in Q1.