Q & A: Storm8’s Perry Tam on Cracking $1 Million in Revenue in a Single Day

Redwood Shores-based Storm8 has made a name for itself in the mobile gaming world by pumping out a number of top-grossing titles from hardcore RPGs like World War and iMobsters to sim games like Fashion Story from its casual studio TeamLava.

Now the company, which hasn’t taken any venture funding to date, said this week that it crossed 200 million downloads and passed $1 million in revenue in a single day through in-app purchases of virtual currency. This was following a sale on virtual currency across its titles.

The company’s normally press shy chief executive and co-founder Perry Tam talked to us about what this milestone means and where he plans to take the company next.

Inside Mobile Apps: You guys have been fairly quiet to date. But it seems like you’re being more public with your figures these days. What’s the reason for this?

Tam: We had been pretty busy before and we wanted to stay low and quiet. Obviously, we’ve seen many of our peers and competitors talking about numbers and how mobile gaming is doing in general. When we looked at the numbers and saw that they were on par with us, we wanted to be more involved. Between the two brands, Storm8 and TeamLava, we can contribute this community by educating others. And we were also just so excited by these numbers this time around. It’s a big deal.

Inside Mobile Apps: Were you projecting that you would cross $1 million in revenue per day? Or was this an unexpected spike?

Tam: We did a one-time promotional event as a way of thanking our users over the weekend and it created that one-time spike.

Inside Mobile Apps: What was the promotion?

Tam: About 40 percent off virtual currency in our games.

Inside Mobile Apps: How different is this $1 million a day from what you normally do?

Tam: [Laughing.] Obviously, we’re not doing a $1 million every day. That would be more than $365 million a year. But, having said that, if you take a look at the top grossing charts, we consistently have multiple apps in the Top 25.

I obviously can’t say exactly our daily revenue figures are but I would say that the company is definitely making some decent money.

The other key point I would want to point out is that we truly believe in the free-to-play model with virtual goods. From day one, we started out with this model. Our apps are always free. You don’t have to pay a dime if you don’t want to. It’s not only a model that works for social gaming, it’s a great model across the board.

Inside Mobile Apps: Is that $1 million before or after the platform’s 30 percent cut?

Tam: It’s after.

Inside Mobile Apps: What’s the revenue split between your casual and hardcore titles?

Tam: You mean Storm8 and TeamLava? It’s hard to say. I would say both sides have equal amounts of voice within our network. Storm8 games are more male-oriented where players are trying to fight each other. TeamLava is more female-oriented with cooperative games where players can send gifts to each other.

Inside Mobile Apps: What about the breakdown between Android and iOS?

Tam: Between Android and iOS, in terms of user base, we’re more prominent on iOS. I would say we’re about 80% there and 20% on Android. Revenue-wise it’s not as easy to tell because in-app purchases just came in for Android. So it’s an evolving thing right now. We’re definitely seeing great traction.

When Google launched in-app purchases, we integrated with it on day one. That was great for us. On a per user basis, iOS users are still monetizing better than on Android but I’m very optimistic.

Inside Mobile Apps: What do you think Google could improve about in-app billing so far?

Tam: Having carrier billing could bring it to another inflection point. [Google already has deals with T-Mobile, AT&T and Sprint.] It could create a huge positive gain. I used to work at Facebook on payments and helped them architect on Credits. I learned a great deal there. When you talk about payments, friction is key. You should try to lower the friction and boost the conversion rate.

Inside Mobile Apps: You joined Facebook early then left. How did you make that decision and ultimately end up in mobile gaming?

Tam: When you start a business, you have to find a space that you believe in. I was really happy working there. It’s a great company and I learned a lot about working at a startup and how to make things happen. At that time, I saw that social gaming was taking off. It was definitely becoming a proven model that would have a great impact because it expanded the number of potential game players.

And free-to-play was clearly a great revenue model. It allowed users to try something first and then pay if they liked it.

But when we looked at social gaming — even at that time — there were relatively big existing competitors. As a startup, it was going to be harder to compete on that front.

We looked around and saw that the iPhone had come out. And to us, it was a relatively open platform where we could put out something so we did that. We truly believed that mobile was going to be big. There wasn’t really a dominant player who was taking social gaming to mobile devices, so we decided to try it out.

Inside Mobile Apps: Because you’ve worked on both sides — internally at Facebook and then externally as a game developer — what do you think Facebook could do to make itself more attractive to mobile developers?

Tam: I don’t know. That’s a tough question. There are lots of possibilities, but at the same time, Facebook will do things that make sense for them. I’m not really sure. All of our games have Facebook Connect.

Inside Mobile Apps: Several of your competitors have raised venture funding. But you haven’t to date. Are you thinking about it?

Tam: This is going to be a huge space and there are many people interested in coming into it either through investing or acquiring. We’ve had interest, but we would be very thoughtful and cautious about who to partner with. We’d want to make sure we’d fine the right one to go to the next level together. This is a huge market. It was growing really fast and it will only grow faster in the next year or two.

Inside Mobile Apps: Are you talking about investors or acquirers? Both?

Tam: Yeah. This is a huge market and my intention is to figure out how to conquer it and become the biggest social gaming company on mobile platforms.

Inside Mobile Apps: Are you looking at acquisitions of smaller studios yourself?

Tam: That’s not something I can comment on.

Inside Mobile Apps: How has the loss of incentivized installs affected your margins and the way you acquire users?

Tam: The situation is still developing so I wouldn’t try and draw any conclusions. I just want to focus on what we’re announcing today, which is the really, really huge growth that we’ve seen and the 200 million downloads. We’re on 58 million devices.

Inside Mobile Apps: What’s your DAU (daily active user base)?

Tam: We have about 4 million DAU.

Inside Mobile Apps: Is there anyone else you’re trying now beyond the existing PPI (pay-per-install) providers like Tapjoy and Flurry?

Tam: To be honest, CPI (cost-per-install) is not the main revenue component for Storm8. It doesn’t affect us that much compared to competitors. What matters is whether you create something that your users want. We’re very focused on doing that every single day.

Inside Mobile Apps: In order to build and retain a large user base, many of the bigger developers like you and others are reusing the same game engine with many similar titles. Do you feel like you have the right balance between creating original content and reskinning older work?

Tam: I do think we push the envelope in terms of how we improve the social aspect of our games. We’ve developed social mechanics that give players the ability to visit their friends and strangers and participate in a community board.