Last month, WonderHill received $7 million in Series A funding led by Charles River Ventures and Shasta Ventures. The company said it plans to use the funds to develop “wholesome” social games targeted at users over 30. However, all we know regarding future titles are assumptions derived from the developer’s existing games, Green Spot and Dog World. ISG recently spoke with the CEO and co-founder of WonderHill, James Currier about the company’s plans.
[Inside Social Games] Thanks for taking the time to speak with us. You describe your games as “wholesome,” but what exactly does that mean? Does that mean they’ll have certain themes, have a Pixar look and feel, or possibly even affiliated with particular causes?
[James Currier] Our aim is to build family-friendly games that are finely crafted, beautiful to look at, and non-violent. We’re trying to create the most happy and magical online games in the world, and we don’t believe they need to be affiliated with a cause to be that. As people, we love the cause affiliations, but as a company, it’s not core to the vision.
[ISG] With Dog World you donated part of your revenue to the ASPCA’s One Dog One Day program and with Green Spot the Nature Conservancy’s Adopt an Acre program. Even though such causes are not core to your vision, do you have any future causes you might be contributing to?
[JC] Right now we don’t have any plans in place to do more of those affiliations, but you never know.
[ISG] Regarding revenue, you seem to be focused on virtual currency instead of advertising. How has this business model worked for you, and how much revenue have you been seeing thus far?
[JC] Yes, we’d like to have as little advertising as possible on the games. We see our business model as selling virtual currency. It’s too early in the life of the company to talk specifics — we’re just getting going and we’re learning so much every week about virtual currencies. The major conclusion we’ve been able to draw so far is that we love the virtual currency business model.
First, the players are happy for four reasons: a) most play for free, b) those who do buy virtual currency never pay more than they value the game, c) those who truly love the game can spend as much and get as involved as they want, and d) the buying of virtual currency adds to the game, instead of advertising detracting from the game.
We as a company are happy for three reasons: a) we only have one customer, the player (if you depend on advertising, you now have two customers – the players and the advertisers – who usually have divergent interests). b) We can focus on building quality and more quality into the product, rather than compromising the product for the advertiser, and that helps the internal operating culture of WonderHill. c) The margins on virtual currency are high, so we can pay for talent that makes higher quality games.
[ISG] Building a bit off the previous question, with what you have learned from Dog World and Green Spot, is there anything you plan on doing differently or improving upon – with microtransactions or otherwise?
[JC] Having our users do more for each other. They are eager and capable of running their game community with little intervention from us, just as they do on Wikipedia. We just need to build the tools for them.
[ISG] How is your approach to wholesome games tied to your view of the evolution of the market?
[JC] One way to see WonderHill is as the harbinger of the second wave of online social games, just as the Wii signaled the second wave for the bigger gaming market. The first wave of social games were very much in the model of the first wave of console games – violent, powerful, competitive, shocking, sexy. This next wave will be more family-oriented and will result in broadening the market for online games. WonderHill demonstrates that trend.
[ISG] Will you only be focusing on 30+ age group or is that subject to change?
[JC] My last company, Tickle, was about self-assessment tests, and I got to work with psychologists and sociologists. One thing they taught me was that teenagers, tweens, and children are at a stage of life where they are looking to explore their boundaries, push limits on who they can be, their attitude, their coolness, their strength, their power, their attractiveness. It’s that time of life for them and most of them will be attracted to games that let them express those attributes and break down real world constrictions.
By the time people are in their 30’s and 40’s, they have often done their experimenting, and are often now looking for a quiet place, a safe place, an aspirational place to create, develop, share. That’s what we’re providing. Frankly, we’re just making games we like ourselves, and 30+ is who is showing up. On a side note, we are getting more emails from people who are playing with their sons and daughters, so we expect some younger demos to come in through that channel.
[ISG] Let’s switch things up and talk about the team for a moment. Your team has experience from Tickle, Pogo, and Linden Labs. What sort of influences are coming from these very different sources, and how are they applying to your new games?
[JC] At Tickle, in addition to psychology, we also learned a lot about making entertainment viral between friends and family. We learned how to run a frugal business, and take it a step at a time. We also learned about what makes for a good company culture.
Fundamentally, we see WonderHill as an attempt to build the best corporate culture we can imagine. From that culture and talent of the people will flow the most magical games in the world. That’s the hope.
From the Pogo days, I think it’s fair to say our team learned about quality game development. The Pogo mini-games are still some of the best games on the Web today, even 10 years later. From SecondLife, we’ve learned a lot about virtual currencies. Although Second Life is a completely different animal from WonderHill, some of the lessons may apply. We’ll see.
[ISG] What about competition? It goes without saying that many will view social shops such as Playfish, SGN, and Zynga as major competitors. What is your point of view on this? Are they direct competition to you?
[JC] Yes, they are definitely competition. Like us, those companies operate at the intersection of games and the Web, and all three of us are competing for the time of the users on Facebook and MySpace.
However, they are our teammates in the bigger picture. The big picture is that the gaming world of the console developers is trying to move onto the Web just as the Web people are moving up into increasingly complex games that are being streamed to the home, not delivered on a $60 CD. It’s a culture clash, and there’s about $50 billion at stake. We represent the Web folks. Our advantages over the console game developers are iterative development, speed, viral marketing, adding social elements to our games, and developing inexpensive games.
My money is on the Web people to take the lion’s share of the gaming world by 2013 because I think it’s easier for us to learn the philosophies of game creation than it is for the gamers to learn the philosophies that make you successful on the Web. Time will tell. I see these companies as a team taking on the giant console industry, and because of that, even though they are our competition, I’m rooting for them, and so are the rest of the WonderHill employees. If they do well, we will do well too. It’s not a zero sum game.
[ISG] How do you think your experiences will play into competing with the leaders in the social games space? And, speaking strictly about game play, what will you be doing to stand out above them?
[JC] Ah, seeing that unfold will be the fun of watching us compete! Each company is well funded (although WonderHill the least), and each company has a far reaching vision about what it wants to become. So in the next few years, you’re likely to see us sometimes diverging in game play and other times overlapping quite a bit and therefore going head to head. You might even see us collaborating. I believe this industry lends itself more than most to fierce competition AND to fierce cooperation.
[ISG] Are looking for more funding at this point?
[JC] We have plenty of capital for now, and have no plans to raise more. We have a game plan to effectively use the capital we have now to develop our brand and get profitable, but depending on competitive forces, we may change that plan next year.
Virtual currencies are a business model that Wall Street has yet to fully understand, but they finally will over the next 36 months, because the juggernaut of the Internet will continue to accelerate the decline of all other media business models (newspapers, magazines, radio, movies and TV), and virtual currencies could be the only bright spot on the media landscape. Given QQ, WOW, SecondLife, HabboHotel and others, Wall Street will wake up to this new model, and capital will become even more plentiful for companies with working models and sufficient size. We hope to put WonderHill in that category over the next year.
[ISG] Obviously, the $7 million from Charles River and Shasta Ventures is going towards your first round of web games, but how many can we expect to see, and in what time frame?
[JC] In the next 6 months, we hope to put out another 6 games.
[ISG] Is there anything in particular that you might be able to tell us about the titles in production?
[JC] The next year will mostly be about building out our core technologies while maintaining and deepening the company culture for creative development. We will double or triple the size of our team in 12 months, and at the same time, we need to support our games on several different platforms at once. There is simply a lot of operational nuts and bolts that needs to happen this year. Given such executional risk, we’re not going to expose ourselves to a lot of “conceptual risk,” meaning we’re not going to be trying completely new game concepts. We’re going to focus on proven ideas. Similar to how Playfish and Zynga are approaching their game portfolios today. Within a year, we’ll get more adventuresome trying new concepts, and we look forward to that time.
[ISG] Is it safe to assume that these will be using microtransactions/virtual goods as well?
[JC] Yes. We are a virtual currency company. All our games will share the same virtual currency across all platforms.
[ISG] Are you or will you be working with any payment or virtual currency monetization partners? If so, who?
[JC] We’d love to talk with anyone who is working on those problems. We can’t do everything, and are always open to working with specialists.
[ISG] From what you have stated, all we know for sure is that you will be building on MySpace and Facebook, but what’s the word on the iPhone? Any time frames or details you would be willing to share on that notion?
[JC] There’s no doubt mobile is the long term platform gaming companies have to be on, especially social gaming companies like us. We love the iPhone, and we’re hoping the other phone makers jump on Android and make their offerings as robust as Apple’s. But right now, we’re seeing it’s easier to get distribution and monetization on the big screen format of computers, so we’re focused there.
Also, we’re very focused on the US, UK and German markets where big screen formats and credit cards have high penetration. If we were doing more overseas markets, or we were targeting younger people without credit cards, mobile would be accelerated in our schedule.
[ISG] Well, I’m afraid that’s all we have for you at the moment, but before we call it quits, is there anything else you would care to share with the readers?
[JC] We’re hiring. Come build the Pixar of online gaming with us.