Judging by track record alone, South Korean publisher and developer Gamevil seems to make releasing hit mobile games look easy. The first half of the company’s fiscal year was the best it had ever recorded, with $28.1 million in sales and $9.8 million in profits. The company is not only doing well in the lucrative South Korean market, it’s been able to establish itself in the far more competitive international arena, where sales have increased by 161 percent year-over-year.
Inside Mobile Apps recently had a chance to talk to Gamevil vice president and head of Gamevil USA Kyu Lee about how his company’s turn to publishing has enabled it to increase revenues, rack up more than 150 million downloads and translate its domestic success to the international market.
Inside Mobile Apps: Gamevil has seen its business grow quite substantially recently. What do you attribute your success to?
Kyu Lee, head of Gamevil USA: I think on a macro level we’re growing because the whole market is growing. We [were a] feature phone game company for a long time and now more than 97 percent of our revenue comes from smartphones. We’ve also been switching from paid apps to free to play, ever since we’ve been doing that our revenue’s been growing significantly. More than 90 percent of our revenue comes from in-app purchases. The third thing is publishing third party titles. Traditionally we did like 12 games a year, most of them internally developed. Since we launched our game developer fund last year we’ve been publishing a lot of titles. This year we plan to publish 45 titles — we’re still signing up titles every month, so that 45 number could actually increase.
IMA: A lot of companies are coming over from Asia but are having trouble replicating their success internationally. That hasn’t been a problem for you. Why do you think that is?
Lee: I think our titles are high quality. The budgets are even higher than the regular titles that are published in the west. That’s one of the reasons. Another reason is we’re very targeted in terms of the audience. We’ve been known for our role-playing games, our action RPGS in the Western market. It’s kind of a niche market, but it’s a also a category that very easily translates. The Zelda fans here are the same Zelda fans in Korea and in Japan. It’s niche but it translates very well around the world.
IMA: When you say a niche market, do you find you also have niche audiences? The kind that are small, but also more engaged, and likely to generate higher average revenue per daily active user (ARPDAU)?
Lee: I think that’s been the overall direction of the company. We’ve been positioning ourselves like that early on. Those are the types of games we’ve been doing internally. [For the] games that we’re publishing, I think we’re becoming more diverse there. Air Penguin got more than a million downloads in its first month — it beat Angry Birds for a week in more than 25 countries. It did very well on Android too, I think it was a top five game. That game was one of our big successes on the casual front. We also acquired another IP called Cartoon Wars, that we share with the developer. That game is still doing amazing for us. It’s a tower defense game but it’s more casual than the games we traditionally produce. We’ve been trying to broaden our fanbase from our existing sports and RPG strengths.
IMA: Can you disclose any specifics about what your games earn?
Lee: What I can say about ARPDAU is I’ve been seeing a lot of figures publicly released by other companies, and I think ours is higher. It has to do with a couple of reasons. One is that in South Korea a lot of the titles are on carrier billing and can be downloaded through the carrier stores. Carrier billing itself has less friction so it monetizes better. The other reason is the type of games we are developing.
IMA: Are you seeing a difference in ARPDAU between Korean and international users?
Lee: Yes, it’s different. Not necessary through Google Play but through carrier billing. We also opened our Japanese office last December and we’ve been starting to localize to more languages. We used to do only Korean and English. Ever since our Japanese offices opened we’ve been doing three languages at launch, English, Korean and Japanese and we just added a fourth language which is Chinese, it’s not coming at launch but after launch. This year we’re also determined to add German and French. I think our European penetration will also improve. We’ve actually seen significant growth due to our efforts. Outside Korea, I can tell you US and Japan are probably our biggest markets.
IMA: You started the $10 million partner fund for developers over a year ago, it brought in Cartoon Wars and other successes. In the last earnings call you said that you’ll invest further into the fund. What are your plans?
Lee: Last year just on publishing and IP acquisitions we spent $10 million. We’re on pace to spend the same amount of money this year. It depends on what kind of deals are out in the market, we might have to burn more cash to bring in more business. There have been a lot of developer funds out there but I want to emphasize that we are spending.
IMA: That’s interesting. Why is it a good idea to work with Gamevil and not one of the other publishers with a developers fund?
Lee: We have more focus on publishing titles than we do on developing our own titles. We only have 10 of our own games. We’re doing 30 third party titles. If developers are publishing as their hobby project or something like that, it’s not going to succeed. The flip side to [focusing so much on] publishing is that it may demotivate your own developers — they might think they want to go out and start their own company too. We’ve been telling our own developers that we’re totally open to that.
The other thing is that we have a large cross promotion base, 150 million downloads on iOS and Android. We’re very strong in Asia too, so if you’re a U.S. company and you feel like you figured everything out in the U.S. we can figure Asia out for you. The developers we’re working with — some of them are two man studios, some of them are 70 person studios. Throughout the experience we’ve had with these developers we gained a lot of knowledge and a lot of trial and error.
IMA: Is there anything specific Gamevil looks for in a publishing partner?
Lee: If it’s in our demographic it is much easier to cross-promote. We’re not looking for paid games because those don’t monetize well in Asia. It has to be free to play. Everybody is looking for stronger social elements, but that’s what we’re looking for too. Most importantly the game has to be fun. We’re reviewing at least five to 10 games every week. Our bar is pretty high. I think it’s getting higher and higher because the landscape is becoming more and more competitive and we need home runs. If it’s something different and fun then we’ll always be happy to look into it. We’ll always give feedback on why we don’t like it because those developers can always come back with something great.