Super Rewards Founder, Pot Farm Creators Net Angel Funding for New Social Game Studio

Super Rewards founder Jason Bailey is teaming up with Pot Farm creators Josh Nilson and Galan Akin to form a new social game studio in Vancouver called Eastside Games. The trio has secured $1.5 million in angel funding and plans to release a new game before the end of 2011.

Super Rewards was one of the first companies to explore the monetization of virtual goods in social games when the Facebook platform opened to developers in 2007. Bailey claims that after just 18 months on the market, the service was already operating at a $100 million run rate (although we heard it was bought for much less than that). He sold the virtual currency monetization platform to Adknowledge in July of 2009 and has since been looking for a way to return to the social games industry. He now serves as CEO of Eastside Games as well as majority owner.

Nilson and Akin come from developer Downtown East Side Games retain their original titles from Pot Farm studio Downtown East Side Games, serving as studio manager and creative director, respectively. The new studio also owns the rights to Pot Farm on Facebook, which currently has just over 900,000 monthly active users and is still profitable, according to Bailey.

Eastside Games is entering the social games market from an advantageous position with the revenues it takes in from Pot Farm, but it’s still a much rougher landscape than it was two years ago. Facebook has changed its developer policies in a way that decreases developer revenue share and maximum audience reach (with the loss of the viral channels) while investors are turning their heads toward cross-platform developers with mobile strategies. To find an audience that can keep the studio running, Eastside Games sees itself going niche.

“If you have a good game with a 1 million MAU count, you can support a small studio,” Bailey tells ISG. “The gold rush is over, but there is still plenty of gold in the hills if you can sit down, shut up, and build compelling games the fit the social/mobile formulas. We want to build ten games with 1 million-plus MAU over the next couple of years. From an enterprise value, I’d rather have ten 1 million-users games than one 10 million-users game.”

The first of these titles is Zombinis, “a collectable battle game featuring cuddly and somewhat explosive zombies with detachable body parts and addicting gameplay.” The title is due for release in Q3 on Facebook as well as open web, and potentially on Google+ should the Games service be open to third party developers at that point. Eastside Games says they see serious potential in Google+ as the in-app purchase fee charged to developers is a mere 5% compared to Facebook’s 30%.

This disparity between platforms is one of the reasons Eastside games is keen on running its game on its own site. The game will be available on and compatible with payments systems of other networks, but the developer means to keep the open web version attractive to users with exclusive content.

“[That] way we own the user, we control the experience and we pay the lowest tax rate,” Bailey says. “Zuck and Jobs want a 30% cut, Google is talking about a much more fair 5%, but regardless, the safest place for us is to not be at the whim of one platform, high taxes, and draconian content restrictions.”

As for releasing games onto mobile platforms, Bailey admits that Eastside has struggled with smartphone game development, eventually concluding it’s better to have a product that funnels players to a single location where they could play the game from any site.

“It is harder than it looks,” he says of mobile development. “Pushing players from FB to iOS or vice versa is more challenging that it seems on the surface. But we have created a playbook that is working.”