PerBlue CEO Justin Beck Discusses Parallel Kingdom, A Location Based Virtual World [Interview]

Mobile and social gaming company PerBlue has just raised $800K in a round Series A financing led by Golden Angels out of Milwaukee as well as some investments from other groups on the west coast. Founded in 2008, PerBlue has grown to a team of 9 full time employees and achieved profitability. Their flagship title, Parallel Kingdom, is essentially a location based virtual world layered on top of a real world map. Interview is after the jump.

The free-to-play title for the iOS and Android platforms lets providers users with synchronous gameplay in which they can claim territories, build buildings and has recently surpassed 200,000 player accounts. I had a chance to catch up with Justin Beck, CEO of PerBlue and delve into his experience growing the company and some of the stats he declared were delightfully surprising.

How did you guys start?

About 2 years ago PerBlue was founded. Parallel Kingdom was started as a project. Andrew, my business partner, and I decided to build a game. The first version was designed at 2 a.m. Slowly the game grew, improving over time. We bootstrapped the business and gave lots of stock options to friends who were working as consultants to build the business. It took 1.5 years to make revenue.

How did you begin to make revenue?

Basically we sell virtual goods and our system uses a pseudo-virtual currency – a good that’s tradable in the world but not cash-outable. ARPU and monetization per user is high. Conversion rate is 20 percent.

The free players who don’t pay anything will work really hard and earn a lot of wood by chopping a lot of trees. A paying player who doesn’t want to put in the hard work would get food. Paying players pay for the food of the non-payers – so overall the economy balances out. The price of food automatically gets adjusted. The key thing from our perspective is to keep the demand for food high.

What’s your analytics setup like?

We spend a lot of time on optimizing revenue and retention of users. For the most part – all the meaningful analytics was home-built. When you want to track everything from advertising campaign to conversions and K factors, building own tool worked the best. Sometimes there are awkward questions that need serious data mining so we capture all of the data. Our analytical process is crucial to our business success.

How important is the free to play model to you?

Being free to play is very essential. Is it physically possible to pay nothing and get access to the entire game play experience? Where the fun is in the game is having a tradable currency. It’s really important to compute out what your revenue per user is. The average cost per user: you can pay anything between $0.25 to $1-2 to user.

Whats also really important is the initial price you pay per user and their quality. The source of users is very critical as we found out. The cheaper users may really not yield much. We get ARPU $6-10 per active player.. but if you do the conversion rates it comes down to be lower $0.95 to $2. The lifetime value of a user of an organic user is $1-2, so you end up making $0.75 to $1.60 so you have to make sure you’re not paying to acquire them.

Have you considered working with publishers?

We don’t really use publishers but we have used Tapjoy and PapayaMobile. Our jury is deliberating of how those models work for scaling our business.

How do you plan your iterations?

2 major update vehicles:
a. Releasing episodic ‘ages’ – slow cycles in which we add major updates
b. Content updates – every month or so. Content updates are very big and they are all encompassing from fixing bugs to adding new content but we’re not completely changing the gameplay.

How has your experience been working on both Android and iOS platforms?

We’ve been on Android and iPhone since last October. Our users were 70% iPhone and 30% Android, and 3 months ago the number switched. This gives us an idea of how the ecosystem is changing. Our numbers show that Android users are actually MORE profitable than iPhone users.

Updating on Android is very fast and simple and makes a huge difference for us since it doesn’t require us to submit the app to an . It’s easy to keep our users satisfied.

Both clients (from Android and iOS) goto one Parallel Kingdom world so people on different devices can play against each other.

What role has the location element played?

Location wise we’ve done tons of iterations to really see what works and what doesn’t. Location really enhances Parallel Kingdom. Players really get invested in their territories and get defensive. This can be limiting though if you’re in smaller areas. Our approach to check-in is that we have a lot of other game plays and mechanics and other differentiation that has helped us get revenue per user higher.

What are your user demographics like?

70% male
30% female
Ages 13-40 and there’s a bump in that graph in the 20s (which is the highest age bracket).
65% united states
25% Europe
10% Japan

What’s your thoughts on the booming international market, specifically Japan?

We shipped 2nd age of Parallel Kingdom in March 2009 and 40% of users were Japanese.. and now its 10%. When we shipped our 3rd age, the ARPU was lower in Japan then in US. This is before the game was translated / localized but it’s undecided at the moment how well our international users will monetize – something we’re working on enhancing. It makes it harder to generalize broadly.

Have you considered integrating branded virtual goods?

No ad networks or branded virtual goods at the moment. The real fantasy of Parallel Kingdoms is about being the most powerful person – so we found more of our monetization working was to empower people to get there. We monetize on the core aspiration of the game. We’re also available on the iPad and it’s really fun to play the game on there because of increased real estate.

Concluding Remarks

What’s really fascinating about Parallel Kingdom is that its a synchronous virtual world and that by building a more virtual community – it’s amazing how it enhances the game. It enhances retention and longer term satisfaction. As opposed to doing quick hits, we’re really looking to keep relationships with our players going.

It is possible to build a tightly knit multiplayer community and it makes the experience and satisfaction much higher. In the end, if you build a quality product and you’ll retain players