Written by Ι Stock Market Media — March 2, 2016
SPYR, Inc. (OTCQB: SPYR) has been busy in the mobile game & app development and publishing industry since it entered the space almost a year ago. With plenty of news already coming from the Denver tech firm in 2016, Stock Market Media Group (SMMG), a research and content development investment relations firm, caught up with Paul Thind, SPYR’s Managing Director of Games & Applications, while he attended the Casual Connect conference in Amsterdam, to discuss the company’s plans to compete in this industry.
SMMG: Can you lay out for us your vision for the growth of the games and apps business at SPYR?
PAUL THIND: “My vision right now is for SPYR APPS to be a global player in the multi-billion dollar mobile games business. Initially, we will do this by publishing third-party games, then we will work on securing IP and, finally, we will create our own games.
“I believe it’s important to work with great developers who are passionate about the games they are creating. As we are growing the business from the ground up, it’s important to begin by adding our know-how to these experiences. Therefore, we are focusing on building out the publishing division first (where we can publish third-party games). With this approach, we don’t have the substantial risk and major expense involved with building out an in-house development team and can focus our attention on sourcing excellent games from third-party developers.
“From there, we can add our team’s many collective years of expertise in user acquisition, retention and engagement, community management/social media marketing and monetization, as we work closely with the developer to make each particular game successful. We can also leverage our relationships in the industry that have been built over many years by working with other large publishers or by getting games featured in the app stores.
“Through smart marketing, solid business development and strong monetization, we can work hand-in-hand with developers while they focus on gameplay and updates. This will allow us to get to market with each title much faster than we would by simply creating our own IP.
“When publishing, it’s possible to have quite a few projects going at one time – which is the road to building a profitable business. From there we will already have the teams and systems in place to identify teams we can work with to create our own IP.
“I do believe it will be important to start creating our own IP very soon, so with some success under us, we will begin looking at developers to work with where we can do co-development deals or strictly work-for-hire deals. I prefer co-development because I like it when a developer is passionate and has some ‘skin in the game’ so to speak. This ensures they also share in the revenue pie and have an incentive for continuing ongoing development and working with us to problem solve on monetization or retention issues. You also have to keep in mind that the life cycle of a successful game can be many years, and the team may be creating new experiences and great ongoing monetization ideas for a long time. We want to take the long-term approach and build a smart, sustainable and profitable business for our shareholders and developer partners.
SMMG: How do you choose what third parties you’ll work with and what games you’ll launch?
PAUL THIND: “We look for teams (developers) that have a good pedigree, whether it has been cultivated through their own experiences or from larger companies. For example, with SuperPlus Games in Finland, we knew we were getting three talented guys who had cut their teeth at successful mobile games companies like Digital Chocolate, BugBear and Rovio.
“Those experiences led them to want to branch out and start their own company and build games that they like. This was a natural partnership because we could help them publish and work closely together. They also had team members with varying strong skill sets (technical, production and art). It was a “no brainer” opportunity since we can both do a deal together and bring something of strong value to the table.
“We recently brought on Tasos Katopodis (an ex-Rovio Executive Producer) to be our Production Director. He’s had tons of experience in publishing games that have made tens of millions of dollars. We’ve also opened a subsidiary for SPYR APPS in Helsinki, Finland, which is a hotbed of games with excellent companies such as SuperCell, Rovio, Next Games, Seriously, Grand Cru, and many more. It’s here where the scene has allowed developers and publishers to really create a strong community of collaboration and learning, which has produced success after success. Most of those companies also have offices in the U.S., so when we looked at building a games company with a global orientation, we decided to go in this direction. Besides, it’s easier to work with someone who has a complete understanding of what we are doing and building at SPYR, and who has a list of developers to work with so we can hit the ground running.
“As far as Spectacle Games, Germany, I have known the CEO, Lars Koschin, for many years. His pedigree and the way he runs development teams and his philosophy on success is completely in line with our own philosophy at SPYR. We can also add some of our own expertise and continue to build on his success with Pocket Starships. It’s these kinds of deals that are unique and interesting. They’ve already put a lot of money into that particular game (Pocket Starships), so when we signed the deal we were able to secure it in a way that made sense.
“The development team had done a lot of heavy lifting as far as a complete cross platform back-end game engine. All that is missing is ongoing maintenance, creating new items and exciting new worlds/factions and of course supporting/publishing the game in a way that makes sense. So, when you are able to publish a game that would normally cost $1.5 Million USD and basically get it for a good deal by adding support, new development and marketing resources, it’s a good deal for both parties.
“We are also fortunate to have a global group of advisors (Juhana Kotilainen, Lars Koschin, Reinout Te Brake, and Edward Laws) who are recognized industry leaders that regularly attend the top game conferences around the world, and who are always being approached by developers. This helps SPYR with developing a pipeline of solid developers that we want to look at when it comes to working together. This, in addition to some of our staff doing the same thing, is important. Developers are global and the world is really flat in that sense, so we are working and looking for developers from everywhere.”
SMMG: Are there any plans to create apps that are not games?
PAUL THIND: “While non-game apps are certainly not out of the question, I don’t think it’s the right time for us. Currently, we are building our team based on very large past successes with games and mobile gaming in general so that we have a coherent organization that is focused on what its team does best. If you look at both the iOS App Store and the Google Play App Store, games still rule the roost. It can be a risky business but we are focusing on eliminating as much risk as possible by entering into smart deals, being both creative and metrics-driven in our approach, and working closely with our developer partners to aggressively release new features in-game.
“I believe in a focused organization with high-level goals that rally the team(s). It’s also great if we can share this knowledge cross-functionally and create collaborative systems, because what works in one game, could work in another and so on.
“I’m of the opinion that regular apps are just hard to monetize unless they are offering something different. Besides, our team has collectively 50+ years of experience in the $40 billion + mobile games sector and I’d really like to focus on games.
“So our focus as of now is to publish quality mobile games, but we won’t rule out acquiring or developing other types of apps in the near future. This is why the name of our subsidiary is SPYR APPS, which will hopefully encompass our future.”
SMMG: The deal with Spectacle Games is a unique opportunity for SPYR to be a part of Pocket Starships, which is an already popular game, and spills over into the MMO-RPG (Massively Multiplayer Online Role Playing Game) side of things. How can this help SPYR? Do you envision doing more of these partnerships?
PAUL THIND: “Well, I, as well as our Head of Marketing, Sophia Lee, actually come from the MMO side. We worked together at Outspark back in 2008 where we published hardcore online games from Asia. Many of our colleagues there went on to successful games companies like Kabam, Gree, Nexon, Zynga, Disney, Apple, etc., who were also doing more mid-core experiences.
“I’ve also had a lot of MMO experience in my career both on browser and mobile, and it also helps that Lars Koschin (CEO of Spectacle Games/Developer) has tons of experience running successful MMOs that have made tens and hundreds of millions of dollars worldwide with Gamigo, Frogster, Wargaming (World of Tanks) and other large companies. This kind of collaboration makes it easier for us to talk ‘shop’ so to speak and, again, build a solid and consistent publishing operation.
“I think this can really help establish us as a quality publisher with in-depth, quality games that have a long lifecycle. This particular game (Pocket Starships) also comes with a pretty large user base that simply needs updates and needs to be reactivated. It’s like we have a user base that is begging for more content and items to buy and we now just need to create that for them. We have some very big plans for Pocket Starships in that regard, and, with Lars and his team at the helm, I’m super excited about the months to come.
“Keep in mind that once a game engine is built, it can serve as the foundation for new games in the near future. For example, if we add a top Hollywood IP to a game and make a game around that, it’s very possible that with just a few months of solid development time we could have another solid game. We can then cross promote the game to our current audience who are familiar with the gameplay and style and continue to add to the life cycle of the business.
“These games can obviously take a larger investment and have a much longer life cycle, so I’m up for doing them for sure, but we need to make sure we can support our current portfolio as it grows as well as invest in the long term. That’s the road to, not only building a successful mobile games company, but it will influence the decision to continue with more in-depth experiences. Since these games can monetize well, I’d prefer to do many of them down the road.”
SMMG: How will SPYR make money in the mobile games industry?
PAUL THIND: “When it comes to monetization I don’t count anything out. If you look at successful games, they require a huge user base and monetize over in-app purchases (IAP) with usually about 2-5% of users purchasing. Some of those games refuse to put advertising in for a reason: they don’t want to mess with the user experience. You have games like Clash of Clans and others making a great deal of money with IAP, and that’s deep game experiences with great teams who are constantly thinking of creative and interesting ways to keep their users happy and engaged.
“On the flip side, you have cool casual games like Crossy Road that have made millions with rewarded video advertising. Games like this can be played a lot and I’m seeing the rise of cool developers like FuturePlay who are focused on making games with advertising only.
“We will use a balanced approach; obviously pushing IAP but complementing that with advertising as needed. The goal is always to not bother our users too much. Clearly though it’ll be good to build a business with solid revenues from users purchasing items in-game because that’s the background of most of the team, so the Free-to-Play/IAP model with some complimentary advertising is the way to go.”