Games studio targets unicorn status - with just 34 staff!
A mobile developer is looking to follow Supercell and Rovio in becoming Finland’s next billion-dollar games business.
Finnish-made hits like Angry Birds and Clash of Clans have cemented the country’s reputation as a gaming heavyweight and now Small Giant Games is attracting global interest.
The company was recently pipped to the coveted title of 2018 GP Bullhound Summit Superstar Award at GP Bullhound’s annual invitation-only Summit in Marbella by SenseTime, the Chinese facial recognition technology developer.
Small Giant Games’ rise is all the more remarkable because it was only founded five years ago and is already forecasting revenue of $130m this year despite only having 34 staff.
It’s one of the reasons why it was able to raise $41 million from a range of international investors, led by Sweden’s EQT Ventures, in February.
However CEO Timo Soininen, who founded the company with Otto Nieminen, admitted their current success is a far cry from the early days.
In an exclusive interview with BusinessCloud, Soininen said: “The first games are almost destined to fail – the team has to learn the way to do things by banging their heads against the wall and that is always extremely painful.
“We had a really interesting flying game called Oddwings Escape. We knew the landmines were there but we stepped on them anyway, focusing on irrelevant things like polishing the graphics or the core gameplay physics mechanics which, at the end of the day, are not the critical factors of success.
“One of the cardinal sins games companies make is to have a super-passionate original idea for a game and focus completely on that, forgetting about the business of games and how to make them work.
“If you have the best game in the world but can't market it, the chances are it'll fade into oblivion pretty quickly.”
Soininen says that at that time many casual games were not well monetised despite boasting hundreds of millions of players. He cites Candy Crush Saga as an example of a game which people can engage with easily but also provide a deeper experience, therefore improving the chances of them making in-app purchases.
“There are literally hundreds of millions of casual games players who play really accessible fun games like Candy Crush Saga and are now starting to look for deeper experiences,” he said.
“We said ‘hang on a minute – what if we could bridge these two worlds and make a game that is super accessible and also tap into the 25-, 35- and 40-year-olds who have played their casual games and want to go a bit deeper?”
That’s when Small Giant Games hit upon the idea for its runaway success Empires & Puzzles, which has a basic puzzle-type game in which players match symbols in similar fashion to Candy Crush. Sitting beyond that is an RPG – role-playing game – where players can build bases, create heroes and battle against other players.
Soininen says it knew it had a potential hit on its hands when testing the game with players rigorously throughout the development period. The key was to also concentrate on the business side of things.
“The numbers don’t lie. If your engagement and retention numbers are really bad in the beginning, you have two choices: either kill the game and start something else, or try to fix them,” he said.
“That is painful when you've put blood, sweat and tears into the project.”
It built an analytical model around whether people were downloading the game from the App Store and Google Play landing pages then engaging with it, plus how long they played it for – and whether they were spending any money.
“Everything has to be measured – the mathematical model then gives you a forecast of future engagement and revenues,” he said.
Once it saw the model was correct and the money started coming in, it began to invest more heavily into ‘direct marketing’ – advertising on Facebook, through Google Services and inside other games – investing over $20m last year to drive up users in this way.
“The good thing about these kind of games is that they're like living organisms: you can and should update them all the time,” he said. “We see a pretty long future for the game.
“We are always adding new content and features, offers and seasonal events. As a business you have to create a system and trust people to run and operate those events.”
After achieving 15m downloads and 1.1m daily active users, it plans to spend about $80m on user acquisition this year.
“Our name ‘Small Giant’ reflects the belief that in today's modern world when you have the right technology, tools and ecosystem in place, you don’t need that many people to do really big gigantic things,” he said.
“Our growth has been quite stellar for the last 14 months – that’s the beauty of this business. If you get it right and create a sustainable model, you can scale very, very quickly. Clash of Clans maker Supercell went from zero to a decacorn ($10bn dollar business) in just a few years.”
Tapping into the Finnish ecosystem was key: the founders and CEOs of these huge gaming companies meet every month over breakfast to compare notes and help one another out.
“The Finnish gaming ecosystem is probably the friendliest one in the world,” he said.
“I can pretty much call anyone in the business and ask them to give me a hand with something - I got help with the financing rounds - that's a really unique situation.
“We know a lot of these guys at very successful companies - they are normal human beings, so we knew it could be done! We had pretty ambitious goals from the beginning – we knew that with this team, we could be one of the big ones eventually.
“$130m with 34 guys is a really remarkable situation. It's important to remain humble, but we honestly feel that we've only scratched the surface with Empires and Puzzles.”
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