Deal Radar 2009: Mytopia

You read my Recession Entrepreneurship column on Friday focusing on business ideas that required little or no investment to build up. In this installment of the Deal Radar, we profile a company that has been able to build a $1 million-plus revenue stream in the field of social gaming without raising much financing.

Mytopia is a social gaming company that creates real-time games that can be played across social networks and smartphones. The company is focused on both cross-platform communication and cross-platform compatibility and is available through a cross-platform development framework called RUGS. Millions of Mytopians play more than a dozen classic card, board and puzzle games on popular smartphones like the iPhone and Windows Mobile live with friends on other phones or through social networks such as Facebook and MySpace.

The company launched with eight popular games on its own website as well as on popular social networks like Facebook and Bebo in March 2008. Soon after, the games were available through major web and desktop widgets. Mytopia was founded in 2007 by Guy Ben-Artzi and his sister Galia Ben-Artzi, out of the belief that platforms were converging and would eventually lead to games that could be played seamlessly across different screens. The Israeli-American duo is based in California, but most of the engineers are in Israel. Guy grew up playing games in the heart of Silicon Valley, drawing inspiration from old Sierra Online and Nintendo titles. Before Mytopia, he founded and was CEO of Real Dice, one of the first gaming companies in the emerging PDA market and designed and built content management systems at Orbotech prior to that.

Mytopia has raised less than $1 million from angel investors, including Benhamou Global Ventures, Eric Benhamou’s fund.  Although they are considering raising their first VC round, they are not in a hurry.  

When Mytopia was founded, social networks were already beginning to go mass market, with established application developers like Rock You and Slide carving out sizable niches. The mobile market, however, was still dominated by traditional mobile handsets, although smartphones like the Palm Treo and BlackBerry were becoming very popular in the business world. Unlike other companies that focused on either the web or the mobile, Mytopia wanted to build bridges between them. Social networks offered a mechanism of discovering new customers who could convert to mobile platforms, outside the walls of traditional mobile carriers.

Mytopia caters to those who love playing games together with friends on social networks and allows them the chance to continue those games even after their PCs or Macs are turned off. The company was created to be one of the first to bridge the computer and mobile worlds, allowing, for example, a user from Facebook to play with a friend on an iPhone.

Since Mytopia works across different platforms, a player’s friends, their favorite games and their profiles are accessible anytime, making it possible for social networks to offer developers a unique opportunity to quickly build large user bases through fun and viral content.

Mytopia’s business model comprises of numerous streams of revenue, all dependent on a large, multiplayer gaming community. Social networks are the primary avenue of user acquisition, while virtual goods and mobile up-sell the main mechanisms to monetize user activity. Advertising is available as an additional revenue stream, but in the current economy, its value can easily be offset by the previous two. Mytopia says that not depending on advertising to drive revenue allows it to create more immersive and engaging content, uninterrupted by the distractions of ads.

The competition is made up of many successful players in games on social networks such as Zynga and SGN who got in on the early days of the Facebook and MySpace platforms with a strong understanding of viral distribution. The early iPhone developers who populated the App Store with its first content were able to net over $1 million. However, with the influx of thousands of competing developers, success now requires very high quality, original content or a very powerful brand name.
Mytopia has generated over $1 million on social networks and smart phones like the iPhone. The company has over 300,000 customers playing its games. An article on VentureBeat says that the Casual Games Association estimated that the market for casual games reached $2.25 billion in sales in 2007.

Related Reading:

Casual Games – Everyone Can Play
Deal Radar 2008: PlayFirst Plays Casual Games Well
Deal Radar 2008: Playfish

This segment is a part in the series : Deal Radar 2009