Transitioning from a Developer to a Distributor of Mobile Games: Lon Otremba, CEO of Tylted (Part 7)

Sramana: If there is a small company looking to launch a new game on your platform, what kind of terms would you offer them?

Lon Otremba: I won’t go into specifics, but we will offer a more favorable revenue share. They get greater than 50% of virtual goods revenue share, and we will share ad revenue where we get greater than 50% of the advertising revenue. We do offer the ability for any independent publisher to participate in both revenue streams, which, I believe, is unique.

Sramana: How many games are on your platform right now?

Lon Otremba: As of today we have 36. We have 35 games in our own catalog and we just launched our first third party game platform.

Sramana: It is very hard to differentiate yourself in iTunes or the Play Store now. This makes your value proposition enticing.

Lon Otremba: I will share the acquisition economics alone to give you a sense. It takes about 1.53 cents to achieve a download for a game publisher, and the number of downloads are decreasing. The life cycle of a traditional download is less than three months. Unless you have the next great hit with lifetime value, then you are on the razor’s edge.

My economics are vastly different. I am on the mobile web. I can get somebody to play your game for about 1.4 cents per user. That does not mean they have downloaded the game or become a registered user. If we have the opportunity to take that user and turn him or her into a repeat user, then the ability to monetize from that user goes up dramatically. I can serve users ads, and I can get them to register which allows me to sell them virtual currency. My acquisition economics use a different model. Certainly the economics are vastly superior. We need only one person out of 150 who plays the game to come back in order to make the game work. The tradeoff is that you need to make that game available in HTML 5. It is a single code base that is accessible on any mobile device. That lets us expose it to carriers like AOL.

We have also introduced a new concept, which is an ad unit we can run in other apps that allow you to play the game. Imagine you are on Pandora listening to music and an ad shows up for a game. In this case it is a game called CUBUGS, and the ad tells you to play the game while you are listening. If you click on that, the game will be served from our server into the Pandora app where you can play the game.

When we launched this as a test with Pandora a few weeks ago, we had 2 million players on Pandora within two weeks. The percentage of people playing the game will likely settle at around 4% to 5% of users who will play a game. If it was a game most people had heard of, the rates would be higher. We can go not just to Pandora but to other app publishers outside of the game world and use those apps as a way to distribute games. We can also serve ads into that game. We have advertisers lined up who are performance based, and those conversions are off the charts. I think this will be a successful way to doing game development, and I think any third-party game developer will want their games distributed this way.

Sramana: It will probably take a while to see if your hypothesis proves true, I suspect you will know soon enough. Good luck going forward, please keep me posted going forward.

This segment is part 7 in the series : Transitioning from a Developer to a Distributor of Mobile Games: Lon Otremba, CEO of Tylted
1 2 3 4 5 6 7