Thought Leaders in Mobile and Social: Doyon Kim, CEO of Pangalore (Part 4)

Sramana Mitra: It’s an execution game.

Doyon Kim: Right. And we don’t expect people to play our games for three years or four years. Yes, they can copy it, but we have a head start.

SM: So, your strategy is to continuously come up with cross-platform games, keep using the user base, and market new games to them.

DK: Yes.

SM: And what do you charge for these games?

DK: They are freemium games, just like Zynga has. They are social games. You are competing with your friends in solitaire or match-three block games. Sometimes you need to have ads to buy a hint or special card. We give some of them free, but you need to buy [the others].

SM: In solitaire, what hint are you going to get?

DK: You can get a higher score once you have the joker or special numbered cards. You have to have a longer streak to get higher points for you to extend the streak. You can get a higher score if you have special cards. I have to admit this kind of casual game is a low ARPU (average revenue per user) game.

SM: A very low ARPU game.

DK: We will have launched a total of six casual games by the end of February 2012. This is more like proof of concept, in a way, to prove we can build good games with HTML 5 and this multi-platform [system]. Getting to market and getting people’s recognition is our initial goal. Higher ARPU games are coming in May and June.

SM: OK. Set me a benchmark for low ARPU compared to high ARPU. What price would consumers tolerate for the low ARPU? And what are your expectations on the high ARPU? What are people willing to pay for low ARPU games? Ninety-nine cents?

DK: Probably lower than that.

SM: Lower than that.

DK: Right. It’s not that you’re just buying a game. When you need something … when you need some ads to beat your friends, then you pay maybe $3 for 100 coins. With those coins, you can buy so many special cards. To price each item, it’s probably, $0.10 per card.

SM: The equation is, right now, that only 1% to 2% of your free users convert to paying users. Of those, you’re saying each of the 1% to 2% who are paying are paying in the range of $3?

DK: Per month?

SM: You tell me. What is your benchmark? What numbers do you use?

DK: Per month, overall, our goal is to get $0.10 per MAU (monthly active user).

SM: OK. And that’s a reasonable number for the low ARPU casual game. So, benchmark that for me on the high end. You’re going with this number for the February launch. When you’re looking at the higher ARPU games coming in May?

DK: That’s $0.20 to $0.30 per MAU.

SM: OK. Those are small numbers to scale with.

DK: Right. You have to have volume. With the exception of a couple hardcore social games, ones from, say, Kabam, typical social games are $0.30 per MAU. That’s pretty big.

SM: That’s pretty big. Talk to me about what you’ve seen in your years working in the social gaming industry – the mobile, social gaming industry. What are the best customer acquisition strategies?

DK: I don’t want to admit it, but these days the virality is pretty much gone, at least on the Facebook side. Facebook has anti-spamming features.

SM: Yes, and you can [prevent] people from inviting you to apps. Mine is turned off because I got spammed constantly. I don’t have time to say no to hundreds of apps all the time.

DK: Right. So, now Facebook will separate those into messaging and game requests. As a game company, I’m not going to say it’s spam.

SM: But it restricts virality in the industry.

DK: Right. The most effective way [to acquire customers] is brute force marketing, advertising, so Facebook ads. But that requires a budget.

SM: It does.

DK: The other way is cross-promotion, partnering with other gaming companies, promoting each other’s games and growing the share of the pie slowly. We have to combine those two.

This segment is part 4 in the series : Thought Leaders in Mobile and Social: Doyon Kim, CEO of Pangalore
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