German game operator Bigpoint has gained visibility with a unique approach to free-to-play browser-based games that’s garnered success, acclaim — and global expansion. Heiko Hubertz, a founder and chief executive of the firm, explains what makes their approach unique, discuses moving to San Francisco, and why they are betting everything on the American market.
Soccer with friends
It all started when Heiko Hubertz and a friend developed a soccer game; the idea was to invite friends to play the thing together. It wasn’t supposed to make money nor get built into a business. “It was more a kind of fun project,” explains Hubertz.
“The problem was,” smiles Hubertz, “All of these friends invited their friends, and so on, and so on — and in the end, our server crashed.” Investing more money in servers just to be able to play their own game wasn’t part of the plan. “It was also clear that we couldn’t charge our friends five bucks a month just to play this crappy game.”
“So we said, ‘Hey, let’s just sell them better soccer players for a couple cents, and if some of them pay, great, then we can pay our servers,’” recalls Hubertz. But the result was more successful than they imagined. Users bought so many in-game players at fifty Euro-cents that it generated tens-of-thousands of Euros a month in revenues. “We said, ‘Hey, that’s a business model.’”
Micro-markets in play
While Hubertz says that microtransactions came about by coincidence, the company has become an expert in the field since then. He explains that the Asian market is different from the European market, and the European market is different than the American market. “All three markets are totally different.”
In Europe, few players will actually spend money in the game, but those that do “spend a crazy amount of money.” In the US, notes Hubertz, a much broader user-number spend money, but less. And that impacts the design for a US-market game.
“What we have seen is that games we have developed in Europe are quite successful in Europe, but not that successful here in the US market,” reveals Hubertz, adding that games which are developed in the US market are quite successful back in Europe. “You have different budgets here. You can invest more money, because you have a bigger market.”
Genesis of the strategy
“In 2002, we were the first company in the western world who started microtransaction item selling,” Hubertz says, thinking back to when the company first started. “No one else did this at this time.”
While Bigpoint started with mainly sports games, from soccer to ice hockey to Formula One — they made a big shift in 2005, thinking at the time was that sports games are great, “But maybe there’s a bigger space for these browser-based games with microtransactions.”
With that strategy in mind, they launched their first mafia game and their first pirate game. “We were quite successful,” says Hubertz. So successful that, in 2007, the company launched into other European markets beyond Germany.
Monetization is the message
“We were quite successful in Europe, because we were working with all the different TV stations,” explains Hubertz. TV stations were promoting Bigpoint games on-air, and the company would do a revenue share based the exposure.
“The interesting part for them is they can promote games, and can monetize…because up to this point, all the content they had on their portal was casual related.” Old-style casual games were hard to monetize, but the new business model paid off for the television stations. “And it was so successful for them, that they really promoted our games on-air,” continues Hubertz.
After working with every television station across Europe, they sold a 70% stake in the company to a joint venture of NBC Universal and a private equity firm in London called GMT. That would prepare the company for its next step.
The land of opportunity
In 2010, Heiko Hubertz moved to San Francisco to open a new office there, because, he says, “The next market we want to enter is the US market.” He adds: “And we want to do it with local content.”
Hubertz reports that he’s pleased with the quality produced by the team in San Francisco. The strategy has been to hire senior developers to make content specifically for an American market.
“Next year’s our big US year – that’s the goal,” he says. His view of America revolves around the number of unique cultures blended together. When that comes to games, Hubertz believes if it will resonate in the US, “it will resonate across Europe, which is why we’re developing more and more games in the US market.”
The future is different
What makes Bigpoint different is their commitment to browser games that are high-quality and fully 3D. In Europe, they operate a game called Farmerama, with some 15.8 million registered users. Hubertz boasts it’s larger than Farmville, but that few Americans have heard of it.
Development was inexpensive, and Hubertz terms it a huge success. But he says that so much of the casual and social game markets focus on an audience that is female, and older. “The entire market focus is on them,” he states.
“We think there’s a market for young and male.” But these users expect something different, because they’re already playing console games. And that’s where production values comes into play. “We want to offer high-quality games for them.”
The final frontier
In addition to that, the company is bolstered by its access to intellectual properties like Battlestar Galactica and The Mummy, courtesy of NBC Universal. According to Hubertz, the use of a recognizable property “helps people to stay longer in the game.”
“One big problem with microstransaction games have is the churn rate,” Hubertz explains. The games are easy to get into, “Players can also leave very fast.”
With a franchise, reports Hubertz, “They take more time to try to understand the game.” There’s clear intention, the carrot of story, and trust of the brand. “And that’s very important for a microstransaction game.”
“That’s what we believe,” concludes Hubertz. “We’ll see what happens next year, when we launch.” With that admission that this is all just an experiment, he smiles, saying: “But we’re always pioneers in our markets.”
Bigpoint is at work on browser-based free-to-play games featuring Battlestar Galactica, The Mummy, and Ruined, an original IP.Tweet