How 99Games built globally successful mobile games out of Udupi
99Games, a subsidiary of Udupi based Robosoft Technologies, is a studio that develops and publishes mobile games, mainly on the iOS platform. So far they have over 15 game titles, 20 million downloads, and have won multiple global awards. Some of their successes include Star Chef, Dhoom 3 and SpellUp. Founded by Rohith Bhat in 1996, Robosoft Technologies is an Indian IT company that provides software product development services mainly for the Mac market. They then launched two subsidiaries Global Delight, which focusses on utility apps, and 99Games.
Robosoft had raised a Series A round from Kalaari Capital in 2013, and, in April this year, announced that they had
raised a Series B round from Ascent Capital as well as existing investors Kalaari Capital. YourStory spoke with Rohith Bhat to understand more about the trends in the mobile gaming sector and with Kumar Shiralagi, Managing Director at Kalaari Capital, to understand what potential they saw in 99Games in 2013.
From consoles and PCs to mobile phones and tablets
In the late 2000s, gaming was popular on PCs, consoles and handheld devices like the Nintendo DS and PSP. But then, the launch of the first edition of the iPhone by Apple proved to be a game changer for the gaming industry.
Games were now downloadable on iPhones and available at the low price of 99 cents. This continued till about 2011, when there was a shift to the freemium model, where users could download the game for free, and then make purchases within the app for virtual goods or upgrades. Rohith added:
Freemium became popular in 2012, and from a monetization perspective it is currently ruling the roost. Mobile gaming is more about providing a quick fix and entertainment to users while console games are more about the immersive experience.
Talking about the difference between mobile and console games, Rohith explained how console or PC gamers generally decide to play a game and then set aside an hour or two to do so. Compared to this, mobile gamers play more often; whenever they had five or ten minutes to spare or on the go while using public transport etc. ‘Core games’ on consoles are more immersive in nature, have an element of competition, and are not very forgiving. Users need to focus and concentrate as there is small margin for error.
On the other hand, most mobile games are ‘casual’ and are more about a sense of completion and building. Sharing on social media has also become more advanced; users can now trade virtual goods, thereby taking help from friends to complete a mission or task. Also, there has been a change in the user interface while jumping to mobile. Initially, developers tried to implement traditional control pads and direction sticks on the mobile screens but were not successful. Games that did well were those that supported the native tap, touch and slide on the mobile, as that mechanism was more intuitive and user friendly. Rohith added:
Earlier a gamer was labelled as a ‘console gamer’ or ‘PC gamer’. But with mobile gaming, everybody is a gamer now. The lines between gamers and non-gamers have started disappearing with the introduction of mobile gaming.
User behaviour and demographics
99Games found that, as expected, audience and traction rely entirely on the game and its content. For their global hit Star Chef, a restaurant management game, they found that 85% of their audience were women in the age group of 25 to 45. Dhoom 3, on the other hand, was popular among the young male population, in the age group of 15 to 30.
Rohith feels that understanding the demographic and addressable market is the key to the success of any game, as it gives the game owners a perspective on the kind of organic boosters that are needed to help them create a viral game. Word of mouth marketing and referral among friends also play a major role. In terms of active users, Star Chef sees 40% in US, 30% in Europe, the rest in other markets and less than 1% in India. Rohith added,“This year the size of the mobile gaming industry is bigger than the console industry. The largest game company is the world is a mobile gaming company. This says a lot about the paradigm shift.”
Star Chef has done well on a global scale, with great traction in markets like Taiwan, China and US. As the penetration of iOS devices in India is comparatively low, they haven’t seen much traction in India. But their goal is to experiment across different demographics and do well globally.
99Games found that though monetizing through mobile games in India is not very easy, it is comparatively easier on a global scale. India was barely present on the internet on desktops. Hence, spending on the mobile is not very prevalent, but is slowly picking up. Rohith added:
In many mobile first economies like India, people were not in the habit of transacting online and hence there was a small roadblock. On the global scale in many countries people were already in the habit of buying stuff online through their desktops and PCs, and hence have been able to make the transition to transacting on mobile phones quicker.
Why Kalaari invested in 99Games
Kalaari Capital was an existing investor in Robosoft in 2013, but in the second round, it invested directly in 99Games, as a participating investor. Kumar Shiralagi, Managing Director at Kalaari Capital spoke about their thought process:
When we look at an investment, we look at multiple angles, the market size the startup is in, the growth opportunity, the team, the product and traction etc. In this case, we saw that Robosoft had serious expertise in the mobile sector, and that 99Games made the decision to focus on mobile a few years ago. Everything is going the mobile way with gaming, transactions and payments etc. Mobile phones have almost become an extension of ourselves. In mobile, Apple is the leader in terms of revenues (from the App Store) and the kind of products 99Games builds, as well as its expertise, is in the iOS platform.
99Games and Robosoft have worked closely with Apple since early on, and Kalaari was impressed with the products, team and track record that Robosoft had. They also had global ambitions from their early days, not focussing on India or any other particular markets. Kumar added: “At the time of investment, 99Games had not yet proven successful, but we bet on the fact that they had a great team and expertise in this sector, and envisioned their capabilities.”
While 99Games has offices in Mumbai, Bangalore and also deploys workforces to different global locations as needed, most of the work happens at their headquarters in Udupi, Karnataka. Talking about this, Kumar added,“We were not actively looking for a company in a Tier 2 or Tier 3 city. But we did not hold anything against Robosoft or 99Games because they were based out of Udupi, although some people may have. They have shown that it is possible to create global success irrespective of location. On the global scale, payments have been worked out, and in the end, it does not matter where majority of the work happens.”
Future plans and advice for entrepreneurs
99Games’s focus is to build one or two great titles every year and make it into multi-million dollar revenue-generating products. They estimate that their global hit Star Chef will continue to do well for the next three years, going by their current traction and looking at other games in the sector such as Clash of Clans and Hay Day.
In the month of May, 99Games made USD 500k in revenue through Star Chef alone, while they were at 125k in January this year and about 25k in August last year. Rohith added,
Lots of startups and companies are focussed on Indian markets, but when we can target the globe, and create global hits out of India, we shouldn’t set out to target certain demographics. I hope more and more investors look at that, and back entrepreneurs who have global ambitions.
99Games is looking to raise another round of funding in the near future to further enhance their mobile capabilities. They are also developing Apple Watch support for Star Chef to test the waters for the wearable segment.
On a closing note, Rohith Bhat added a few words of advice for entrepreneurs who are looking to build sustainable businesses,“Focus on an issue or an opportunity and be laser focussed in executing it. Build on certain metrics or revenue, to show investors that you can build a scalable business around it. Another key focus should be to keep growing month-on-month and maintain the track record.”
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