The game industry is struggling with the perception that it’s a hit-driven, one-off business, dependent on megahit franchises that are very difficult to repeat. This belief is based on a long track record of one-hit wonders, making it difficult for game companies to succeed — either on the stock market, or over the long haul.
RockYou has a solution to this challenge. To that end, we’ll soon be making several key acquisition and licensing announcements that are part of a strategy that has been working well for the company over the last 12 months. But right now, I’d like to explain the broader vision behind it:
Life for Games Beyond the Megahit
Very few games reach the megahit status of a FarmVille or a Candy Crush, and even blockbusters such as those decline over time, once continued spend to support new user acquisition becomes unprofitable. Further, many game developers manage to create a single successful title or franchise that’s very profitable albeit with smaller user bases, but often find it difficult to replicate that success — even though it’s critical to their long-term value. Without another viable and profitable title, these developers usually stagnate, with few prospects for growth.
It’s a problem we’ve dealt with first hand at RockYou, leading to lots of setbacks and growing pains. To sustain the games we developed and survive as a business, we learned how to maintain our users effectively and manage titles for overall revenue, which includes not just digital goods, but also optimized video ad revenue. We also innovated around the way brand experiences are delivered, both to our players and our ad partners.
After many iterations over many years, I’m very proud to say our team has succeeded, creating an ad platform that greatly increases CTR and completion rates for our advertisers, while strongly boosting revenue for our titles by including ad engagement as part of their core gameplay loop. We release these solutions to our publishing partners as well. This boost in revenue allows developers/publishers to continue providing premium content and feature updates that keep games engaging for their loyal fan bases. Thanks to this approach, RockYou has been a profitable company over the last few quarters.
This brings me to the vision we have for the future of RockYou, which may also suggest a vision for the future of the game industry.
Premium Ads for a Premium Network of Classic Games
RockYou currently delivers 300-500 million+ monthly impressions of premium video ads to the 75 million+ social/mobile players of the many classic games on our network. Most of these games have been around for years, and retain a passionate fan base that we maintain with quality content and customer support. In coming months, we’re going to expand this network through acquisitions with many more premium games which are still loved and played by millions. Though past their apex, these games have very long-lasting and dedicated user bases that monetize for years, making them very profitable over the long run.
This is our vision for the future of RockYou. While it’s not a perfect analogy, you could say our goal is “Hulu meets the Game Show Network.” By integrating their content with premium ads, both networks have vastly extended the life and enjoyment of TV shows years or even decades after they first premiered. In a similar way, we are maintaining and expanding our library of classic, quality games, supporting them with a network of premium ads from top brands.
That’s our value proposition now for our three core constituents: For developers and publishers, we offer a way to keep earning revenue from the great games they’ve worked so hard to create, long after they’ve launched. For quality advertisers, we have a vast audience of highly engaged consumers in their demographic sweet spots, ready and willing to interact with ads optimized for maximum engagement. And most importantly, for gamers, we have a way to keep the titles they love playing alive for years to come.
As I said, we have many acquisition and licensing announcements we will make very soon to support this vision, so stay tuned here on our blog. It’s a very exciting time for us—and for the game industry as a whole.