Building a business in a fun but ruthless market
Since the dawn of time (or smartphones at least), the mobile game industry has only increased in value and competitiveness. In 2016, the global revenue of mobile gaming reached $38 billion, ultimately surpassing PC and console gaming. By now, that number has hit $70 billion, and according to market analyst company Newzoo, it will reach a whopping $100 billion in 2021. That’s 1, 2, 3… 12 digits!
The extreme growth of the industry has changed the market from one in which everyone could release a mobile game and have the chance to achieve success to one in which only well-developed and strategically thought out games have a chance. There are 2 million apps in the App Store and 3.8 million in Google Play Store - and approximately 6.000 new apps are launched every day. About half of all those apps are games, so it’s safe to say that it’s a pretty competitive market. Therefore, it should be obvious that making your mobile app or game stand out is kind of difficult - resulting in a ruthless market with lots of failed attempts and, unfortunately, lots of bankruptcy.
Funday Factory has been around since 2011 to witness, and be part of, the ferocious development of the mobile game market. Throughout those 7 years, we have made everything from small marketing games to connected toys and large co-productions. Being adaptive, having a closely connected and high performance team, and always seeking strong partnerships are big parts of Funday’s DNA. This is the story about how Funday Factory has managed to build a successful business in a highly dynamic industry - told by our CEO Kristian Bang Nørgaard and the founding father and CCO, Anders Leicht Rohde, himself.
"I found that networking was really important, so I spent a lot of time going to conferences and meeting new people. We got our first big client through networking, so I would definitely say that’s a very important factor in this market - and a little luck doesn’t hurt either."Anders Leicht Rohde, CCO & Co-founder
Our story begins in 2011, back when Adele was still making her breakthrough and everyone was talking about this new game called Skyrim. Anders Leicht Rohde and Max Nielsen, founder of Mediaworkers, had identified a gap in the market of branded games and decided to take a swing at it. Anders explains:
“The premise in the beginning was that we wanted to make high quality marketing games because we felt like most of those games out there were really bad. So we identified a market gap and saw a potential for building a business out of it. The mobile game market was still fairly new and booming at the time, but it quickly became almost impossible for smaller companies to develop and publish their own successful games. That was also a realisation that we had to make. Our dream and hopes for the future have always been to create our own IPs, but getting there doesn’t happen overnight. It takes a solid business with room for higher risks, and that is where our strategy of teaming up with strong, inspiring partners along the way has proved to be essential. Good partnerships involves sharing knowledge and experiences which secures a strong foundation for our awesome employees to grow from and raises the collective quality of our productions.”
The first year, Anders was the only full time employee of Funday Factory, while Max made some of the programmers from Mediaworkers available for helping out with the game productions. It was Anders’ first time running a business, and even though it was basically just himself, he found that he had to learn a lot of new things:
“The main challenge at first was learning how to manage a business, how to approach clients, and how to handle everything from pitching ideas to reading up on jurisdiction. I found that networking was really important, so I spent a lot of time going to conferences and meeting new people. We got our first big client through networking, so I would definitely say that’s a very important factor in this market - and a little luck doesn’t hurt either. Gaining and sharing knowledge with the good people of the games industry is something I have increasingly embraced during Funday’s lifetime, and in my experience, it is something that really gets things moving.”
Climbing the ladder
The first couple of years, things went slow but steady. Anders managed to make some good deals with well established brands, which slowly established Funday Factory’s name within the Danish game industry. Then, in 2014, Anders got a call from one of Denmark’s largest mobile game companies, Kiloo, who wanted to collaborate on a game. Anders quickly took the decision to hire some new people, including Kristian as CEO, and then things gathered speed!
“The deal to make Spellbinders with Kiloo was one of the biggest turning points for our business because the game gave us attention and contacts on a worldwide scale. Things exploded around Spellbinders, so we had many different projects going on simultaneously during that period. When we were first contacted by Kiloo, we were just three employees. By the time we finished the project, we were 25. Over the years, we have welcomed the best possible people. People who are extremely skilled at making games and pushing creative limits - and who care for one another and make Funday a fun place to head for work even on cold Monday mornings,”l Anders says.
"When we were first contacted by Kiloo, we were just three employees. By the time we finished the project, we were 25."Anders Leicht Rohde, CCO & Co-founder
Spellbinders was Funday Factory’s first big shot at the free-to-play genre, which was trending at the time, and now is one of the most common monetisation strategies for mobile games. Up until this point, the focus had mainly been on marketing games. Therefore, Spellbinders was very different from previous projects and marked a creative transition into the vast mobile world of free-to-play action and strategy games. The deal with Kiloo came at a time when Funday Factory experienced a lot of growth which brought forth a bunch of new challenges. CEO Kristian elaborates:
“The biggest challenge with Spellbinders was that we were still a small company and there were a lot of things that hadn’t been systemised and planned yet. So the first step was to take a better look at the economy and the structure and to make sure that we had several good projects going on simultaneously. We built up a whole structure around the organisation and formalised how we should do things, how we should work within the market, and how we could prepare for potential outcomes. I think that gave us a good framework to handle the growth we experienced during Spellbinders and afterwards. So even though Spellbinders wasn’t a huge financial success on its own, it gave us a lot of valuable experience about co-productions and about making games for the international mobile games market. It was definitely a big game changer for us. Pun intended.”
To financial security, and beyond!
Four years and a whole lot of business dev later, Funday Factory has sought to find a sweet spot in between profitable and exciting co-productions with experienced partners and the more risky self-productions that can lead to new deals. Game projects for kids are still a big part of Funday’s expertise and identity, but during 2018, the transition towards the free-to-play genre has had increased focus. This change of profile is both a result of the contacts gotten from the Spellbinders project, a passion for great games and business opportunities, and an open, data-driven eye towards the development of the mobile games market.
“Since starting Funday Factory, the market has changed from premium games that cost 1-2 dollars to almost exclusively free-to-play games. So that is a market change that has definitely been a big cause of our own switch towards free-to-play. I think we have managed to survive this highly competitive market by making sure that we always had some steady revenue streams securing our finances. It may sound like a rather boring approach, but now we are in a place where we always try to have at least one project of our own going alongside the co-productions. So I think we are well on our way towards finding the right balance between making our own games and engaging in partnerships that are both creatively interesting and make good business sense,” Anders clarifies.
"We have a lot of cool, passionate and highly professional people here who loves to make cool stuff, and more often than not that pure interest leads to some really crazy, but also really good, ideas."Kristian Bang Nørgaard
Kristian puts it this way: “We obviously try to make good business decisions, but there is, and has always been, a passion to make awesome games, which I think is just as important. Passion is what drives business forward. We have a lot of cool, passionate and highly professional people here who loves to make cool stuff, and more often than not that pure interest leads to some really crazy, but also really good, ideas. So sometimes we make really good business decisions and sometimes we make really good creative decisions, and I think the trick is to find a balance where we are happy with both parametres.”
So there you have it. The story (in short) of how Funday Factory has built a steady business in a market that’s anything but steady. It is mainly a story of mutually beneficial partnerships, continuous adaptation to a highly dynamic industry, and a huge desire for creating the best games possible within the given capabilities. These factors show the importance of expanding your network, making smart business decisions, and seeking help from people who has knowledge that exceeds your own. Finding a comfortable balance between dreams and business hasn’t been easy, but according to Anders and Kristian, it has been the key to not only open new doors but the right ones as well. That is also why Anders is looking at Funday Factory’s future with great optimism although the competition in the market is huge:
“There are billions of smartphone users, so obviously the competition is huge, but that’s also what makes the market so exciting! The next couple of years are interesting for us, because I think we are awaiting the next big explosion. The market is consolidating and we intend to come out on top. We’re ready and armed to the teeth with expertise and drive. If we don’t get that explosion, we will have to take another look at the market and maybe find a new direction to keep on doing the good things we got going on. But with the right development and timing, I feel confident that we will hit the bullseye soon enough and make a hugely successful game that can elevate us to the next level.”
Published: November 16th, 2018