Q&A: Boonty's Nouzareth Opens Casual Microtransactions

Casual game developer and distributor Boonty has recently announced the launch of its social casual gaming portal, café.com. The company has been operating the Boonty gaming portal since 2001, but co-founder and president Mathieu Nouzareth notes that cafe.com allows the company to take advantage of the “opportunities presented by incorporating the burgeoning areas of social networking and microtransactions”. The site offers games free of charge, and uses microtransactions, contextual advertising and sponsored game wrappers as a revenue source. Nouzareth commented at the time of cafe.com’s launch that while “brand owners, marketers, and advertisers have all recognized the enormous potential existing in gaming” he feels they “have yet to fully understand how to successfully work with the medium”. Additionally, Boonty has announced that the café.com SDK will be made available to interested developers, allowing them full access to the site’s “microtransaction, avatar and social networking features”, as well as numerous other systems for revenue generation. We spoke to Nouzareth about the gaming portal, the SDK, and the tolerance of casual gamers to advertising and microtransactions. When was Boonty established, and what were the aims of the company at that time? The company started in 2001 with the ambition to change the gaming industry by making it easier and more cost effective to distribute video games while creating an entire ecosystem of video games for consumers to access. We also wanted to access the vast and untapped casual market space - we saw a huge opportunity there. We started on the distribution value chain by offering digital downloads. Now, we see the larger growth potential in creating a whole new social community ecosystem and gold coin economy around social casual games. When did work begin on cafe.com, and what goals do you have for the site? We started to work on cafe.com it in early 2005. The goal was to move every offline social casual gamer, which is just about every person imaginable, to the online world. We realized this would be best achieved by complementing the casual game industry's single-player, try-before-you-buy model with free-to-play, multi-player games, or social gaming. The process was accelerated by our acquisition of Gamehub in Beijing, China in mid-2006, which gave Boonty our own development resources. We're elated to have the first public beta launch this month. Were there any particular studies or research papers that altered you to the growing market of social casual gaming? It all started when I visited Korea in late 2004 and got to know Kart Rider, Freestyle Basketball and many other "free-to-play games". I became interested in exploring the casual games market after seeing how many people not only played these games, but socialized around them. We started researching this market and saw that the casual game market was potentially much larger one in terms of users, as every person is already a social gamer in the offline world. We found out Kart Rider is played by one in four South Koreans, for a total of 12 million players… QQ, which few people outside of China have even heard of, is the largest online game platform in the entire world - 3 to 4 times bigger than WoW. Of course, there's also Habbo Hotel, virtual goods and access. Runescape is currently a mass phenomenon. From those examples, it's clear that the social casual gaming market is huge and growing. But it's equally important to note the greater revenue potential, as social casual games have a conversion rate than traditional video games. Only about 1% to 2% of people buy the full version of a try-before-you-buy game. Now, if you focus on microtransactions to personalized avatars and game virtual goods, there's a far greater potential of monetization from the bulk of the network. Why do you believe the social aspect is so important to casual gamers? Because just about every single person likes playing casual games on a social basis. How many times have you played Monopoly or cards or chess or Battleship with friends? Did you want to leave your friends and just try playing by yourself? People want to play games and they have a natural tendency to want to socialize around playing games. We are simply taking this traditionally offline tendency and moving it to the online world. We've already seen it be successful with hardcore multiplayer games such as Unreal or World of Warcraft on a massive scale. But this is a limited market as most people, while they do play casual games, do not play hard core games. Now we are introducing this multiplayer social capability into casual games for the entire range of demographics. But we are going beyond multiplayer and actually designing games and a gold coin economy around socialization. For example, we have a game centered on music thus combining two great social activities - casual gaming and music. We are also allowing people to completely personalize their game play experience through 3D avatars. They can then personalize both the avatars and the game play through microtransactions in our online shops. We've seen a much higher conversation rate on 'free-to-play' games with microtransactions (up to 10%) versus purchasing try-to-buy games (about 1%). For developers, this means being able to not only develop the game and enhancements for purchase, but to continually come out with new items for their players to purchase. What do you believe cafe.com offers to gamers that isn't offered by other casual gaming portals? With cafe.com, the social aspect is actually a primary consideration when developing each game. If you just tack on superfluous functions that hint at social networking because it's the trend, what you end up with seems more like multi-level marketing, and that's not the kind of ecosystem we want to create. Instead, cafe.com gives a combination of specific community and social features seamlessly integrated into 100% free high-quality games - until now you only had 60 minutes of free play - a built-in 3D avatar system, a microtransaction/virtual currency to buy items for the avatars and game play. Overall, we believe the platform, which is essentially a virtual console designed for community and socialization, is the most important unique feature. Think of it as a MySpace for the casual gaming world. It allows players to not only socialize, but to make new social connections. For cafe.com and its game developer community, this means a growing and returning network of players and revenue opportunities. Why have you decided to utilize both microtransactions and contextual advertising and sponsored game wrappers? The conversion ratio of try-before-you-buy model is simply too low. We lower the barrier of entry - what can be better than free? And by having lower price points, we increase conversion ratios (up to 10X) and at the end of the day make much more money than traditional try-before-you-buy. On the advertising side, we believe there are advertising opportunities that result in additional revenue without interfering in game play. For example, an advertiser can offer a contextual advertising outside game play or can sponsor and wrap an entire game just for a specific part of the community - one that would care. Advertisers can also sponsor free avatar and game items thereby having players see the sponsorships as adding to the game play. Do you think casual gamers have a higher tolerance for advertising than more traditional gamers? I think it's the same for all consumers. If the advertisement does not interfere and is relevant, they don't mind it and may welcome it due to relevance or context. With branded items, players will even see it as a plus. Why do you believe marketers and advertisers "have yet to fully understand how to successfully work with the medium"? It's a new medium and they have to learn how to adjust their creative and messaging to the context of social casual online gameplay. Also the whole ecosystem of advertising needs to adapt - not just the advertisers but also the ad buying agencies, etc. However, I think they are making very fast progress. What is behind the decision to release the cafe.com SDK to developers, and what are you hoping to see happen as a result of this move? It is a content business and no matter how good our game studio in Beijing is, we will never be as good as the dev community as a whole, as we want cafe.com to benefit from every creative gaming mind. So we will develop games with a first tier approach, second tier approach and third tier approach. The SDK makes it extremely easy for developers to enable all the difficult functionalities of multiplayer/community functions such as lobby, matching, high scores, realtime multiplaying, not to mention the necessary "plumbing" behind all this: server, bandwidth, maintenance. Do you think the integration of the e-commerce engine will prove an incentive to developers? Yes. We have implemented into the Boonty network over 85 billing systems around the world, and it is simply way too much to integrate/maintain for ordinary developer. Furthermore, having an engine tied to a microtransaction business model will also provide them with additional revenue opportunities. What other tools and features are included in the SDK? The SDK provides a comprehensive set of tools to help game developers bring their content to cafe.com, complete with server and client components, technical documentation, graphical and design guidelines, and technical assistance. Other features that developers can access include game network communication, anti-cheating mechanisms, game and game room user interface templates, inbound and outbound APIs, and C++ support for 2D & 3D graphics. It's object oriented, with easy implementation and Flash support. What is the revenue generation model associated with the cafe.com SDK? We share revenues on items sold on the games, so the better the game is designed to foster the use of items, the more money the developer will make. So game developers - be creative! We will also share advertising revenues on generated within the platform. What kinds of developers are you hoping to attract, and what kind of approval process will be implemented? Highly creative folks, so many different people. We are not striving to get thousands of games on this platform. Cafe.com is "liquidity" driven, i.e., the more people play on a single game, the better. So we will be selective and open at the same time. Developers have to sign a NDA and send game concept documents, and then we start to negotiate. What rights in terms of IP and future distribution will be offered to developers? That is negotiated on a case by case basis. In what way do you feel this move will foster creativity, and do you think the release of exclusive new games through cafe.com will be a drawcard for users? Yes - no one has really thought of casual games and community so far. However, given the natural tendency of people to play games socially and the great growth of online social communities, we are very excited about the potential. We see developers getting creative in how they leverage the social aspects of the game as well as how they develop items that enhance the gameplay. We also see some creative potential in how games are developed to leverage existing social networks, as the SDK allows scores to be kept on other social networking sites. What are the advantages for you in offering the SDK to developers in this way? There are not advantages per se. We are just looking to offer an SDK in the easiest way possible for developers and one that is tied to a platform that provides developers with strong creative and revenue potential. Where do you see the casual gaming market moving in the future? We saw an incredibly large market that numbers in the billions of players. We see more social networking features built into the designs of games as well as more personalization around the avatars and the game items. We see new types of games that haven't even been thought of built around the idea of online social gaming, as opposed to hardcore games with multiplayer capabilities. What future plans do you have for cafe.com? This is top secret! But it will have more socialization functions, games and types of gameplay, features, opportunities for developers plus and improved UI, and so on. Check back often.