Digit raises $2.5M for cross-platform game development

Screen Shot 2013-01-30 at 10.50.59 AMDublin-based Digit Game Studios, announced today it’s closed a $2.5 million round of Series A funding.

The funding round was led by Delta Partners and also saw participation from ACT Venture Capital.  According to a statement from Digit CEO Richard Barnwell, the money raised from the round of funding will be used by the company to pursue “disrupting the industry with new cross platform technology and awesome games.”

Currently, Digit is working on its debut title, Kings of the Realm, a massively multiplayer strategy game that will reportedly work “across any connected device.” This takes the concept of cross platform gaming one step further, as these types of games are currently limited to certain device and platform types.

According to a statement by CMO Martin Frain, the titles the company is developing will also allow players to transition between devices to continue playing their game.

This latest round of funding brings the total raised by Digit to $3.75 million. Kings of the Realm is due out later this year and will also have a series of books launching around the same time from Penguin Publishing.

GREE invests in mobile game developer MunkyFun

Mobile-social gaming powerhouse GREE recently announced on Dec. 6 that it invested $3 million in independent mobile game studio MunkyFun, a partnership, MunkyFun believes, that aligns with the direction both the companies plan to pursue.MunkyFun GREE investment logos

“MunkyFun is about making fun above all else and connecting people,” said Nick Pavis, CEO and co-founder of MunkyFun. “We see that connecting people through games is where things are going and this is where GREE has made a lot of success in Japan and foreign territories. We are very much in alignment with where things are going.”

MunkyFun, which was founded in 2008 by a group of former LucasArts developers that worked on Star Wars: The Force Unleashed, had developed notable titles for MunkyFun so far including free-to-play iOS title My Horse under the guidance of developer NaturalMotion, who’s known for CSR Racing, and FPS Archetype for iOS.

“Back in 2008, we decided we wanted to do something a little bit more interesting than ‘Star Wars’ and ‘Indiana Jones’ repeatedly,” Pavis said.

Pavis told Inside Mobile Apps that although the indie developer consider multiple companies to partner with, GREE stood out to MunkyFun the most. The Tokyo-headquartered company is moving toward building more technologically advanced games, he added, which aligns with MunkyFun’s plans as well. GREE, who’ve been in talks with MunkyFun for quite some time, will also bring its expertise in user acquisition, marketing and monetization to MunkyFun.

“Another thing that GREE brings to the table for a small developer like ourselves is cash-flow,” Pavis said. “This investment is allowing us to expand in line with the industry. The industry is exploding and there’s just a wealth of opportunity. It’s moving quite fast. It’s good to get an injection of cash to help us expand at the rate that we need to in order to take full advantage of this growth in this industry at this time.”

MunkyFun also plans to expand its team out in which its actively looking for a 2D/UI artist, analytics/data jockeys and a senior game designer. The company is also moving its office to a former Ghirardelli Chocolate factory at Jackson Square in San Francisco.

The studio, which has 15 to 20 million total game downloads to date, plans to launch a couple of new games in early Q1 2013 on GREE’s platform.

MunkyFun has been independently and privately funded company up to this point until GREE’s recent investment.

Applifier closes $4M second round for mobile games discovery

Applifier, the Robin Hood of Facebook games cross promotion, has closed a $4 million second round of funding led by Lifeline Ventures.

The influx of funds will be put toward accelerating Applifier’s growth on iOS, where the company currently hosts a video-based discoverability service called Everyplay. Its Facebook video ad service, Impact, will migrate to mobile next year. To that end, Applifier is staffing up both its engineering-focused Finnish headquarters and a much smaller developer relations-oriented San Francisco office. Applifier currently has about 25 employees total.

Everyplay continues Applifier’s mission of leveraging games’ appeal to generate organic growth and retention. The SDK, when implemented into a developer’s game, allows players to capture video of their in-game play experience and post said video to Facebook, Twitter, YouTube and Everyplay’s site (picture, right — click to enlarge). Since we first saw the service, the site part of the experience has evolved into more of a gamers social network, with avatar creation, status updates and a Follower system similar to Twitter’s. Players can link their Facebook accounts to Everyplay, but that is used more as a means of finding friends instead of a substitution for a virtual identity.

Speaking to Inside Social Games this week, Applifier CEO Jussi Laakkonen explains that gamers naturally prefer anonymity to the use of real identities in games. But at the same time, he admits that the social nature of sharing games — showing them off, beating set high scores, competitive multiplayer, etc. — requires some form of connection.

“We want to make a safe and fun environment,” he says. “So we’re not launching the face-cam part of Everyplay until Q1 next year when we have moderation in place. We don’t want this to be Chatroulette.”

Everyplay is currently live in two iOS games, Fatcat Rush and Stair Dismount, and the SDK is now widely available to developers. A few additional features are planned for Q1 in addition to the face cam capture function — such as a picture-in-picture video display where game developers can choose to show community videos or trailers from a game title screen as an engagement tool. Like Applifier’s previous service on Facebook, Everyplay monetizes through native ads (e.g. sponsored or promoted videos that function on a traditional CPI model) and could potentially branch into other forms of display ads.

Laakkonen — along with many others in the social/mobile space — believes that the next big frontier for mobile games will be tablets, so the sooner Applifier can establish itself on mobile, the better off it will be. This is not unlike the situation the company faced in 2008 when it first contemplated the rapid growth on the Facebook platform.

“We’re hoping for explosive growth on mobile, because [there are] similar market conditions to what we faced on Facebook,” Laakkonen tells ISG. “We don’t know where things will go, but for now, it’s about discoverability.”

Applifier’s second round saw participation from existing investors MHS Capital and PROFounders and from new investor Webb Investment Network. Angel investors include Steven Lurie, Anthony Soohoo, Philip Reisberger and David Wright and Tekes, the Finnish Funding Agency for Technology and Innovation. The $4 million brings Applifier up to $6 million in total funding following a $2 million round closed in February 2011.

Warner Bros. and MGM invest in Kabam

Warner Bros. Entertainment and Metro-Goldwyn-Mayer Studios today revealed that they have partnered to make an investment in social mobile game developer Kabam, joining other investors like like Google Ventures, Intel and Redpoint Ventures.

Correction: We originally wrote that Google was an investor in Kabam. That was incorrect and should have been noted as Google Ventures.

Details about the investment haven’t been revealed, but Warner Bros. Home Entertainment President Keven Tsujihara and MGM CEO Gary Barber will join Kabam’s board of directors as (respectively) a member and observer.

The investment adds yet another layer to the relationship between Kabam and Warner Bros. Recently, the two groups announced a partnership to release The Hobbit: Kingdoms of Middle-Earth for mobile devices. The title hasn’t achieved the same success as Kabam’s flagship mobile title Kingdoms of Camelot: Battle for the North, but it is the No. 13 top-grossing mobile app on Google Play and one of the Top 25 grossing games in iTunes. Meanwhile, Kabam is releasing The Hobbit: Armies of the Third Age on the web early next year.

Warner Bros. has been starting to step up and show an active interest in the social games market. Aside from partnering with Kabam, the company entered a licensing agreement with Spooky Cool Labs for its Wizard of Oz game and other unspecified titles. Until now, Warner Bros. hasn’t had much to show amongst social/mobile games for the past couple of years (despite deciding to focus Warner Bros. Montreal on those kinds of titles). This latest move shows the company is becoming increasingly focused on these types of games.

Liveblogging from Inside Social Apps, New York: Investing in Social and Mobile Games

Live from New York, we’re at the Inside Social Apps conference at the New Yorker Hotel.  For the last session of the day, Eric Goldberg, managing director of Crossover Technologies lead a panel consisting of Atul Bagga, senior analyst – video games & China internet, Lazard Capital Markets, Mike Foley, SVP of corporate development, Electronic Arts, Eric Tilenius, executive-in-residence, ScaleVP and Rick Thompson, general partner, Signia Venture Partners as they weighed in on what investors and publishers were looking for when they invested in mobile and social games.

The Following is a paraphrased account of what was said on the panel.

Goldberg: I’m going to give you a brief overview of the investing market. This is not a happy story. In February Rick, Atul and I predicted there would be a decline in social gaming. Zynga has gone from $12 to $2 in the stock market. In the secondary market has also seen a sharp retreat. According to Pando Daily, only 20 percent of seeded companies will receive institutional funding. What is going on with the state of investment?

Bagga: There has been a mismatch of expectations in the secondary market. About 12 to 15 months ago, companies like Groupon, Facebook and Zynga were extremely popular. However, when they went public and investors expectations were not met. For Zynga in particular, the expectation was that the company would mitigate some of the risk in the social gaming market when that didn’t happen and then Facebook’s debut was something of a double whammy. Right now Zynga’s value is close to its cash and real estate assets  which means investors are assigning zero value to its business. This will not only affect investors who want to get their investment back, but will affect M&A in the industry because Zynga was such a big buyer.

Goldberg: Rick, you’ve still be investing while most of your peers are retreating from the field. Why?

Thompson: If we do three pure game deals next year we’ll have met our quota. The things that we’re looking for are games with a new angle, and game companies with a new angle. We invest in ideas, so we’re investing before there is a business. We’re looking for passionate people who can execute on an idea.

Goldberg: Eric, Scale Venture partners have had some investments change their business models after the investment has been made. What do you look for?

Tilenius: We’re a later stage company, so we’re looking for metrics that will indicate solid traction. The irony of that is companies that are successful and are seeing things work don’t want to take capital — look at Mojang who make Minecraft. What the market changes imply to me is a much more relentless focus from game companies on growing cash rather than users. Two years ago it was a land grab. That’s no longer the case. I think one of mistakes that companies are making is thinking that assuming previous monetization models will work now. For example, arcade games don’t work with free-to-play. I think the future will be about running games as a service, where you’re running a back-end to help players connect.

Foley: One of the biggest challenge I face is far too many people come to me and say “look at my app.” When you’re building a business, you need more than an app. For me its about the team and the capabilities, not what you have today.

Goldberg: What are you looking for in particular and what’s the hardest thing to find?

Foley: The hardest things to find is a developer who can build a high quality free to play game on mobile who doesn’t want $100 million dollars. For example, our top grossing app The Simpsons: Tapped Out is a huge hit. Both the company that developed the game and the company that powers the back end of the game were very small acquisitions that have already recouped their cost because of how successful the game has been.

Goldberg: Which skills matter the most if you don’t already have Angry Birds or Farmville?

Tilenius: It’s hard to make a successful business. You need to have the game and the back end to enable it. Supercell has done it beautifully — both the game and the back end that powers the social and competitive elements are beautiful. I typically worry the least about distribution, since there are so many services out there to solve that problem. The important thing is seeing a gem of a game. Word of mouth is one of the most important factors. There is a caveat  though — there’s a tremendous problem of discoverability. It’s not enough to say “we have a good game, people will find it.”

Goldberg: Rick, you’ve invested in discoverability companies. What do you look for?

Thompson: It’s a part of the ecosystem and its still under development. If you are willing to pay the price someone will help you with distribution.

Bagga: If you’re talking about games as a service, you’re essentially adding another layer to the game. You need to have a great game, to know how to get users and have a finely tuned system  to make the most of their customers. You can always rent features like analytics.

Tilenius: Being able to calculate the LTV of a user is very important. Buying a mobile user costs between $2 and $3 dollars now. If your LTV per player is $0.35, you’ll only be able to grow virally or by word of mouth. When I worked at Zynga, we used to joke Zynga Poker was our first VC. My advice is to find your poker early.

Goldberg: We’re seeing a shift here. Previously if a person bought your game, you had earned your money. Now you need to get people to play your game and then you need to get them to pay for it. In opposition to that we have Kickstarter, where customers are pre-paying for games and financing their games that way. What are your thoughts on that method of financing.

Tilenius: I think it’s a tough slog unless you’ve got some name brand recognition.

Foley: I’ve never seen so many headlines about something that won’t affect the industry that much. These are games and products that are already popular, but not quite popular enough to have publishers.

Goldberg: Can you talk about being a publisher Mike?

Foley: Ultimately we see a vision where all of our content is connected in the back end. it’s extremely difficult to do, and I think that’s now the barrier to entry in this business. We’re in the investment stage on that right now. Companies like EA have a competitive advantage there.

Goldberg: Mike, if someone comes to you with a great iPad game but its not connected, do you just take the game from them then and apply your back-end expertise?

Foley: We work with them.

Thompson: Publishers bring advice as well as cash.

Tilenius: This is my personal opinion, as someone who used to work at Zynga and pushed us towards publishing, perhaps before we were ready, I can see the model has changed. Earlier, we couldn’t buy studios fast enough. Now many don’t make the cut.

Goldberg: What point do you need to think about getting money by hook or by crook? What are the sure signs you need capital?

Bagga: Many two person teams can make a great game in their garage and make $100,000 and have a great life and career making that game. But you have to think, is it scaleable?

Thompson: Those few companies that are able to operate at scale also need to know how to invest that money — it’s hard. You have to know what to green light and what to spend. I think the future will be many smaller studios that can use the tools already available in order to maximize their resources.

2012 mergers and acquisitions run-rate 40 percent higher than 2011, investment in social/casual games drops

Investment bank Digi-Capital today published its Q3 update for its Global Games Investment Review 2012; the mergers and acquisitions transaction value of 2012 has already surpassed the total from 2011 but games investment (particularly among social/casual games) is far lower than it was last year.

This year’s transaction value is now at 105 percent for the entirety of 2011, meaning the run-rate to  Q3 2012 showed a 40 percent year-over-year gain. Six of the 10 largest transactions of this past quarter were made by Chinese, Japanese and South Korean groups.

2011 was a record year for M&A, with a total of $3.4 billion being generated from 113 different transactions (the average value of these being $30 million).  This year so far, though, $3.6 billion has been generated over 71 transactions with an average value of $51 million. The Zynga acquisition of Draw Something developer OMGPOP for a reported $180 million back in March obviously had an effect on these numbers, but this year has seen fewer and larger transactions in general.

According to Digi-Capital, the transactions have been particularly focused on MMO titles, mobile and social/casual games and middleware. Likewise, the company’s larger Chinese, Japanese and South Korean clients are focused on M&A in these areas, while European and U.S. clients “are fishing in similar waters.”



Games investment isn’t seeing the same kind of growth as M&A, however. In 2011, there were 152 transactions resulting in $2 billion, with an average value of $13 million. As of Q3 2012, there have been 130 transactions for a total of $591 million, meaning an average of $4.5 million. Compared to Q3 2011, Q3 2012’s transaction volume is up by 14 percent, but the value of said transactions is down by 60 percent. That said, Digi-Capital says that even if this trend persists, 2012 could still see the investment levels of 2010, which is the second-highest year). A particular point of interest is that in 2011 the social/casual field accounted for 57 percent of the year’s transaction values and 32 percent of transaction volume; as of Q3 2012 it’s only responsible 8 percent of transaction value and 11 percent of volume.

“Our original view that Social Games 1.0 is a consolidating sector could continue through Q4 2012, with 2011’s wave of VC social games investment appearing to be over,” says Digi-Capital.

Wedge Buster secures $2.2M in venture funding, launches social and mobile apps

 Wedge Buster today announced it’s secured $2.2 million in a Series A round of funding, as well as the launch of its social platform.

The funding comes from a variety of investors, including 37 Technology Ventures and Rob Dyrdek (best-known for his pro-skateboarding and various MTV reality shows). The money will be used to accelerate the company’s game development, support marketing and building up Wedge Buster’s distribution network. According to CEO and co-founder Scott Philp, the company is planning to launch one to two new games on both social and mobile platforms per quarter.

The company’s eponymous Wedge Buster Sports is a social sports game platform that recently began appearing on our list of emerging Facebook games. The platform is launching with 100 games to play, many of which are variations of popular web games that have been given a sports theme (Bejewled becomes Ball-Jeweled). Players can challenge their friends to asynchronous matches or enter tournaments with strangers, betting soft currency on the outcome. Philp tells us the company’s focused on sports games because, “no one is doing sports right in social.”

The games monetize in three different ways: Aside from the sale of currency, there are also video ads that play before the start of each game and Philp tells us brand partners are lining up. While he isn’t willing to share what percentage of revenue is currently coming from the brand partnerships, he says it’s a useful stream of income to have while the platform builds up a sizable user base.

Meanwhile, the developer’s first mobile game Battle Darts is nearing completion and should launch for smartphones towards the end of October. Philp tells us Wedge Buster is planning to build up its own brand of sports games under the “Battle” label. Like its social counterparts, Battle Darts allows users to engage in asynchronous matches with their friends and allows them to send drinks to their friends to make the dartboard harder to hit. The game will come in both premium and free (ad-supported) versions, and will also monetize via the purchase of virtual goods like better darts and new dartboards.

“These platforms offer enormous opportunities that aren’t being maximized for sports. We are scaling sports games in a way that’s never been done before,” Philp says. “We know how to be the true leader in sports social gaming: We need a cross channel strategy that includes social, mobile and web.”

According to our AppData traffic-tracking service, Wedge Buster Sports currently has 30,000 monthly active users and 2,000 daily active users, but Philp tells us the average play session is 14 minutes.

Nuukster turns to Kickstarter to fund Birdopolis’s further development

Game developer Nuukster is using Kickstarter to help fund its next section of development on the social game Birdopolis, eschewing more traditional forms of fundraising like seeking investors. CEO David Engel explains why the company is taking this approach and how it’ll use the money if it’s successfully raised.

The 25-day Kickstarter campaign seeks to raise $50,000. If the goals are met, the studio will be able to hire more development staff, particularly for software engineering and community management. Engel tells us his company will be able to continue working on Birdopolis even if the goal isn’t met, but it’ll be slower than desired due to the lack of staffing.

“Doing social games, you have to get a lot of the pieces of the puzzle right,” he tells us. “You can’t just make a good game, you have to make a game that’s really monetizable and that road takes a while. While we do that, we still have to grow. We need an additional software engineer because we have players who are quite advanced in the game. We need content. We need community management. We’re finding we need to offer more and more and more all the time.”

Even if the Kickstarter is a wild success, Engel tells us the money will be spent carefully and the development team won’t explode in size.

“We’re pretty lean and I’d like to keep things on the lean side,” Engel says. “I’ve seen some game companies take on a lot of people and a lot of money, but the outcome of that just wasn’t very impressive.”

At the time of writing Nuukster’s Kickstarter campaign has earned pledges totaling a little under $2,500, under 5 percent of the overall goal. However, the campaign also has 17 days left to go, and much more has been raised in much less time. Engel doesn’t seem worried about the campaign’s progress and he notes the company also emails to players, both active and lapsed, and the developer’s publishing relationship with 6waves is still strong.

Seven people currently comprise Nuukster and have bootstrapped the company so far. Among these seven are veterans of the game industry with impressive backgrounds like Lead Designer John Astell (who cut his teeth in the board game world and was involved with the infamous Robocop VCR game) and Lead Artist Gabor Szikszai (known for his work in World of Warcraft, Dungeons & Dragons and Magic: The Gathering).

Birdopolis had a promising start when it came out early this summer, we liked the game for its strong gameplay and original concept. The title even rose to the top of our emerging games list in mid-July. Since then, though, traffic has fallen off and our AppData traffic-tracking service currently shows the game sitting at approximately 1,000 daily active users.

PlaySpace secures $1.9M in funding

Social games developer PlaySpace today announced via a press release that it secured $1.9 million in funding in an investment round led by PeopleFund with participation of the Spanish venture fund Faraday Ventures. The new funding will help PlaySpace further expand into Spanish- and Portuguese-speaking markets.

Since it was founded in 2011, PlaySpace has successfully launched a variety of Spanish language freemium games on Facebook and the Spanish, private social networking site Tuenti. There are currently 3 million users in PlaySpace’s community across the two social networking platforms, and the developer plans on expanding to iOS and Android soon.

The press release also states that funds will be used to improve PlaySpace’s current products and develop new games. Additionally, PlaySpace plans on launching its portfolio of titles in the United States and Latin America where the company’s goal is to become the leader in social gaming for the Spanish- and Portuguese-speaking markets.

Tagged raises $15 million from Lighthouse Capital Partners, Comercia Bank

Tagged, the social network that bills itself as a destination for meeting new people, announced today it has accepted $15 million in growth capital financing from Lighthouse Capital Partners and Comercia Bank.

Tagged explains that the new funding will help the company grow existing key products and will fund additional strategic acquisitions.

“The Social Discovery category has just begun its high-growth trajectory,” Tagged CEO Greg Tseng said. “While we are profitable and don’t need capital to fund operations, we are also opportunistic and will use these funds to further Tagged’s leadership and innovation in the industry. The growth capital will also enable us to make additional strategic acquisitions, accelerating us toward our next 300 million members.”

Last year Tagged acquired other social networks like messaging service Digsby, and the similarly discovery-focused hi5. In 2011 Tagged reported its revenues of $43 million, a 35 percent increase year-over-year.

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