Nick Gibson takes a closer look at the growing European mobile and browser developer

Extraordinary game companies: Goodgame Studios

In October, German browser and mobile games company Goodgame Studios announced that, having added 400 staff in the previous nine months, its headcount had reached a landmark 1,000.

By my reckoning this makes it not only the largest independent games developer in Germany but one of the largest in Europe – and it is continuing to add 50 new staff per month. I recently had the chance to chat with Christian Wawrzinek, one of the founders, and in doing so got a glimpse into a fascinating and atypical developer at the cutting edge of the business of games. The following profile continues our Extraordinary Games Companies series.

As unusual starts go, Goodgame’s is right up there. The company was founded by a dentist (Christian) and a lawyer (his brother Kai) just after the financial crisis in 2009. Remarkably, given the timing, the pair raised €0.5m in bank debt, which it used to help found their games studio and launch a range of lightweight browser games. Neither brother had a history in the games industry and Goodgame was entering a fast growth but hugely crowded browser games market with substantial competition from established and better-resourced market leaders such as Bigpoint and Gameforge.

This baptism by fire helped create a clinical approach to business, which has fuelled the extent and speed of the company’s remarkable ascent. The dire consequences of failing to service or repay its original financial debt instilled in Goodgame an acute focus on operational efficiency and profitability from the outset. Being a relatively late entrant into a crowded market forced the company to seek different creative and business paths to its browser game peers.

Of its 1,000 staff, just 300 actually work in development.

This quickly resulted in a primary focus on the core browser strategy and MMO gamer, the adoption of sophisticated free-to-play revenue models, massive emphasis on performance-based marketing to acquire customers, and a root and branch application of Google and Amazon’s intelligent data-driven ethos. While many companies have adopted similar approaches to development, Goodgame takes this to a whole new level.

Of its 1,000 staff, just 300 actually work in development. Amazingly, a greater number work in its analytics department while a further 100-plus work in marketing.

A Good Game

Goodgame is utterly focused on identifying and enhancing what players enjoy, extending what they are willing to pay for and ensuring a constant flow of new users.

Having demonstrated the viability of a business, which had already reached 100 staff in under two years, Goodgame raised an additional €3.3m in 2011 to accelerate the exploitation of their winning formula. Since then, Goodgame has gone from strength to strength. It recorded profits of €13m on revenues of €102m in 2013, and in just the first half of 2014 has recorded €98m in revenues and €21m in profit.

Although the browser games market has stagnated in recent years and caused widespread problems for many of the market leaders, Goodgame’s browser sales have still grown. Stronger growth has been achieved in mobile following the launch of two iOS and Android titles. Mobile now represents 40 per cent of its revenues and will top 50 per cent by the year’s end.

Like most of the larger browser games companies, the geographic spread of Goodgame’s business is extremely wide, although continental Europe and Germany in particular remain the browser gaming heartland. Goodgame’s handling of its diverse user base is also somewhat unusual.

Where most MMOG companies will divide their servers into silos based on language or geographic region, Goodgame uses server silos based on both language and territory, having deduced from its metrics that players engage and spend more when playing with and against players in the same time zone and speaking the same first language.

Goodgame is defined by such nuanced understanding of its players and their behaviour. It is telling that one of Goodgame’s key expansion plans is to create a new department to study economic theory and practice within its virtual economies. Probably not an idea for start-ups to follow.

Such data-driven, commercially-focused games development can easily risk alienating players and creating bad games. High user ratings and 220m user registrations in just five years say otherwise. Who would have predicted that a German dentist and a lawyer could disprove the myth that too much data always kills a good game?

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