Founding a successful company is hard enough. Adapting its products to meet the demands of a changing industry - that's another challenge again.
Wooga was founded in January 2009 by Jens Begemann, Patrick Paulisch and Philipp Moeser. For some years best known as a leading Facebook game developer, the company actually started out making Flash browser games, has experimented with platforms like Korea's KakaoTalk, and is now famous for its free-to-play mobile games like Jelly Splash, Bubble Island 2 and Futurama: Game Of Drones. Last year the company was forced to make a number of layoffs, but in 2017 is back with June's Journey - Hidden Object.
CEO Begemann joined the European Founders panel last week at Casual Connect, speaking with Kai Bolik (CEO, GameDuell), Klaas Kersting (CEO, flaregames), Heiko Hubertz (CEO, WHOW Games), and Heiko Klinge (Editor-in-Chief, GameStar) on the subject of launching and sustaining a games company. Immediately following the panel, we sat down with Begemann and asked what wisdom he can pass on about surviving in the games industry…
What was your very first start in this business?
In 1987, I was 10. [Laughs.] My father taught me how to code. I wanted a home computer to play games but my parents said, "No, that's not good for you." So they gave me a used Apple II. My father had an Apple II that was not really great in terms of playing games, because there were very few great games on there. So I had to write my own!
That turned into a hobby. Some friends and I teamed up to create an adventure game – LucasArts style, think The Secret Of Monkey Island. We wanted to create something similar. And that's how it all started.
I did some detours. I did university, some other stuff. And then I was back at a company in Germany called Jamba – in the UK, they were later called Jamster. But I joined way before the ringtone times. Years before Crazy Frog! Back then, we wanted to be the Yahoo of mobile. One of the aspects was getting games on mobile phones. So my first project there was in 2001, on what I think was the first Java game download portal in Europe (Japan had i-mode). Screens were tiny, like a thumbnail. They could display two colours: dark green and light green. We were selling Java games. So I've been in mobile games since 2001.
At the time, did that feel like a risk? The technology wasn't where it is now.
Jamba had quite a bit of capital, and was just trying dozens of things at the same time. Some of those things we tried, failed. That game download portal really worked! It turned into a big business where we worked together with external developers and provided a mobile portal where you could download games back then in the super-early days. I was an employee. I left in 2008 to start my own company. I took some months off to go travelling around, and then decided, "Hey, I want to start a games company!"
With Wooga, what were the biggest lessons you learned straight away? You had to change direction early on, I think…
Our initial idea – my co-founders' and I – was to do what we called "a website for the silver surfer." That's what we called people with grey hair. So we want to do a portal for people 50-plus, maybe 60-plus. Because we thought there was an audience that was not really addressed, that did not really receive a lot of attention, that didn't really receive a lot of entertainment. Back in the day, there was a brain-training game on the Nintendo DS. In Germany, it was called Dr. Kawashima or Brain Age. We thought, "That's great, we should do something like this, but on the web." That was the initial idea: "Let's do a brain-training game for the silver surfer on the web."
It was the end of 2008, and our business model would be advertising and subscriptions. Then we realised after just two or three months that the platform should not be a website; it should be Facebook. "Our business model, we will figure it out later!" The only thing that remained was this brain-training game. That was when we started Wooga in early 2009, and then the first game we launched was called Brain Buddies, which became a big hit in 2009 on Facebook.
So how did you get from there to here?
Brain Buddies didn't make any money, but it was viral. It got a lot of users. That attention, we used to raise a bunch of capital. The attention we got allowed us to raise five million Euros. And those five million Euros then allowed us to finance ourselves in the next two years.
In those next two years, we developed a number of games on Facebook… some of them failed, but some of them worked. And the ones that really worked were Bubble Island, Monster World, and then later Diamond Dash. So those were the big Facebook hits we had. That was what kind of initially financed our growth, and it allowed us to become profitable, actually.
And then we did one more financing round and realised, "Hey, wait a minute – mobile's getting big!" We thought, "We have to go into mobile." We actually thought apps would be a fad. They'd be there for a couple of years, and then after that it would be HTML5 for the browser – like it was on the PC, right? On the PC, you don't have the Gmail app. You use Gmail in your browser. You don't use the Facebook software. You use Facebook in your browser. On the PC, everything was in the browser. We thought the same would eventually happen on mobile. We went all-in towards HTML5 on mobile. It took us about half a year, nine months, to realise that that was wrong, and to make the shift to native apps.
How do you feel about the fact that now Facebook is trying to get games back into its Messenger?
At the moment there are a number of platforms that are interesting to observe, to follow. One of them is Facebook Messenger. One of them is iMessage. One of them, obviously, is everything that happens around VR and AR. One of them is smartwatches. I hear that some other technology companies are also thinking about: could they open yet another platform for games?
So there's a lot of experimentation at the moment of: what could be other platforms for games? I think, honestly, at the moment, nobody knows what will succeed! So at Wooga we follow that very actively. And we do experimentation. But it's so unclear what will win. We observe very carefully, and when it becomes apparent that a platform gets traction, we would be interested in going after that.
Would you say that having to be flexible is the biggest lesson you learned?
It's a very, very important lesson, yes. It definitely is. You have to be open to change, because the world changes. Even the big companies. Even companies where you think "they're established", the successful ones are extremely adaptive to change. I think the best example of that, actually, is Facebook. When Facebook saw the threat of Twitter, they changed their platform. When they saw Instagram, they bought it. When they saw WhatsApp, they bought it. When they saw Snap, they basically challenged Snap Stories with Instagram Stories.
I think Facebook is a good example of even big companies being always aware and changing. And small companies should be at least as flexible and adaptive as Facebook is.
With small companies, then, what advice would you give? To a person about to found a games company right now, what would you warn them about?
I think you have to find your segment where you are different. You have to find your area where you're better than everybody else. I think there's no point, as a small company, going into an established segment where there are lots of companies who have more money than you, who have more people, who have more resources, who have better relationships. There's no point in that.
You have to go into something where others are not looking, or where others are going in with their previous knowledge, and that previous knowledge actually hinders them.
I will summarise it in one sentence: humans are very good at learning, and we're very bad at forgetting. Sometimes, if you go into a new segment, you have to forget what you know, and that's the advantage you have as a new company, because you don't have these preconceived notions of what's the formula. It's easier for you to challenge.
One of the things you said on stage at Casual Connect was that the Tesla guys didn't know the rules of making cars…
When we started with Facebook games, we didn't know much about games. I had a little bit from my Jamster times, but I was kind of a newbie. And that was an advantage, because I didn't have all of that baggage of previous knowledge that would apply to Facebook. It was easier for me to learn than for the other guys to forget.
Your Casual Connect speaker's bio says that one of the things that's important to you is people. So what makes Wooga people different from other people?
We have a culture that is very open and collaborative. You will find extremely few people who would do what's best for them. You would find extremely few (or no) people who strive to achieve only what they want. You will find a lot of people that strive to achieve what's best for the team or what's best for the company, and will collaborate to achieve this. That's the key aspect of our culture.
We have very diverse teams. You have to be open to work with very different people from different nationalities, different genders, different religious beliefs. So diversity and openness is extremely important to us. You should be someone who likes that, who appreciates that, who enjoys that. Then you will thrive at Wooga.
Following last year's restructure, how has the company culture changed?
Our culture is very important to me and I think it's very strong. From Wooga's very first days we always made sure to root certain aspects deeply in our company culture, whereof one is transparency. I believe this helped a lot in those tough times of the restructure. I communicated a lot both on a companywide but also a personal level and openly shared the reasons as well as a clear plan for the future. Having said that I can actually say, that the restructure didn't cause any changes to our company culture.
What are the things that make you most optimistic about the games industry's future?
What I'm most optimistic about is that playing is deeply in all of us as humans. It's a core human desire. That's what I've said since the very beginning of Wooga.
For a long time, it was difficult for us to express that. There were technical hurdles. You had to buy an expensive console. Society painted you as kind of a nerd if you were playing. Society put a stigma on it. But those things are disappearing.
So what has been in us, as humans, since the very early days, that we are allowed to expressed as children – that stigma is going away; it's socially acceptable to play, and it becomes very accessible because we always have devices with us that allow us to play.
That really makes me so optimistic, because as humans like to communicate, and we like to play. Removing that stigma and making it accessible will result in a more opportunities in games.
But what are the biggest challenges facing the industry? What's 2017's biggest battle going to be?
I actually think we have what I would call an oversupply. Especially in mobile, but I would say almost everywhere, we have more games than anybody could play.
It's because games have become such a big phenomenon. It's something that people have so much passion about. There are a lot of companies that are active in games. A lot of companies have started. There is actually a crazy amount of competition because there are more games out there than anybody can play.
The result of that will be, over the next few years, that not everybody will make it. Not every company will make it. There will naturally be a consolidation, where there's more concentration on a smaller number of companies.
At the moment, everybody tries to stay ahead, to be one of those that consolidate, and not be one of those that are consolidated, and therefore getting attention for your games is difficult. You have to spend a lot of money on marketing. Even if you have a really, really good game, you may not find the audience for it.
That, I think, is the biggest challenge. For consumers, it's great! For users and for players, it's awesome. For people in the industry, though, it's going to be very tough. To be successful, you have to be really, really, really great. Being very good is not enough. You have to be great.