Our co-CEO, Horacio Martos, sat down with Albert Garcia Lopez, editor of La Vanguardia Tecnologia, one of Spain’s leading daily national newspapers earlier this month. Amongst other things, they discussed the gaming and tech scene in Barcelona, the challenges facing start ups and SMBs in the sector, and how big data number crunching drives game iteration.
We’ve translated the article from La Vanguardia into English, to share what Horacio and Albert discussed. Please feel free to leave us a question or comment below.
Social Point: Barcelona’s Video Game Dragon
The studio behind hit game Dragon City is set to deliver four new titles and exceed $100 million in run rate by the end of 2014.
Whilst the economic crisis continues to penalize the console and PC games sector, things are looking very different in the social and mobile gaming space. One of this sector’s most notable success stories is Barcelona-based Social Point, with more than 50 million active monthly users around the planet.
Social Point co-CEO Horacio Martos
This year, the Catalan studio looks set to break through the $100 million threshold in terms of revenues. “It won’t be easy, but we are confident this will be a break out year for us in terms of earnings,” says 28 year old Horacio Martos, co-founder of the company, which counts smash hit game Dragon City in a portfolio of four established games.
When Martos founded Social Point, together with his university friend, Andrés Bou, shortly after graduating in IT engineering at the Polytechnic University of Catalonia, he might have struggled to imagine that Social Point would one day employ a staff of more than 190 people. And it looks likely that with a pipeline of four new games in production and plans to break into the Asian gaming market this year, the company will be looking to further expand its headquarters in Barcelona’s tech hub, @22.
“We will grow to around 220 people this year, and probably that’s where we’ll reach capacity,” said Martos, speaking to the Vanguardia.
The studio is renowned for its breeding games – a category that targets the general public and is well-designed for mobile devices and for Facebook.
Titles like Dragon City and Monster Legends mix elements of strategy and collecting, but also deliver a sense of user progression through the game, which, as Martos explains, “offer a really immersive type of gameplay to engage the player deeply.” They are games, he says, that are “easy to master at first, so that everyone can play.”
As with phenomenally successful games like Zynga’s Farmville or Clash of Clans by Supercell, another pivotal feature in the games’ success has proved to be the free to play model. Unlike the traditional console scenario, freemium games mean that players incur no cost to play; instead offering the player a chance to make optional mico-transactions to advance more quickly or obtain additional resources.
Users decide if and when to invest in the game.
“We see the free-to-play model as the go-to monetization model, dominating the market over the next years,” says Martos. This model sees around 5% of players make in-game purchases, which is a solid model “when you consider the massive size of the market, with millions of players – outstripping the console market.”
A change in approach for businesses and consumers
“People aren’t prepared to pay €50 for just anything any more,” says Martos. He believes that the crisis affecting the console sector relates as much to changes in business models as to the fact that “the consumer’s view of things has changed.”
“In the same way that people today prefer to subscribe to Spotify than purchase CDs, or are paying less for hotel rooms and looking to house exchange models like AirBnB, they’re no longer willing to pay a lot of money for a game in a box that they might play for three weeks. They are, however, more likely to download a free app from the App Store and then decide whether they want to make an investment or not.”
Social Point’s continuing profitability in 2014 is proof of the success of this new model in electronic entertainment. And although the studio still has some way to go to match giants like Zygna in earnings, Social Point is now within the “top 15 mobile gaming companies in the world”.
Big Data and Video Games
Data analysis and metrics are key to the success of Social Point and other players in the social gaming space. “Each time a user enters the game or makes any type of action, we are able to track everything they do and assess whether it’s what we expected them to do or not,” says Martos.
The success of Dragon City, as well as the four other titles the company has in production, is based on user retention. To optimize retention the studio analyses all the available data in Amazon’s cloud computing services, and decisions to tweak or update games are based on the metrics.
“We have access to a lot of analytics and metrics to track whether a game feature or addition is performing well or not,” says Martos.
Barcelona – a Tech Hub
Barcelona is steadily gaining traction as a hub for tech start ups. Wired magazine recently named Barcelona one of Europe’s hottest startup capitals, with Social Point heading up the list of top companies with headquarters in the Catalan capital.
“A few years ago a lot of e-commerce companies were founded here, and some of them have gone on to become very successful,” says Martos. “In the last three years video game start ups have begun to take off, and they’re also seeing strong results.”
Martos believes that Barcelona’s tech boom is down to the “top tech talent” that the city is proactively nurturing; a phenomenon he attributes to “the quality Masters programs offered by our universities, and the support that is also being given to entrepreneurs by sector experts in the city.”
Barcelona is seeing a boom in tech talent.
“Barcelona is becoming a reference in tech start ups, joining ranks that include London, Berlin or Tel Aviv,” he says.
Nonetheless, with a staff made up by 21 nationalities, Martos is less enthusiastic about Spanish regulations that make it hard to hire non-EU nationals. “It’s a shame it’s still so difficult to contract skilled workers from outside the European Union,” he says. And it’s a view that is shared by other leaders in the same sector
Current Spanish legislation means that a minimum wait of six months is necessary when contracting non-EU staff – a hurdle that he describes as “a serious handicap.”
In spite of the bureaucratic obstacles however, Social Point’s growth trajectory looks set to continue, with a robust financial forecast for 2014 and a production pipeline that contains four new titles.
The first to launch will be League of Warriors, which is now available in beta in Spain and Canada for iOS users.
The company’s philosophy, says Martos, is to develop “few games, but care for each one to the max.” It’s the opposite of having keeping a large portfolio on the go, but neglecting titles after launch.
And on this issue, Martos is very clear: “The real work begins after your game is launched.”
Social Point will be launching 4 new titles in 2014
Read the full original article in Spanish on La Vanguardia website, and feel free to leave us a comment of question below.