My second attempt was born still inside the walls of the first company - in 2003. While playing with the “cutting edge” devices of the time (wow, phones with COLOR screens!) and the rudimentary JavaME 1.0 (J2ME at the time), we came up with an idea: what if we invested in mobile… games? Don’t get me wrong: B2B is certainly where the money is, and all… but I mean, just look at those GORGEOUS little screens. Who couldn’t get excited about the prospect of playing on these sexy little devices?
For that 180 degree turn in focus, I brought in two other friends, who worked with me in parallel with the “parent” company (and for free). The simple prospects of having our games running on BILLIONS of devices all over the world kept us going with a never-ending enthusiasm (we all used to make games in the past - I myself learned to program by writing little games on a Z80, as a kid). It was more than enough to make everyone work double shift (besides their regular “job” or company).
The first (and huge) barrier we found was the mobile market itself: back then, it was a nightmare of epic proportions: each telco had their own WAP portal, billing system and pricing scheme. They kept up to 70% of the revenue, meaning our margin would be lower than 30% (after taxes). And the prices HAD to be low, otherwise “people wouldn’t pay”. The second challenge, was, of course, actually BUILDING the games: the tools we had back then were so bad (and the top-of-line devices so puny) most games couldn’t even play sound for the lack of device support. Using the mobile network for anything except downloading the game itself was also a big no-no, given the absurd data rates (and the astonishing speed of the spotty 2g networks).
Despite all this, we pushed on. Managed to close contracts with ALL the telcos in the country (then some more in the rest of south america and even the USA), built some very good looking games, assembled a truly amazing little team, got in the news (and then again, and then again). We even got an investment offer of over $1M for a very favorable stake in the company, after presenting in a VC conference where we were the only ones not wearing a tie (it was also my first experience with VCs, which included going to absurdly expensive restaurants in a BMW and getting mocked because I was asking for too little money).
Despite all this, something didn’t feel right. Despite having around 10 games distributed on the portals of a dozen different Telcos, the sales where simply not happening. It was all somewhat expected: we knew the best phones were yet to arrive (we made friends inside the major handset manufacturers who provided us with prototypes), that the data coverage would improve in a matter of months (we made friends on at least two major telco networks). What we could not predict was how long it would take for this market to bloom - for the sales to start tickling.
We tried diversifying: instead of just building our own games (which was costly and took time), we started to also act as publishers for third-party developers from all over the world. Considered shifting focus to Palm games (which, by the time, could have made us a buck - that’s how PopCap bootstrapped their growth, with the first version of Bejeweled). We considered SMS as a platform, but dismissed it as “too simple to matter” (the only guy I know that moved away from mobile games into SMS services got so rich its grand-grandchildren will never have to consider working at all). Then gradually, over the course of 2 years, as some of the original team members departed, the idea of mobile games as a viable business slowly faded. The major mistake was obviously timing: we were at least 4 year too early, in a market that would only blossom with the rise of the iPhone.
During the entire lifetime of the company, we managed to sell a grand total of $100 (yes, a hundred dollars) in copies of our games, even with some of them being on the top 10 of more than one portal for months. We were not the only ones who got burried in that graveyard: of the 50-something companies we published in our catalog, only a handful survived past 2005-2006. The few that survived (many of which we had distribution rights back then) lived on to become the huge household names of today: Rovio, Gameloft, Digital Chocolate, Glu, ngmoco, com2us. And they all made it after the iPhone.
Ironically enough, all the involved in the company back then (me included) were dismissive when the iPhone and Android trends started to rise. It was “just another Symbian, after all”.
The takeaway: it doesn’t matter whether you have the best product, know the right people and have the right contacts: if the timing is wrong, you’re done.