JUNE 02, 2008 • After only six years in operation, Big Fish Games is living up to its name. With operations in North America, Germany, France, Spain and Japan; this online casual operation has a growing impact on the segment worldwide. The company was also early into the social networking area with My Big Fish Games in 2006. DFC Intelligence talked with chief executive Jeremy Lewis to get more details on Big Fish’s business model.
DFC: Can you give an overview of Big Fish’s business model and corporate goals and how they evolved from when you first started the company? What is your projected revenue target for 2008?
Jeremy: Big Fish Games is the leading developer and distributor of online casual games. We generate revenue from free game trial conversions to paid downloads, subscription services and advertising.
Since our beginnings in April of 2002, we have grown in excess of 100 percent compound annual growth rate. In 2007, we generated more than $50 million in revenue. Our focus remains as it has for seven years, namely, to build the leading casual games company by serving the needs and desires of casual game developers and casual game players worldwide.
DFC: You work with a large group of third-party developers. Can you explain Big Fish’s relationship with them? How do you find these developers and what makes Big Fish so unique in attracting third-party talent?
Jeremy: Big Fish Games has partnerships with more than 500 independent casual game developers. We serve the global developer community as among our most important customers, alongside affiliate partners, and consumers. The Big Fish Games developer relations teams is staffed with professionals with diverse backgrounds, a love of casual games, and who in the aggregate speak 11 languages.
Big Fish Games offers independent developers the largest marketing and distribution capabilities for casual games on the internet, the best rates, and dedicated producers to provide real time feedback and information to make their game a success. Further, our innovative affiliate referral program enables developers to enjoy a stronger and more predictable revenue base by sharing in the life-time revenues of customers they refer to Big Fish Games. This affiliate partnership helps developers focus on innovating compelling games.
DFC: What can you tell us about the demographic for your products in terms of age and gender? How does it vary by product?
Jeremy: Our customer demographic is increasingly skewing older and younger simultaneously. Big Fish Games’ players include women and men, ages five to 95, literally. The peak of our customer demographic bell curve is roughly 70% women, ages 35 to 55 years old.
DFC: How well do games like Mystery Case Files and Virtual Villagers do in terms of usage and revenue? How do you know if you have a hit game and what is the general life of a casual game?
Jeremy: With more than 2 million units sold for the PC and Mac, and growing rapidly, the Mystery Case Files series is the No. 1 selling game franchise in casual games. Virtual Villagers is in a different genre, simulation, and it continues to dominate among its peers in that field.
Our world-wide consumers are the ultimate judge and jury for determining hit games. We know we have a hit once we launch a game and then measure download velocity and sales. The life of a game, as with boxed games at retail, casual games enjoy an initial spike in sales upon release. But unlike boxed games at retail, casual games enjoy a long tail that typically lasts for several years. Some of our top 100 games ranked by sales are more than four years old.
DFC: How do you see your revenue mix changing in the future? How does it vary by product? Do you see all of your future products fitting into a similar type of business model?
Jeremy: We will have a roughly similar revenue mix in the future. We anticipate continued robust growth in each of our current and to be developed revenue line items. Proportionately, item based revenues will likely experience the highest growth rates, albeit from a very low base relative to other sources.
Macros that are driving our industry include 1) increased awareness from the media and big publishers like Nintendo; 2) computer savvy baby boomers entering retirement with lots of time and disposable income; and 3) handheld consoles and mobile games introducing and hooking younger generations to casual games.
DFC: What is the typical development budget for the games you produce? What are the most expensive components of development? Do you see that changing over time?
Jeremy: There is no typical development budget as costs vary by genre, and those costs are rarely correlated with how well a game will sell. Generally, traditional puzzle or card games can be created for $50,000 to $100,000, while linear games (hidden object, puzzle adventure), can range from $100,000 to $750,000. For these games, art assets are typically the most expensive.
DFC: Casual games have typically had a reputation of products that consumers play a lot, but only if they are free. However, with the success of companies like Big Fish it is clear that consumers are willing to pay for these games if they are packaged right. Do you see a blurring between casual games, traditional games, MMOGs, virtual worlds, etc. as a growing number of consumers access their entertainment online?
Jeremy: This is a tricky question to answer as the term “casual” is increasingly broadening. Yes, the lines are blurring, but this is less a function of changing consumer behaviors and more a function of companies categorizing more of their products and services as casual.
DFC: Who do you see as your biggest competitors and what do you feel gives you a competitive edge?
Jeremy: It’s difficult to name a large competitor as the companies in our industry have quite different business models. Our competitive edge can be distilled into two words: customer focus. Big Fish Games’ customers include its employees, independent developers, affiliate partners and casual gamers. We listen to our customers and focus obsessively on serving their individual and collective needs and wants.
