PlayFirst gets funding; joins online game fray

Three industry veterans, as well as two venture capital firms with experience in enterprise software, networking, and communications technology, are putting $5 million on the line today by betting that a new business model in the online game space will find traction with underserved markets.

The three vets--Brad Edelman, Jason Rubinstein, and John Welch (pictured from left to right)--are bringing their past business experiences with Macromedia, Ubisoft, and Shockwave, respectively, to the fore with startup PlayFirst, a company they define as one that will bring games from “a new model of online game publishing” into the lives of a still-untapped casual marketplace.

“We’re going beyond the hardcore gamer,” Welch said in a statement to be released to the media later this morning. “We want to reach families, women, and new audiences with games that are easy to play and fun.”

A first round of funding has been secured from VC firms Mayfield and Trinity Ventures. In a public display of confidence, Gus Tai, general partner of Trinity Ventures, said in the statement, “If anyone has the know-how to make the enjoyment of games as simple and broad as going to the movies or buying music, this is the team to do it.”

The new company--with Welch on board as CEO, Edelman assuming the CTO rank, and Rubinstein tapping the title vice president of marketing and business development--is planning to launch its first games later this year.

GameSpot spoke with John Welch over the weekend.

GameSpot: Internet downloads are nothing new. What will set the PlayFirst lineup of games apart from what is currently available online?

John Welch: When I was at Shockwave.com, we launched this new category that we have been calling downloadable games. Three years later, we've largely got games in the action/puzzle (bubble poppers) and word game genres, and about 70 percent of the titles are purchased by women 35-plus. That leaves a lot of untapped genres to cover and a lot of other audiences to win over. What we hope will ultimately set our games apart is our focus on visual quality, design innovation (beyond bubble poppers), and technical prowess.

GS: Who exactly are the “other audiences”?

JW: Today, about 70 percent of those who download, try, and purchase these types of games are women...which is already a 180-degree turn from the normal 18- to 34-year-old male-dominated demographics of the traditional business. Kids have been largely left out of the downloadable games' space to date. We also want to expand our market to various ethnic groups who have started to flock to the Internet. And let's not forget about seniors or even "ex-gamers" who have the hardware and connectivity but neither the time nor the inclination to get sucked into a 40-hour hardcore RTS, FPS, or RPG.

GS: Which devices/terminals today reach the PlayFirst target audience, which terminals are you targeting for your first games, and which terminals do you see becoming more important over the next 12 to 36 months?

JW: We are building our games and related technologies to anticipate all consumer platforms and devices. However, we are starting with the PC because of all the great advantages it offers us: First, 90 million home Internet users, with 30 million of those now broadband. Second, every month approximately 100 million unique visitors go to the major consumer games portals, like Shockwave.com, RealArcade, Yahoo! Games, MSN Games, and AOL Games. And third, developing games for the PC ensures the easiest portability to other platforms later, particularly as we are creating proprietary technology that enables our developers to do just that.

Over the next 12 to 36 months, we see the next-generation handhelds being quite interesting, as well as mobile phones. The next series of battles in the war for the living room could be quite favorable to PlayFirst, because telcos, cable companies, and even satellite providers are investing heavily in faster networks and new types of content to play on their new set-top boxes. Popular games have already proven to be critical content/programming in all of the US market trials--and even commercially viable overseas in the UK and Asia. Last but not least, there are the next-generation game consoles, which are ultimately connected set-top boxes of their own. And for those platforms to expand beyond hardcore gamers, platform providers must find ways to license games that will attract a broader audience.

So we're very excited about the opportunities that all these devices and networks will offer PlayFirst in the coming years but are quite happy to start on the PC!

GS: Any plans to include networked consoles in your plans to reach an appropriate audience?

Absolutely...see the long answer above!

GS: Are there businesses in play today that you are modeling PlayFirst after? Any geographic is fair game?

JW: Ultimately we're nurturing and developing great games--which game publishers do quite well--so that we have a catalog of intellectual property that can travel forward as the platforms change. The difference, however, is that we have completely different purchase models--try-to-buy or subscription--which we must contend with from day one. We are developing technology to enable our developers to reach the consumer platforms of tomorrow. And most importantly, each game we produce is targeted at the mass market, which means we must emulate the best of Hollywood-meets-packaged goods...but online. To date, we haven't found any company, games publisher or not, that is focused this way. That's why we started PlayFirst.

GS: Is your business model all about a pay-to-download model, or do you find that in-game sales of objects (via micropayments) offer an upside for you or traction with the PlayFirst audience? Are there other pay models you plan on implementing?

JW: Today there are two models that consumers have adopted. One is try-to-buy. Download a full game, try it for some length of time (60 minutes is today's norm), and pay for it (usually $20). What's fantastic about this is that consumers love to sample before they make a purchase decision, and unlike typical game demos, with crippled features, games in our space are usually fully featured. So if you take a step back and look at what the mass market is used to consuming, it wants a no-risk, high-quality experience...then maybe a purchase.

The second approach is subscription, which costs between $7 to $10 per month and either lets people play any of the games included in the service (the "all you can eat" model of Shockwave.com's GameBlast) or offers the equivalent of a buying club to encourage repeat purchase (such as RealArcade's GamePass). The catch there is that sometimes the more highly anticipated titles are not included in these subscriptions for some time.

For now, these models work, and we don't envision them changing a whole lot over the next couple of years. But as the games, brands, and communities get bigger and support the need for in-game objects or add-on levels to be downloaded, that could foster a micropayments model.

GS: How will you acquire content? Third parties? Or will you develop in-house?

JW: Both. So far we've been cherry-picking some of the top developers in this space, both for our internal team as well as for publishing relationships. We also hope to attract game developers from the traditional games industry with the idea that they can return to the purity of game design and see their titles come to market in months, not years.

GS: When do you expect to launch your first games?

Before the end of the year.

GS: What will the price points be?

JW: We don't expect to stray from what have become the standard pricing models for top-quality games. We'll announce pricing once we announce our games.

GS: How will you promote the products?

JW: The fabulous part of the PlayFirst approach is that it's tuned to optimize existing customer bases of the major portals, e-tailers, and other direct-to-consumer marketers. That means we'll invest in specific marketing campaigns and promotions that suit the needs of our channel partners.

GS: Any partnerships you can talk about?

JW: We have already signed a few publishing deals with third-party developers, and those games are coming along quite nicely. We are in discussion with a number of technology companies who would like to find ways to work with us, but we are not ready to announce anything just yet.

GS: Are you thinking North America only, or does the company have an interest to cater to a wider audience?

JW: We are definitely focused on launching in North America first, but on the heels of that, Europe is the next most likely place for our games. Once you leave the continent, payment systems become quite complex, so we expect to partner in the short term so that we can get our games to market the right way--fully localized at the point of sale as well as in-game.

GS: Currently, I see three people working on the enterprise. Is there additional staff on board yet?

JW: We are up to seven full-time employees and several contractors, with another two positions open. If you include third-party developers, we're feeding about 50 people right now. The roles are: technology/R&D, production, marketing, business development...a typical publisher org chart.

GS: How does a startup allocate a $5 million war chest? What do you spend it on first--besides that first press release?

JW: Well, the good news is that our game development budgets are one to two orders of magnitude cheaper than a typical $10 to $20 million project at a traditional games publisher. So that gives us a tremendous runway to conserve cash and invest properly in several games at the same time, in adition to core technology, infrastructure, testing, and marketing.

GS: Will the PlayFirst site promote your games alone, or will it be a gaming destination itself?

JW: When you go to our site today, you should see our corporate Web site. Our destination, featuring games, will arrive early next year.

GS: What research do you pull from to back up your pitch to VCs?

JW: An IDC report helped a lot. We also referred to the IGDA's Online Games Whitepaper (which I helped author and edit). Also, there's pretty solid Internet usage data from the standard Web analytics firms, such as Jupiter Media Metrix. We also looked at the ESA's annual report, which they published at E3. My fellow cofounders, Brad Edelman and Jason Rubinstein, also had some critical real-world insights, given their respective experiences.

GS: Thanks, John. Good luck.