 All right. We're alive. Welcome to the scoped years of acquisition in cloud gaming. Really good to see you. I'm joined here with our co-host Anto Bug from Play Ventures and Paulina Martikainen from MockyVC. What if we start with introductions for you, Paulien? Hi and welcome on MockyVC's behalf as well. I'm Paulina Martikainen, investment director at Mocky. Just a few words of our fund. We are an early states VC firm investing in deep tech and print-driven companies across consumer and enterprise spaces. Our entrepreneurial core team is based out of Helsinki, whereas our global network or LP network is spread across Nordics, Europe and Asia, and hence we have a mandate to invest globally. Timo Soininen from Small Giant Games, who will take the stage later today, as an example of these people who are humbled to have backing our fund, and he's also been actively engaging with some of our portfolio companies. In practice, our portfolio consists of very deep tech cases such as quantum computing company, but then we also have consumer companies, so for instance a gaming studio in our portfolio. What really is paramount to us instead of a specific technology or a specific industry really is partnering with founders who are relentless in challenging existing category norms. Mainframe, who will also take the stage, their venture is set to create the first cloud-native sandbox MMO, and I think that's an example of a company who mirrors these pieces very well. Funny anecdote with regards to mainframe is that when we invested in mainframe last summer in their seed round, that was actually already a second time around that our founding partner Ilkka invested in Thor and their venture, so I guess that also tells something about how we actually are investing in teams. So that's us briefly, and I'm happy to tell you more one on one at some point later. Cool. What about you, Vorjantan? Hi everyone, I'm Anton from PlayVentures. So PlayVentures is an early stage VC firm investing in games and game services startups. We have a special knack for free-to-play in terms of companies building free-to-play mobile and free-to-play PC games, in addition to startups building out technology and services for the game industry as a whole. We're based out of Helsinki and Singapore, but investing all over the world. The firm is founded by Hari Maninen and Henrik Suoran, and both long-standing game entrepreneurs and investors who are now looking to put their skills and experience to use and help the next gaming founders build the next big thing within the space. We have our focus lies in the pre-seed and seed stages, so make sure to reach out to us if you're building something in the space. Cool. My name is Miika Huttunen. I'm the CEO of Slush, a global movement with a mission to create and help founders to change the world. And obviously this year has been really interesting for us as well, due to the fact we have to cancel our main event, but we are doing a lot of interesting projects to help founders forward, as well as this year, and this session is one great example of that. We have pretty, pretty interesting 70 minutes coming up, really, really cool lineup, and we're going to start the first discussion really shortly around player acquisition and retention in the era of cloud gaming. And after that, we're going to move ahead to discussion around how the best practices around user acquisition in mobile gaming can be applied to cloud gaming. And maybe a couple of practicalities of this session. Obviously there is a chat open. It's really active, it seems already. And we're going to have the Q&A all the time open. So feel free to post your questions whenever you wish. And those questions will be answered in the end by Timo and Tor, at least as long as we have time left. But I think it's time to move ahead for the discussion. And without further ado, I would like to welcome Andrew Chen, general partner of A16C and CEO and co-founder at Mainframe Industries, Tor Gunnarsson, to discuss and to be hosted by Ante Bakma. So what if you start right away? Sure thing. Thanks, Mika. Okay. Thanks, Mika. Pauli, and for the kind introductions, moving you guys to BCC just for a moment now that we're having a chat with Andrew and Tor. So really thrilled to have you, Andrew and Tor here. Would you mind giving just a quick brief introduction on your part as well before we dive into the topic. Tor, you want to go first? Sure, I'll start. I'm Tor Gunnarsson, native of Iceland, but a member of the Games in the Street now for a couple of decades, working in various parts of the world across both mobile gaming, multi-user virtual worlds, and then those console games and more. And co-founded Mainframe just over a year ago. Great. And I'm Andrew Chen. I'm a general partner at Andrews and Horowitz. Thor and I have just started working together recently where we've become a new, very happy investor in Mainframe. And at Andrews and Horowitz, we've been investing in a number of different companies, a lot many different sectors, pretty much the whole thing last 10 years. And one of the big areas we've gotten very excited about is games. And then in particular recently, obviously Mainframe, we also did a big investment in Roblox. We invested a number of X Riot Games alumni. We've a whole bunch of other ones that are unannounced. There's probably a dozen games investments overall. We were also early in Oculus and Zynga and quite a few others. Awesome. Thanks. Always good to hear that there's more capital flowing into the games industry. I thought about gaming just to our viewers or listeners just a quick brief on what cloud gaming is. And then we'll make sure to dive into the topics regarding user acquisition and retention within the space. So for all of you who might not be too familiar with cloud gaming, games today run locally on a wide array of hardware ranging from low- and mobile devices to high-end consoles and gaming PCs. And then the attributes of these devices set the limits for what kinds of games can be played on them. So these natural limits triple A games, so big budget games to the later end of the spectrum. And one of cloud gaming's promises is to bring the majority of gameplay processing to data centers outside of players' homes, making expensive gaming hardware less important. However, arguably the more interesting promise of cloud gaming is how it allows game developers to design entirely new types of gameplay. This doesn't just limit to what kinds of games but also extends itself to how players are acquired and retained. And as games will be accessed and played through video streams in the future, they will lend themselves out to new ways of engagement throughout the whole video ecosystem. And before diving into this more deeply, Thor, could you give us just a quick brief on what kind of game you're currently building on Mainframe? Yeah, happy to. So Mainframe is a developer founded in Helsinki with a parallel studio set up here in Reykjavik where I'm joining you from tonight today. We started Mainframe with the sort of basic assumption that with the advent of cloud gaming, social online games, of which MMOs, of course, are sort of pinnacle experience, would be a perfect match for this promise that cloud gaming brings to players, which is to be able to access a window or sort of a view into the virtual world of game that they're playing from any screen. So this ability to kind of play from mobile, from your TV or console or indeed from your laptop is incredibly powerful. We think that it fundamentally changes both how people will access and kind of begin to experience games over the cloud, but of course fundamentally how we create them as developers. So with Mainframe what we really did last winter is really assemble kind of a fairly unusual cross-section of developers that come from variously a background in MMO development, live operations, with a number of the kind of early team around CCP games that created even online, but also a cohort of people from studios like Remedy, kind of one of the best for AAA PC console studios out of Helsinki, and a number of people with mobile backgrounds from companies like Next Games and Rovio. And then we think this was critical because we think that the kind of creative and business opportunity that cloud gaming brings is going to require people that have expertise in all of those corners of the industry. And so we're hard at work on our first project. It is an open world sandbox MMO and we'll hopefully have more to say about the game itself before two months. Awesome. I think that really resonates also with how we've been saying that this has basically been the game. You and your team have been preparing your whole careers for into building. And as a personal big MMO aficionado, aficionado as you know, Thor, I'm really excited to actually get to play in the game at some point hopefully in the near future. But okay, so diving into the questions now, I'd like to start with you, Andrew. So you've been bullish on the opportunity regarding products that automatically generate video when users engage with them. You mentioned games as some of the top products in this category to create more viral acquisition and engagement through videos and live streams. And I'd like to know how do you expect Cloud Gaming to amplify this opportunity? Yeah, let me actually unpack a little bit what I mean by, you know, why I'm excited about products that automatically generate video. So, you know, one of the big observations you might have about any huge, you know, consumer, you know, revolution in kind of new products, et cetera, is that there's always some underlying platform shift that's driving it, right? When you have smartphones that come up, you know, that's what's going to enable, you know, Supercell to emerge, that's going to let Uber emerge, that's going to let, you know, a lot of these other, you know, products. And, you know, before that, you know, we had the Facebook platform, before that we had, you know, the internet, you know, the browser itself, right? And so every time there's, you know, one of these big, you know, platform shifts, it can be really big. One of the things that is really fascinating is that the last 18 months, especially, has been really just, you know, an incredible, you know, set of achievements for video and for streaming. You know, you look at the emergence of TikTok in a huge way. You look at the emergence of, you know, Instagram stories and Snapchat stories in a big way. You know, these are all forms of videos. I was just doing some research before this talk. You have individual videos on YouTube, like Despacito, which is a, you know, music video, baby shark dance, which is another, you know, it's like funny kids video. The individual videos with six billion views on one video, right? It's just incredible. YouTube itself has, you know, two billion monthly active users, and then if you were to add that and TikTok and Snapchat and Instagram, you know, you're talking about aggregating many, many, many billions of people. So I think what's happening is you have this, you know, huge underlying content shift where there's a lot of new video platforms and infrastructure that are happening. And at the same time, you have to ask yourself, well, you know, if there's a product that, as the user engages the product, it automatically generates and publishes video to the internet, that's going to create a lot of really interesting places to go with user acquisition, with pretension, with engagement, because it's going to attract users to then come, you know, think, oh wow, what is this amazing game that people are playing? Oh, okay, great. This is, you know, this is TFT. This is Lauren. I'm going to click on it and I'm going to come back and I'm going to play it as well. And so I think, you know, with that context in mind, it is really impressive to then think about what could cloud gaming get us, because what it means is that, you know, if for all of you that have tried streaming on, you know, Twitch today, for any of you that have, you know, been making, you know, videos while you're gaming, it's actually a really annoying and high friction experience. You have to install OBS, you have to, you know, set up, you know, multiple monitors. Like, there's all these things that you have to do. And I think what cloud gaming is really going to allow that is, you know, it's going to happen is that it will just be this automatic magical experience. It'll just be like you hit a button, you know, and you hit a key in the game, and then you're streaming to, you know, YouTube, you're streaming to Twitch, et cetera. I think that in itself will be really interesting. I think the second thing that it's going to allow is, it's going to allow people to actually deep link into the experiences of the game, right? It will make it so that if there's an amazing, incredible boss fight that's happening and people want to jump in and they want to spectate or they want to, you know, be in the middle of the action, you know, there's going to be a way that that's going to be on Twitch or that's going to be on YouTube and people are going to click on it and then they're going to go into the game. And because, you know, there isn't a 40 gig install that stands between you and being in the experience. And then the final thing I'll mention is, once you push a lot of the video and the intelligence in the cloud, what that means is, we're going to be able to actually, you know, apply machine learning techniques to figure out the highlights, to figure out the most interesting interactions in the game. We're going to be able to cut, you know, these videos to be extremely engaging in ways. Again, it's going to be all automatic. It's going to be, you know, there's going to be this huge corpus of data. People are going to be able to, you know, play around with all these highlights. And it's going to make it even more watchable. So I really think that this incredible emergence of the video platforms combined with where we see games going is going to mean that games is going to be, you know, really one of the, it's already one of the most dominant, you know, forms of content, you know, for video. But I think we're all going to start seeing it in every video platform that we use, whether that's TikTok or Instagram or any of these. And so I think it's a really, really interesting opportunity for me. I definitely also think that the concept of deep links is going to be very interesting also to see what kind of stuff game designers will come up with in the coming years and then seeing this as a sort of better frictionless way of having. That's right. I mean, you know, the internet is like the web. Can you imagine the web without links? Right? Like that's where we are in games, right? And so it just seems inevitable that once we get there, it's going to fundamentally change the kind of interactions that, you know, we'll all have, you know, with these products. As spectator participation is also something we're going to cover a bit later in this discussion also. But sort of moving, also giving some context on sort of MMOs and why MMOs are specifically or could get a lot of views from being cloud based. So Thor, I'd like to dig into a bit into your experience and so MMOs have traditionally suffered from a cold start problem as they often require a good amount of players to create the ideal experience. Could you tell a bit about your own experiences with this problem, especially when building out even online back in the day and other previous MMO projects and how you plan to tackle it with mainframe and what kind of benefits cloud gaming bring into this problem? Yeah, so back in the old days of sort of the early MMO space, you know, CCP originally planned and launched even online in a box product, you know, shipped on a disk and people would buy that for 60 bucks. That, you know, continued for quite a while. CCP was one of the first companies that kind of moved fully into digital distribution, but we saw for a number of years the kind of MMO space all kind of based on this old school method of kind of shipping game or client in a box and then, you know, hoping that basically you would be able to kind of get enough launch momentum as the new game came out that you would get that kind of critical mass of players before the 30-day, you know, bundle subscription for that box basically expired. These days, of course, that's fundamentally changed and, you know, when we think about kind of what we did over the years at CCP as we were looking at ways of acquiring players, you know, one of the fundamental observations that came to us very early and indeed it was kind of the founding theory of the game is that, you know, the most powerful facet of any MMO is the social layer of that game. So if a game is designed around maximizing human interaction, the way in which you acquire players is all based around that social layer. So, you know, back in the day we had, you know, very successful programs like the buddy program in New Online where they would basically bring the player into the game. They would join it if they kind of converted to become a subscriber. You know, you got some free game time as well. So that kind of social referral mechanism was, you know, pretty powerful back in the day. These days, of course, when you think about, you know, how to launch an online game, nobody is thinking about boxes anymore. I mean, there are still some legacy projects that still use that. But if we look at kind of what is kind of, you know, a pointer toward the future, if we look at how successfully Riot kind of ran the closed beta program for Valorant, you know, the kind of way in which they basically seeded influencers and streamers on Twitch with keys to the closed beta and basically kind of led to this sort of mass of people coming in to watch the Twitch streams before the closed beta basically lifted and you started to see just this crazy bump in which we were figures for Valorant before it kind of left closed beta. So that kind of way of acquiring players is quite powerful. Of course, working with influencers, working with streamers is kind of a natural way to kind of build up that initial interest in the game. But to retain interest and continue to acquire the way in which you structure a game that actually allows social onboarding and social referral is kind of the critical shift. And of course, with the advent of cloud gaming, that's kind of removal of friction, that 40 gig download as Andrew was talking about. That's a critical thing and that just basically opens up a complete new canvas for us as game developers in terms of how we actually allow our players to refer the game to each other. And this was simply really hard to do back in the day. And these days it's much easier and kind of brings that whole social aspect of anemomode to the forefront. Got it. And piggybacking on Andrew's previous comment on the links and then the spectator gaming I mentioned just a few moments ago. So there's been this discussion on spectator participation and introducing various layers of gameplay for people to engage with as a low threshold way of participating in the game. For example, looking at a Twitch stream. So could you give us a sort of quick notes on what kind of game design and what role this will play in acquisition and retention and what do you have in store when it comes to mainframe sandbox game? Yeah, I mean this sort of facet of cloud gaming is kind of what we spend most of our time thinking about. So if we sort of start with the premise that in a cloud native MMO every gamer can be a streamer that they can choose to share basically their play session with other people that are watching. They might share that with the kind of classic audience you would find on Twitch or on YouTube where you're watching a live stream that's sort of a passive audience is nothing particularly new about that. But the prospect of actually, again, kind of parking back to what Riot did with Valorant if you're a player in the game you have a set of keys to the game you basically have, you can basically issue those to people on your stream have them join in the game with you at your choice. So we'll see how players use these tools to try and build kind of the social kind of aspect of their gameplay experience. So for us we kind of think about it as sort of concentric circles of engagement. So on the outer rim are your passive viewers your audience on Twitch or YouTube or a mixer but the prospect of basically moving people further into that circle of engagement by for example giving them a short kind of experience of the game whether that's at the test of another player or through an ad that you display to them that allows people to take a very short kind of touch point on the game experience and we think it's going to be most impactful when people do that with other people that's we think that the critical kind of difference in terms of what we can do with a cloud native project. And then of course as you bring people from that passive experience that kind of like participation experience what you hope to be able to do of course is provide them with a game loop and a mechanic and a social environment that brings people into becoming a core member of your community. And so as game developers we have to think fundamentally different differently about how we market the game how we of course acquire users in this new model and the funnel fundamentally changes it becomes a social funnel and I was thinking kind of trying to think back where we saw similar kind of behavior in the past and I'd have to point to the good old days of farm mill when Facebook basically had an open social graph and you were able to do this kind of acquisition strategy they had its downsides of course but we haven't seen that sort of very kind of vast viral mechanic for a long time and I think it's due for a comeback because of the capabilities that we get from the cloud. I was just going to add one other thing Thor to your point on the concentric circles around the gamers versus the spectators etc I find it fascinating I know it's not a perfect metaphor but if you think about something like baseball it's like you start you play baseball as a kid and then by the time you're an adult chances are you probably are playing you're just watching and I remember talking to some of the riot folks at what point is it going to be that there are more people that watch league of legends than play league of legends but you're already seeing that that ratio is really starting to flip and so I think one of the really fascinating parts is that so much of games today are really oriented around the players but not necessarily the spectators but I think in a cloud gaming environment maybe you'll have way more data about who's just watching and it'll be much easier to create these hangout experiences around the whole thing in a way that I think will be transformational for game design Yeah, couldn't agree more and I think we're just kind of on the tip of the iceberg of what the potentiality is talked about AI do kind of instant replay segments based on the data that you gather that's one kind of incredibly powerful path the other one of course is you will see celebrities arising these games of course as we've seen in others and so things that we've seen happening in the kind of influencer and streamer community of course I think will be kind of super charged as we have this ability for players to make that migration so easily between spectating energies Thinking about the onboarding experience that you both mentioned here I'd like to ask you Andrew what do you think that the gaming industry especially cloud gaming could learn something from previous web 2.0 companies or SaaS businesses in this regard when designing frictionless sign ups registrations and conversion etc Yeah, it's a really good question because at least as an investor when I meet teams that are primarily from the mobile side of the world in terms of mobile gaming versus folks that are from the the DNA and the attitude towards user acquisition and paid marketing and all that are very very different the mobile gaming folks are from a world where of course you buy ads of course you buy installs of course you need to A-B test and optimize the first five minutes of your product experience of course you need to take on whatever the newest APIs that Apple releases and Google releases of course you need to implement those because you need to go fast and those teams tend to be very iterative and think about metrics and I think that's something that is very commendable on the other hand in many ways the PC console folks have a really really strong background in actually going to market using you know using influencers by building discord communities by working with a lot of different folks on Twitch and the twitch ecosystem in a way where they're not spending a ton of money right off the bat in terms of user acquisition and so one of the things that I think is very interesting is like taking these two you know communities and kind of like starting to meld them together because I think inevitably that's what cloud gaming is going to force you're going to basically be able to build extremely high end AAA type experiences but that you know are powered off of an ad that you see on YouTube where you click on the ad and then you're in the game right and so you end up meeting I think the best of both worlds where I would guess that the teams that win are not going to be the teams that try to build the most lightweight experience, the most hypercasual games and then just buy a lot of ads I don't think that's going to work and then on the other hand the teams that build really heavy weight experiences and it takes four years to build the game and it costs 100 million dollars and then by the way like they're not thinking about paid marketing that's probably not going to work either so I think you know together there's going to be quite a lot of intersection between the two, these hybrid teams I think are very very interesting that was one of the things for mainframe that that the entries to our wits folks got very excited about was that it was you have the CCP folks and then you have you know folks from mobile gaming in the back I think the other you know two other kind of follow on effects of allowing for paid marketing for basically AAA type you know experiences and cloud gaming you know that I want to touch on I think you know the other really big thing is I think we're going to see weight much larger hits you know if you look at a product like counter strike for example that's been around for you know 15 plus years part of it is it's just grown organically and it's hard to like onboard people into this like super core experience where the people that are still playing can see us go at this point are like actually really good right and like as a new you probably don't want to do it but if you have these teams that actually think a lot about the user experience they actually buy ads and there's like this really deep you know engagement and retention I think what's going to happen is once something starts working these teams are going to dump a lot of capital on it and it's going to you know it's it's going to just explode and I think that becomes important for the for the second thing I wanted to mention you know on this which is I think it's going to vastly increase the number of startup opportunities that are available because a lot of these teams are spinning out riot or blizzard or valve or epic you know they may be in in previous years would have been you know dependent on a large publisher to work with them to bring their game to market if all of a sudden they can actually you know build cloud gaming asset and you know and then just buy ads to do it you know similar to the mobile gaming world we're going to see teams out of Brazil out of Eastern Europe out of you know China all sorts of places in the world are going to basically be able to make a run at building a very very large you know revenue game you know kind of a billion billion revenue a year type game you know with these underlying techniques and kind of the intersection of the two worlds and so I think I think that's one of the very interesting things and one of the reasons why I'm really bullish about cloud gaming because I think it'll it'll really open the field quite a bit even more so than than what exists today. And I'd actually like Thor you to follow up that with if we're not we're not now thinking that that cloud will basically sort of lower lower the friction a lot when it comes to accessing triple A games and if we're looking at a scenario where we will have a multitude of these these new titles on the market and given the use of accessing them do you think players will feel less committed to these games and more prone to switch between titles and if so what do you believe could be done from a player retention perspective. Yeah so from that perspective cloud gaming is a double edge sword. You're absolutely right that you will be able to move very quickly between different games and sample those kind of ducking in and out but fundamentally when you think about at least from the perspective of an MMO we think about kind of what really drives retention for a successful MMO and that is the social network that forms within the game. The friendships or the conflicts that form within the game these are really the key retention drivers. So you know back in the day when we were running even online we've been in the market for a number of years we saw large launches happen we would see a dip in our numbers for perhaps 60 days when people were sampling the latest $200 million MMO that was competing with us. What happened inevitably was people always came back because their friendships were in our game their most valued interactions they had were happening within our project. So that's still a truism in terms of how you build and retain you really have to kind of bring an experience that very quickly allows those social bonds to form in the game because they ultimately are the switching costs that you can basically effect when people are able to move as quickly between games as they move in the future. And that will definitely sort of both, I'm sure it will both provide as an opportunity as a challenge to sort of create this different onboarding experiences if we're looking now at a sort of box triple A game you're always going through this most of the time you're going to the same tutorial of that game to sort of get a grasp on what's happening but now as we talked about the deep links we can be seeing that I'm streaming something I'm putting a link to a couple of my friends to join in on the fight that I'm in and that onboarding experience might be very different to for example what if Miika for example is playing the game and sending a link where he is in another dungeon or he is farming something somewhere and then seeing that onboarding experience so definitely both a challenge and an opportunity. Yeah I think social onboarding is going to be critical to the success of games in the future of course we'll still have the more conventional type of onboarding slash tutorial experience for people that are for example accessing the game through a paid marketing campaign and so on but if your friend recommends the game to you on Facebook and you jump in the person who onwards you is that friend it is not a tutorial that you have to go through for two hours and kind of grind your way up to level 80 before you get to have meaningful gameplay with your buddy because he's level 80 and you're level one these are game design issues that partly kind of facilitate this kind of social onboarding. And before wrapping it up here I'd like to ask you Andrew sort of your view is on what's the role of streamers currently in terms of player acquisition retention we're looking at the current state of the market and how do you expect that to evolve with cloud gaming and maybe even more adding to that do you think there's something that other consumer software companies could learn from working with streamers and this ecosystem. Yeah I think if you zoom out in the ecosystem right now it's a very very interesting time for anyone that is building something for consumers right. You know we are now you know 13 years into the smart phone platform there are things like you know VR things like cloud gaming which are you know still I think you know pretty early in that cycle we you know unlike you know the era in which you know Supercell and Zynga and those guys were created there hasn't been something you know recently that is just explosive I think my observation about video might be the closest and so I think what you're seeing is across the entire start-up ecosystem and of the many thousands of companies we might evaluate you know in a given you know period at entries and forwards what we see is that this whole idea of going to market by going with influencers and streamers and celebrities is now just like a core part of how every consumer company has to think about you know bringing a company to market and so you know so some of the things that we're seeing in other places and then I'll come back and you know talk directly about games but for example if you look at you know we have an investment in a company called Substack which is the ability for individual writer to basically host a newsletter kind of like Ben Thompson writes just writes a newsletter and you can make a living for yourself just writing this newsletter and that's this new form of work that you've created and so that entire business is about providing tools to that obviously Shopify is a great example one that's been hugely successful Patreon as well partnering with mostly YouTubers and musicians and so on and then there's a lot of really interesting you know niche ones like for example Fitplan is one that allows fitness influencers on YouTube to be able to create a product around selling you know fitness programs you know to their users and so I think this is this recurring pattern that's happening over and over again which is how do you how do you sort of you know partner with the celebrities in a given platform and have them work with you to you know to promote that and so I think you know given that this entire infrastructure is being built I think across all consumer applications you know games is definitely one where we've seen a lot of you know deep forward thinking I mean you look at the you know Laurent launch and everything that they've done around the random key drops on you know on Twitch and you know and having this you know beta where everybody you know all these streamers are playing just like an incredible kind of cutting edge job in you know leveraging you know all these streamers so I think I think this is just going to be a trend that continues I fully expect that you know just the store was talking about you know if you if you went back in time and you know you're playing like Ultima you know like someone like Lord British who is like the salab at the time like they don't automatically become a you know multi-millionare by being like an in-game celebrity but like I think that that's just going to happen like you know it'll just automatically you know happen that if you built a huge following because you're entertaining then you're never going to need to work again and you just make your living off these video platforms and being games which is you know really fascinating and so no wonder you know when you survey kids that are growing up on like what they want to do when they grow up you know it's like they want to be youtubers they want to be influencers like this is a very desirable you know kind of fun you know activity and so anyway so I think you know long story short I think I think it's it's transforming the entire consumer you know start-up landscape and certainly games are like leading the way and so you know it's been a very interesting trend to watch yeah I mean it's just to tack on to that briefly I mean we I think we kind of all know that that social proof is one of the most powerful heuristics that we use to make that kind of shortcut to purchase decision or engagement decision so this sort of celebrity trend is something we're going to see more and more of it's just a very you know human way of kind of making decisions about where you spend your time for your attention hey thanks guys we're a bit over time here already but I like thank you both for this discussion 25 minutes really went by fast and next up I'd like to introduce Paulina again who will then take the stage together with Demo from Small Giant Games thank you alright thank you Anton for moving me back back from BCC so for those who joined late I'm Paulina Martikainen investment director at Mocky VC early stage VC fund investing in deep tech and brand driven companies and we're proud investors in mainframe and humbled to also have Timo Soinien packing our fund with whom we're going to chat now so for those who do not know Timo Soinien is CEO and co-founder of Small Giant Games company also based in Helsinki Finland founded in 2013 and nowadays one of the fastest mobile gaming companies in the world so they struck gold with the mobile role gaming role playing game with match tree battling empires and puzzles which essentially is a very approachable mid-core role playing game after launching the game in 2017 the company raised 41 million dollars in February 2018 and empires and puzzles has reached top 10 positions in over 110 countries around the world and was chosen by Google as breakthrough heat of 2018 and the company has been called the most efficient user acquisition machine in the gaming scene by many in December 2018 Small Giant Game was acquired by Tsinga at the valuation of 700 million dollars and continues to operate as an independent studio within Tsinga retaining the unique culture and creative freedom so Timo welcome on virtual stage I'm excited to have you have you with us let's actually start from the beginning of the journey of small small giant games so how did you actually approach launching the new game empires puzzles back in 2017 on the market that everyone thought was crowded where there may be some key takeaways with regards to user acquisition from your first games that did not pick on the hits that everyone wished they would be thanks Paulina, great introduction now you know all about us need to know so we started back in 2013 with the promise of creating something super interesting and sort of groundbreaking on the casual front of mobile games like million other studios at that time and we did a series of mistakes in the process but you know I think the very long story short that you know I think we were focusing on more of a like vanity issues like you know the appearance and the aesthetics of the game rather than the retention and monetization ability of the game and you know what kind of systems and you know how do you really create that deep engagement which will eventually lead to monetization as well and in a way you could say that you know we didn't have much of a marketing capability at all at that time we were super small team of 12 people and we sort of overlooked that idea I think that was one of the mistakes that we the combination of not having enough knowledge on the UI side of things that on mobile games you have to actually know UI if you want to become a big one it's impossible to rely on influencer marketing you know virality, social graph, those days are long long gone so you have to know what you do and of course depends on genres a little bit so hyper casual is a different play versus casual games versus mid-core RPGs which we are representing but basically you know the mistakes were really leading to the fact that didn't have enough analytical capability and didn't have enough monetization systems in the game so they were not marketable because it was not profitable enough to sustain to spend and on the back of that we basically started searching for something that would have that like deep retention potential deep sort of potential monetization potential and the big insight through research game that we see an opportunity that a lot of the basically a billion plus casual gamers were starting to look for deeper experiences going to more hobby like games and at the same time the games at that time game of wars someone is worse and things games like that at that time were really difficult for normal people to play approachability was there and we said hang on a minute can we actually bridge these two worlds by building something right in the middle having those systems and sort of deep engagements in place whilst having this like a casual style super easy in boarding and that's really how it happened and you mentioned the importance of investing in marketing so what was your marketing team set up actually when approaching the launch and how has it evolved since and was there maybe some key criteria that you used to actually like hire these people yeah that's a really good question so this time this time around second time around we basically we knew we were really good and we developed the capability of being really good analytics so we knew that from a retention and monetization perspective that this game good good scale but the problem was that we were not very good in marketing at all on online marketing performance marketing and with the help of a couple of consultants with some king background we actually fine tuned the sort of lifetime value models for our game which would allow us to sustainably start to invest and then on the back of that we also managed to hire two of the best people in the industry to join the team so all of a sudden we had that capability and then it took us like six to seven months to really verify our data models and optimize creative for the ads and making sure that the data models actually hold water so that because when we start putting our first million out I was literally sweating because the money doesn't come back the model was saying it's coming back but what if but luckily our models were super accurate and all of a sudden the traditional marketing spend turned into marketing investments we knew exactly almost exactly how quickly the money will come back if we invest smartly so how did you actually recognize these two hires to be the ones to hire yeah so we obviously it's about having nice and sort of motivated people but also having those capabilities to be able to have marketers who can handle creative optimization can do campaign management work the network so marketers with creative minds but super good in numbers sort of a mathematical approach to the whole process of marketing I can guarantee that there are some people in the audience who are here to learn how to launch a game or how not to launch a game so can you maybe name the single most important learning you made in the very beginning when it comes to user acquisition work or sort of top of the funnel optimization and getting people to actually download the app yeah so I think the biggest realization for us was really cracking and understanding the lifetime prediction model and so having this mathematical tool that understanding that if we acquire a user how much revenue will that user generate over the player lifetime inside the game and just getting that right took us very long time sorry so I was trying to call me so getting that right was critical and and moving on from that then the other big idea was that you know how to optimize the whole conversion funnel of the UA so starting from creative so we currently have in the ballpark of 2,500 different video versions out there in the networks and this continues the approach that we do and you basically start from shaving off the conversion percentages from the creatives then you go to the app store optimization where you really sort of need to work on your creatives there make sure that conversion is optimized and then obviously when players land in the game then it's about the tutorial conversion and so forth but really focusing on this approach and then the third really important thing actually I talked to a couple of game game developers earlier this morning is that you have to choose your battle so and in terms of creative channel how do you say creative channel sorry advertising channels do not throw in like try to optimize your sort of work in 5 to 10 channels big to 2 big ones Google and Facebook to start with because if you master those and then you have you can actually scale almost infinitely from a spend perspective but you know it takes a long time to master those and tame those evil algorithms we still not there yeah yeah yeah on a very practical level since I know there are a lot of founders there how did you actually approach decisions around for instance segmentation so was there for instance you mentioned of course customer acquisition cost is probably one that you were looking at and then on the other hand lifetime value so was there for instance a certain ratio in the beginning that you thought was satisfactory enough to then sort of think of a specific segment as worth targeting yeah absolutely I mean it's a combination of obviously we have something called ROAS return on as spend sort of a payback window so we had a certain payback window as an initial target which is relatively short period of time so that if we can restart then we know for sure that we are going to get our money back and you basically on a cohort level so there is no one magic bullet so we do a number of experiments and you go pretty granular you do on a cohort level so this acquired cohort let's say using Facebook with certain targeting criteria with certain price with certain creative at and that creates you know and those users coming from that combination is a cohort and then you sort of monitor that cohort held and how does it how do they convert and how what is the lifetime value prediction and then you basically okay if it works then you basically start increasing you give it a little bit more you know rope and you start investing more into that area and at the same time you have a number of these experiments and for that you need systems that's why we developed bespoke internal analytic system to handle all of this that was really the the best decision probably ever did during our history yeah so when small giant games was then sort of growing immensely immensely quickly sort of after the launch and when once you raised a little bit more money how did the marketing operations and KPIs overall evolve during the hyper growth time was there like some shift in focus or was it the same from the Peketko no that's a good question so we were I think it was a really a team effort so the game developers and game designers did a fantastic job because we were able to increase both the retention and the monetization rate of the game all the time which obviously like you know quoting our UA team said their job much easier because you know they were able to do more experiments they a little bit more risky experiments if they pay back and we were really good in also optimizing our creative conversion our app store conversion and also the game onboarding so it all came together and but this whole data model and the super granular level was actually one of the value creation items for when the acquisition happens a lot of the suitors including Zynga looked at it you know the elaborate data model and really sort of an optimized approach to this and people could easily understand that if you can fuel that fire there's a system that works and what if you create a game 2, game 3 on the back of that system lot of value could be created so you have been vocal about that point that you actually had this sort of an analytic stack at small giant games and then there is the other half that says that using external tools is fine I guess it's pretty obvious where you stand but can you elaborate? This is a really interesting and important question because obviously you have to get started and so it's perfectly okay and you should use third party systems at least in the beginning so that you get going you start building your model and optimizing things to a certain point. If you really want to become big and sort of sustainable company your sort of data and your sort of analytics tool is the most valuable part of your company and you don't want to be at the mercy of somebody else's roadmap on that system so that if you need something very quickly a new analysis, a new algorithm a new prediction that you can potentially do it in a matter of hours and it's already there and it starts to service you so it allows you to go really fast and really accurately and second things you don't want to you know we've seen some of the ad networks becoming game developers and sort of a you know using the data of other games to actually create an edge for themselves and you want to protect your data as much as you can because that's another valuable thing that you know what are the game dynamics and you're a bit of an internal recipes so those are the really the things, the speed, you know accuracy and then data protection why you eventually need to have your own systems. This is going a bit back and forth in terms of topics but so you told in 2018 that small giant games marketing spend was over 90 million dollars to drive the game profitably so and now you of course have been talking a lot of how like that's constant iteration and the role that the internal stack played in that constant iteration but was there maybe still sort of a certain point of time when you actually realize that okay like now we've actually set up a functioning marketing funnel and now we can actually like invest in growth and we can it's guaranteed that it's somehow profitable. Yeah so just before we launched the game we were in a situation that we knew that you know the ARPDAO levels of the game monetization metric was at the level that we think that if we somehow crack this thing this could actually grow but then we did this we built the predictive algorithms LTV algorithms and a lot of marketing automation systems actually and we started scaling growth we started really gradual very small investments through the early weeks seeing what the thing and then we started gradually investing before the first million went out there in a very rapid space and then we had to wait because you know in order to verify the data model you have to wait the real world tells you whether your model is correct so we have to wait several months to verify that all of these systems are go and basically it was about 6-7 months after the launch we knew that now it holds water let's go and then we really started investing and then the hyper growth happened. All right so let's then actually start chatting about those best practices of user acquisition and mobile games and how they might be applicable then in cloud gaming context so this is something that Thor and Andrew and Anton already discussed but coming from a mobile background do you expect some of these best practices from your world to translate into cloud games designed to be played on desktop? Yeah obviously I'm not an expert on cloud gaming but you know maybe comment a couple of points from Thor and Andrew that I think you know when the early era of cloud gaming happens I think it's going to be there's going to be a couple of big games who will be able to do show some marketing they will be able to influence some marketing perhaps even celebrities by the way I don't believe in celebrity marketing at all but what will happen eventually that you know this will get you know so competitive and so much volume you know in mobile games we have millions of mobile games out there and once the cloud games the same sort of explosion happens you will have to have this combination of things obviously there is a very important dynamic of having a community approach and you know sort of a recommendation social user acquisition but my prediction is that you know this important analytics driven performance marketing principle will also be more prevalent for cloud games because of the competitive intensity out there and then therefore you will need to have a lot of these analytical systems you need to have multi-talented user acquisition teams with creative optimizers, campaign managers network people and then you need to have data scientists to build those models because it's going to get more complex when you have more platforms and more data source seats because you will have to optimize let's say that you have a game that people are playing both on PC and mobile or maybe even a console you will have three sets of user acquisition problems because not all platforms are created equal and then all of a sudden you will find that if certain people reaching through PC different set of channels or creatives bit levels will work on that channel versus on mobile versus on on console eventually so it's going to get really really complicated and I think the prediction here is that the UA teams will be the kings it will rule the world eventually exactly well talking about actually teams obviously this has been a super important topic also at small giant games as mentioned in the beginning do you think there will be some key differences between mobile versus cloud when considering building product or especially growth themes yeah I think the underlying like I said the underlying principles are the same but I think obviously the game dynamics whether you are from a game design perspective obviously so if you are designing a sort of a MMO social MMO or a AAA type of shooting game as opposed to a casual game or a mobile mid-core but I think it will be interesting use cases develop I'm coming from a mobile perspective for example that especially on the more mid-core games that if you could create completely new use cases for your games let's say that in our particular case we would actually benefit greatly because the conversion funnel becomes so much simpler like Andrew said that all of a sudden you basically you optimize your user acquisition messages but then you have much less friction in the funnel you are able to convert user better which typically means that you are able to spend more because the economics of the deal becomes much more simpler so that's the big promise for mobile so having games that can be played on other devices as well which also allows you to reach completely new audiences in a different use cases yeah absolutely 20 minutes have flying pass super super quickly maybe to finish this of very important question so will we see Timo soining from small child games at any point jump into cloud games no let's see I think we should we're pretty good in mobile games so I've heard you can double down on that and let Thor and other smart people maybe we can exchange notes and join forces at some point now I'm gonna do what we know awesome good hey thank you thank you for the chat and I will actually next then welcome Thor from mainframe and also Mika from Slush for the Q&A session and Timo will stay online as well I'll call you after this is done okay done alright I must admit that this will be the shortest Q&A session we have ever had at Slush but let's do it definitely we have time for roughly three questions and I picked them from the chats let's find a way to answer the questions that are unable to be answered right now because there is a lot of interesting questions actually starting with you Timo a question by Lauri when creating that deep engagement for empires and bustles how did you balance between A-B testing and intuition or just general understanding and especially in the early days when you didn't have maybe that much data to back it up yeah that's a good way I'm not a game designer we have better people at that but basically there is always an insight and better people have better insights typically but we had a very rigorous culture from the company because of our previous failures that let's not rely on opinions let's test everything and we actually did have a lot of data for example the tutorial of the game we tested that rigorously let's say a lot of the so called experts in the industry game design experts said that this is complete shit it's never gonna work and we were silently smiling because we knew that it is working so basically good people have good hunches and have a couple of tracks and just be brutal about testing trust the numbers put your egos aside for a while and good things will happen maybe you followed on that how do your team basically stay on top of the like basically the stay up to date regarding the user acquisition trends and what to actually do because you seem to be top of your game all the time yeah so we are obviously monitoring market rigorously we follow our competitors all the time it's very important to be on top of the marketing trends from a creative perspective talking with the networks having data scientists to bring in new things so it's a pretty fast pace ever changing environment and you have to have good people but also not to get too carried away but be really mindful and focused about what actually makes a difference what's worthwhile of spending your time on right cool Tor there was a question that I slightly moulded but considering that mobile first markets could be ready basically for triple the games soon will there be basically main platform for the game such as PC or mobile or basically is your team trying to keep in mind the both platforms then and how do you see that yeah it's a great question I mean it's coming up with a game that translates between the mobile screen and your laptop or your larger screen is both one of the biggest opportunities that cloud gaming affords us but also one of the biggest challenges and I think it's going to take a little while for creative developers to come up with a good prototype and begin to sort of test what is working in terms of whether the game is sort of an equal citizen on both mobile phones and on your PC from our perspective we're certainly aiming to make the experience as compelling on mobile as it is on PC no question I think the ability to allow players to enter their world from their mobile device throughout the day is one of the most compelling features of cloud gaming from our perspective whether we acquire people that are mobile first players down the line or when they come to us from more traditional PC audience and then use mobile as sort of an adjacency to their primary experience that remains to be seen I think there will be a number of different attempts to try and figure out where actually your players are coming from first and how far you go and attempting to kind of make that experience sort of equal citizen on both screens it's going to be hard but it's the biggest opportunity Yeah, I agree it then maybe a broader question to also Tor but Tracy kind of covered already in the discussion it's interesting the question goes if no downloads is an important element of what makes cloud gaming so attractive why hasn't cloud game been massively adopted by the current audiences yet Yeah, so I think there are a couple of answers to that you know number one many of the kind of user acquisition methods that we've been talking about here today are only just now beginning to be available to developers there are so far relatively few commercially launched cloud gaming platforms a couple of large contenders in beta still but the second part of the answer to the question is this is such an early period in cloud gaming that essentially the content that consumers are presented with is content they can get elsewhere whether it's their PC or their console we've not seen the type of cross-platform experiences that really begin to drive this kind of virtual cycle that we're trying to engineer so that's going to take a little bit of time I think all the platform boulders whether it's companies like Google or others they certainly speak about playing a long game from that perspective so I think that certainly is part of it if you're accessing your games currently by a console or PC by download that shift in behavior needs something I think more dramatic and compelling than just the fact that your download time is reduced that's only one kind of technical or basic part of the proposition right maybe to wrap it up question for both of you starting with Timo obviously slush mission is to help the founders as much as we can maybe both of you what kind of advice would you give for gaming founders who are in the audience in our general advice how to understand the market what to know about the co-founders how would you basically wrap it up for aspiring founder who are in the audience maybe starting with Timo yeah so I think a couple of things first of all like you said it's all about people getting those co-founders we have five co-founders and we were in a fortunate position that we were able to both develop the game and design the game but also do the other parts of a games business the financing setting up the operations so you have to think about building multi-talented teams like in the case of Thor so I think that's super critical and I often you just see two guys with a great game developer but that's just the tip of the iceberg you need a lot of other things as well so focus on that and be brutally honest about what you are good at what you're not good at just basically say even to the investors hey look we're really good at this but we need a good marketing person or marketing team here and we need your money to actually fix that and that resonates well because no one can have everything ready at any given time so just think about brutal honesty about your competencies right what about Thor yeah I would wholeheartedly echo what Timo said in the case of Mainframe we spent quite a bit of time forming our initial team we actually have 13 co-founders at Mainframe so that's our lucky number hopefully but it is just critical if you're setting out to do something if you're going to swing for the fences make sure you have your team in place before you enter the field so spending that time on getting the team together making sure the dynamics are good between the team past experience and other companies working together which always helps but that team forming moment is the most critical thing that you can do it's the one thing that kind of is a good predictor of future success alright I think that's perfect time to wrap it up first of all thank you so much Timo and Thor for joining and also thank you Andrew for earlier joining and I think this was really nice I would like to also thank Playaventure for helping with the hosting and arranging this event together with us we have recorded this session so obviously let's find a way to distribute this for larger audiences as well and we're going to ask feedback just to help us improve and do more of this later and at this point I would like to say thank you and stay tuned for exciting news coming out of Slush as well as Maki and Playaventures bye thank you bye bye