Q&A: Small On MiniClip's Social & Advergaming Approach

Founded in 2001 by CEO Robert Small and his business partner Tihan Presbie, UK-based Flash gaming site Miniclip has since gone on to become the most popular gaming website, with over 36 million unique users a month – an astonishing number, and one that makes the site the largest privately owned entertainment portal on the internet. Currently, the site hosts over 260 games, the vast majority of which are unique to Miniclip. Much of the content is also advergaming, with companies like Coca Cola, Disney, Gillette and Warner Bros. using Miniclip to reach audiences. The site’s biggest demographic is the “tween” market – users between the ages of 8 and 12, and the age group responsible for $170 billion in spending in 2006, according to Euromonitor – though Small notes that the company is careful to source and develop content to target many different demographics. We spoke to Small recently and asked about the site’s history, its plans for expansion into social networking, and its developer relationships. How did the site start, and what was the initial pitch? Well, background-wise, we started in 2001, and I set it up with my business partner Tihan Presbie. I was fresh out of university and an avid console gamer evens since my parents gave me the ZX Spectrum; 128K with a little tape deck on the end! Tihan had come from a trading background – he’d been trading the futures market and things like that. We met through mutual friends, and back in 2001 we wanted to start an online business, and we had looked at the overall sector. At that point, it was just prior to the big explosion that happened, and we saw that there was an opportunity – we discovered Flash fairly early on, and saw that there was an opportunity to use it to develop content specifically for the web. Back then, a lot of the media companies who were in that space were the kind of old-school MTVs and Disneys and Warners who were trying to repurpose a lot of that content they’d made for TV and still trying to figure out what they were doing. The space was really wide open. We started using Flash as a development tool. I think it was maybe Flash 3 or Flash 4 back then. We just self taught and made a few politically themed games: the first big hit was Dancing George Bush, which we sent out to about 4,000 people, and in a couple of months it had been played by about 2 million people. It kind of launched us, and we saw the power of this kind of viral marketing. But although that political stuff served us well as a kind of viral spike, it doesn’t really give users much of a reason to come back and play for a long time on your site, and give it longevity. Were you aiming for a different audience then to what you have ended up with now? I think, yeah, undoubtedly that bought in an older and quite geographically specific audience, being topically based around a political figure. It has changed, and the games very much dictate the audience that is going to come and play them. Nowadays, when we make advergames for a lot of these blue chip companies, we can – if we come up with a clever concept – help the game reach the target audience we want it to, by coming up with a concept that’s going to reach that target demographic. You can see something like Club Penguin, which has done extremely well on our website, is aimed at that younger demographic: that 2D, cartoony look, penguins throughout the game. It’s undoubtedly something that’s going to appeal to a younger demographic versus puzzle games, which we know are generally played by the female, 30+ housewife demographic. So we started developing more of what you’d call mainstream games in Flash, and in Shockwave more recently. We’re continually raising the bar in terms of quality. It’s amazing how good we can make the games look compared to what I was playing on a console just three or four years ago, with what I’m now playing in Shockwave 3D. We’re really pushing the limits on that. In Q4 we’ve got a few games skewed for release which are going to be visually very, very rich. It’s very exciting for us to have Adobe on board. I think they’re injecting a lot of money and effort into building up both Flash and Shockwave and we’re excited about that – that they have that kind of focus moving forward. Would you say your intended target audience has firmed in that time? I mean, are you now mainly looking towards that younger skew? We have one of the biggest audiences of tweens, out of almost any site online right now. We’ve got 36 million unique users – and that’s all organically built, there’s no paid advertising or anything like that. The audience that we’ve tapped into is hugely chatty and quite difficult to attract, especially for a lot of these media players who have traditionally reached them through the TV. So, we’re in quite a good niche right now, and a lot of advertisers who would have normally gone for the TV networks to reach them are coming to us right now because they know they can reach them in vast numbers. I think we have ended up with a slightly different demographic, but the demographic that we’ve got is ultimately one of the best you could have because a) they have huge spending influence, and b) they’re the true digital generation. They were born on the internet, pretty much and unlike people like me who, for the first 15 years of our lives, or more, the internet wasn’t a part of our lives or a part of entertainment at all, these guys are familiar with it, and so comfortable using it, and so chatty, posting on their blogs, and using IM and everything else. It really allows us to spread and seed the word very effectively in schools and colleges and so on. Much like Facebook have done, I guess. When did they become the audience you were focusing on? I guess when we moved away from the more topical stuff. I mean, we still do that, because it’s a great opportunity to jump on a topical event, and it’s a different demographic. But when we starting developing the more traditional games – the beat ‘em ups, and action games – the initial focus was actually more male skewed, only because we enjoyed building those kinds of games: shoot ‘em ups, and retro-styled games. Those games dictated the fact that we had a slightly more male skewed youth audience. Now we have a broader range of games – more puzzles games, like Sudokus and crosswords – and therefore we’ve kind of shifted around and have about a 55% male skew on the demographic of the audience, so it’s come around as we focus more on developing learning games and puzzle games. That works well for us, because we have a lot of teachers visiting the site, and a lot of parents. I think they want to be able to believe that their kids are learning stuff from the time they’re spending on the site. Do you have figures for the age skew? I have them from Media Metrics report, so I know that the core demographic is that tween demographic – from 12 to 17. Are they more open to the kind of advergaming you’ve got on the site? I think they are. I think ultimately we’re quite fickle about the types of advergaming we’ve got on the site. It has to be a fun game, irrelevant of how much we’re being paid to have it on the site, the advertiser is not going to be happy if his or her game isn’t played. We guarantee ten million plays on our website, so for us to be able to guarantee that number we have to know and have to have a strong inkling that the game is going to perform. So we’re quite precious about insuring that all the games we’ve got on the site are of a good quality, whether or not that’s an advergame or a game that I source off a developer anywhere around the world. The numbers speak for themselves. We did a game a few weeks ago for Unilever – they have a brand called Shore Deodorant, it’s a brand here in the UK – and the game was called Extreme Pamplona, and it’s done phenomenally well. I think it’s done 25 million plays in one month, which for them, when they’ve traditionally bought old school media like the banners and things like that; they’re just overwhelmed by that. So we’re seeing it all gather more momentum, and more advertisers are getting switched onto the fact that this is the best way to connect with your target audience: while they’re having fun, and while they’re relaxed and enjoying themselves. A lot of the movie studios are really into it – you might see that we have one out now for Evan Almighty which has a trailer at the backend of the game so people can view the movie trailer right within it. How have you built the user base? It’s quite interesting, because when you look at who we’re competing against, which is MSN and Yahoo!, and Viacom, who bought Shockwave.com about a year ago, most of them are pretty large, and they’ve got bucket loads of cash – and users, as well. But what they didn’t understand was the demographic, and they didn’t understand online games. A lot of them – MSN and Yahoo!, primarily – use aggregators for content, so they will do a deal with someone like Oberon, who will prepare a whole suite of games for them, do a red share off the back of those games, and Microsoft just have to push users to that channel. What happens is that because they all end using the same aggregators, they all end up with the same games. So if you go to Shockwave, you go to MSN Zone and you go to Yahoo! Games, you’ll see that they all have Zuma, Bejewelled, the mix of try and buy games that you find on all our competitor’s sites. We decided that if we were going to create a valid reason why people would want to come to Miniclip over our competitors, we should be creating our own games – games that are only playable on Miniclip, and coming up with some really quite original web based concepts. Most of those guys do downloadable games, so they’re forcing every user to download a 10 or 20 megabyte file and play that on their desktop. We felt a long time ago that the browser was really the way forward and whatever the hardware they’d be using to access it, keeping it browser based would mean it would always work. I think that was a pretty good idea to come up with, because as time has moved on, we’ve now got things like the Nintendo Wii. We had the second biggest suite of Nintendo Wii games overnight, because all of our games are browser based, and are coded in Flash 7, and work instantly with the Wii. How big that market? I think it’s still relatively small, but we’ve had over a million visitors to our Wii site, which is not bad going, I think. So we’re quite excited about that, and obviously Flash moving to mobile devices with Flash Lite will mean that we’re able to port a lot of our games very quickly onto mobile. I think because we were very focused on building games that our audience enjoyed, and we have no venture capital funding or anything like that – we’re privately funded, so we can actually make our own decisions, and we can be quite nimble in the way that we’re running our business. Those other guys are such heavy players in the market, and it takes them weeks or months to make a decision. We can make a decision within ten minutes, and have the game developed and out within a week, and they’re still umming and ahhing about what they want to do. We’re able to react much, much quicker, which means we can jump on those political, topical things, but also seasonal events – we always have things around things like the Football World Cup, and we have a baseball game out recently, and a Christmas game – and we can jump on all these opportunities to create games based on these seasonal events. What percentage of the content on the site is from outside developers? I’d say we probably develop about 30% of it, although it’s quite a difficult call to make, because we have a developer network of about 100 companies that are all over the globe – people in Australia, New Zealand, China, India. Pretty much every country. We tend to get pretty heavily involved in the development process, and we think have a good idea of what makes a good web-based game, and how to optimize it and the kinds of pitfalls that people might come across if they haven’t built stuff that is going to be played hundreds of millions of times. We get quite heavily involved in that development, or in buying engines from developers and skinning them up ourselves. The lines are quite blurred, I think. We have a big development base, and for a lot of them back in 2001 there was no viable business in coding Flash games. There was no one licensing them, but they’ve grown, and they might have started out doing it as a hobby, but they’ve seen that there’s Miniclip and a few other sites who’ll license these games, and we can nurture and grow our development base. It’s not only a good money spinner for them to develop and license a game to us, it’s also a great buzz for them to be able to build a game and have it played by 35 million people, you know? What kind of quality control methods do you have? We have our own beta testing audience – internal guys and audience players who are passionate. We take all our games through that QA test system. All of it is web-based for us, because our employees and our audience are spread all around the globe, so we have an interface where we allow people to log in and post feedback directly to the developers. So we do that, and then we have multiple units here we test them on in terms of Macs and laptops and PCs and everything we can get our hands on, basically. Because we’ve been doing it for some time now we’re pretty quick to figure out whether or not we think it’s going to be a suitable game. There’s more and more people churning stuff out, and I’m seeing a lot of degrees here in the UK, and I’m sure it’s the same in other places too, where game development, and Flash development in particular, is the focus for them. We’re excited that there’s more and more people getting into developing higher and higher quality content… But are you seeing “higher and higher” quality content though? Yes, definitely. Flash 9 is a big step forward for us, and ActionScript 3 is going to allow us to do some amazing things. It’s beyond just gaming now really. Flash is a great tool because you can make applications with it too, so you’ll see us working on things that are also slightly further away from the games space that we’ve tended to fit in. They’ll still appeal to our demographic, but they’ll allow them to be more creative. And also, a goal for us is drawing the convergence of social networking gaming. We have the biggest online gaming community with 36 million users, and the skill for us is going to be to try and create an environment that conveys that buzz and lets them know that there is that many people on the site and that they’re part of something huge. We have a lot of separate games that have a very, very tight following of fans, but this will be a way that we can sort of cross pollinate all the games and allow people to challenge one another and get people involved in the whole community aspect of things. Right now it’s very difficult to convey that – some people do it quite badly, by putting ‘There’s 100,000 people logged in right now’ and that’s about as far as they go, but I think there’s more imaginative ways it can be done. Well, that was something I really wanted to ask about, because we’re seeing sites now like Kongregate that are really trying to bring that social networking side into it. How do you feel about that? Are they in direct competition? I guess they’re competing in the same space, but they have a relatively small audience, and they offer developers an advertising share, which means developers are putting their faith in the fact that the guy who runs Kongregate ad sales is going to do a good job of monetizing his traffic. For us, we found that developers – especially those people who are trying to expand their businesses and hire new people and scale things up – are finding it quite difficult to do that on a revenue share which you’re not quite sure is going to generate a substantial amount of money. These guys we work with, they prefer to have a perpetual license on a game, get paid up front, and they know that we can do a 30 game deal with them and they know that they have that cash coming to them over the next year, or however long it’s going to take them to do those 30 games. That’s the way we tend to do it, but we are very flexible and we have to be because we’re working with so many different developers and they’re all over the globe and it tends to work differently in different markets, so we have to be accommodating. Is the social side of things something you’re looking seriously at expanding now as well? Yeah, we already have Runescape and Club Penguin, the two biggest browser based MMOs in the world right now, so we really do have on the site a big community around those games, and there is a lot of communication going on through those. It’s just us coming up with clever ways to allow those users to interact through our site, and, much like Kongregate have done, we’re looking at the social networking sites like MySpace and Facebook and figuring out why it is that people find them so interesting and compelling. For us it’s a very good thing. If we can nail it, it means we’re going to be bringing users back to the site on a much higher frequency basis, which is important. We already have great loyalty – about 80% of users come back every month. It’s pretty good loyalty, but there’s still improvements we can make, and I see this kind of convergence of social networking and gaming being the next obvious step for us. Is that where the Flash gaming market in general is heading? It’s one aspect. When I talk social networking, I’m talking browser based MMOs, chat, that kind of thing. So I think there is definitely a switch in that direction, but the problem for sites like ours is that we’ve got so many users if we create any kind of multiplayer environment, we have to support instantaneously 40,000 concurrent users or more, and it’s quite difficult to create a game that’s going to support that kind of scalable volume. Luckily, we’ve been working on it for a few years now, and we’ve got our own internal server farms and stuff like that: multiplayer engines, so we have some good experience of how to do it. But it’s difficult, and it’s difficult to work with other companies, because most of them have no experience with what it’s like to look at those users numbers. It’s a challenge. Where else do you see the market going? Well, for us, we’re a broadband site in Europe; 98% of our audience is on broadband. We certainly see huge growth potential as we continue to see that rollout in broadband penetration. In northern Europe – in Scandinavia – we have some markets where 50% of the audience on broadband is on Miniclip. We’re very bullish when we look at those predictions of numbers for growth, in the US especially, but also elsewhere, and if we’re able to capture that kind of percentage of broadband users, we can take the site to many, many hundreds of millions of users. Ultimately, what is a gamer? A gamer for us is anyone who has a PC and is online. Traditionally, the console developers have thought about this male 18 to 25 gamer, or whoever he is, but for us, it’s anyone who can take their PC online. Well, as the console manufacturers broaden their own markets, is that going to help you? I’m sure it probably is. The Nintendo Wii is something that’s switched on a lot of people to the fun that can be put back into gaming, and shows that it’s not just something that appeals to that skewed male hardcore demographic, and certainly if you look at what EA are doing and Sony is doing, they’re making moves to go into that online space and they’re realizing that they can no longer just focus on that traditional GTA player – they need to be looking at a much broader range of users now. I know the guys over at EA and Sony are keen to move into that space, and I’m certainly keen to see what happens.