So let’s say you’ve made an iPhone app. You’re a brilliant coder, you’ve nailed the user experience, the gameplay, the design. So that means you’re about to strike it rich, right?
Wrong. But several years ago, that’s more or less what Sagi Schliesser, cofounder and CEO of the Israeli app startup TabTale, thought. TabTale initially sold richly interactive book experiences for iOS users. Since these books took a lot of work to make, Schliesser thought it natural enough to charge for them. But the product simply wasn’t moving; people weren’t downloading. And that’s when Schliesser began to realize that to make it as an app designer, it wasn’t enough to be an expert at designing apps. You also had to become an expert in so many other things: pricing, marketing, consumer psychology.
TabTale adopted a freemium model and shifted its focus to games for kids. And it started cranking out numerous products, instead of putting all its efforts behind the book app. Today, the company has grown successful enough–it recently hit 300 million downloads and exceeded $15 million in revenue last year–to hire a total of 150 employees. It now puts out an app every few days. Some hit, some don’t, and each time, TabTale learns.
Though TabTale produces the bulk of its content in house, app publishing is also part of its business. It works with with third-party programmers who have developed great apps but don’t necessarily know how to sell them.
“A lot of developers have an app with good gameplay, but good gameplay is only part of it,” explains Schliesser. TabTale can help with a suite of questions: how to market the app, what’s the best icon or text to use in the app store. More importantly, TabTale can help you figure out pricing. “We offer advice and infrastructure on monetization, how to manage the game map, and ways to open gates, like a star system.”
If you’re not much of a gamer, that lingo may go over your head. But the insight Schliesser is offering is this: that today’s casual gaming economy is simply too complex for you to throw up an app, slap a price on it, and sell it like a Nintendo cartridge of old. There’s a very precise strategy that is likely to maximize your revenue, and it may involve giving parts of your content away for free, tucking others behind a paywall, and being clever about the way gamers get to pay to unlock it. Those coins that Mario collected are less and less metaphorical, and the economy that exists in your game bears an increasingly direct relation to the real-world economy that puts coins in a developer’s pocket.
At the same time–particularly since TabTale has historically focused on children’s gaming–TabTale pays attention to the ethics of pricing. You may or may not remember Smurfberrygate, but suffice it to say that Schliesser is uncomfortable with a scenario in which an eight-year-old can accidentally spend $1,400 within an app to buy something frivolous. “We don’t do consumables,” says Schliesser, meaning he’ll never publish a game in which you can spend an infinite amount of money. “The maximum price in a TabTale game to unlock everything is $4.99 at most.”
While this might reduce revenue in the short term, it’s an illustration of what TabTale feels is a fundamental business principle: an ethical business will lead to a stronger brand, which in turn will lead to a longer tail of revenue. Few consumers probably explicitly think to themselves, “I want to buy the next Rovio game.” Rather, they think, “I can’t wait for the next Angry Birds.” Nevertheless, Schliesser says he’s confident that at least some consumers recognize the TabTale brand, which may guide some of their download and purchase decisions. He has shown up at conferences wearing a T-shirt with the brand logo, but with none of his game’s iconic characters–and parents have still approached him to thank him for his products.
“The best advice I can provide is that we’ve consistently taken the more patient approach, and not gone after the low-hanging fruit. We wanted to build a brand, a community, and be fair, and we saw that it resonates and gets us more active users.”
As TabTale grows, Schliesser begins to think of it more generally as a media and entertainment company. He cites Disney as a major model. The company has launched a YouTube channel featuring game teasers and some singalongs with game characters. And TabTale is looking beyond its core audience of youngsters: last week, TabTale launched a sub-brand, Crazy Labs, devoted to content targeting kids 13 and up. An air hockey game called Disky rapidly shot to the top of free section of the App Store.
So if TabTale’s the next Disney, with Schliesser as its own Israeli Walt, does the company yet have its Mickey Mouse? He laughs, admitting it’s a long struggle to get an iconic character like Cut the Rope’s Om Nom, which can become something like a household name. “It’s hard to create IP that can go out from the gaming world to the TV and merchandising world. We haven’t gotten our Mickey Mouse–yet.”