This article was taken from the January 2012 issue of Wired magazine. Be the first to read Wired's articles in print before they're posted online, and get your hands on loads of additional content by subscribing online.
The first task for Jens Begemann each morning is to check the numbers. On his iPhone, the wooga founder reads an email sent at 4.04am. It shows charts for Magic Land, the Berlin-based company's newest release: the number of users active in the last 24 hours; the number of new users and bookings; the proportion of unique users who came from Facebook requests or from links on friends' feeds; how many batches of 15,000 Gold or 545 Diamonds, the game's currency, were sold. Begemann can see how many made it to the second stage, "Configurations loaded"; how many completed the tutorial; and where those who didn't dropped off. He checks the geography of players, broken down into new users, one-day retention and bookings per daily active user.
In total, Begemann studies 128 data points. He does the same for the six other games that wooga has released. "Some differences are obvious, like Wednesdays are better than Thursdays," Begemann says. "But if I still can't make sense of the reports, I forward the question to the respective product lead of the game." Then he puts away his phone, takes his two-year-old son to kindergarten and walks to wooga's Prenzlauer Berg offices in east Berlin.
Wooga is a new type of game developer, one that emphasises metrics over creativity. Its core discipline is A/B or split testing, in which new features are introduced to a selection of users, and their reactions measured. Features remain only if users engage with them. If they don't respond, wooga tries new features until they do. Each wooga title is updated weekly; the initial release is just another stage in development. "After launch we become very metrics-driven," says Begemann. "During the first two weeks of Brain Buddies [wooga's first game], we did four or five A/B tests. It was very fast -- almost daily iterations."
The result is a rigorous process that practically automates the creation of a social game, and maximises each title's chance of success. "We A/B test everything, we optimise everything," says Stephanie Kaiser, a lead game designer. "In the product department, it's very simple," says Thorbjörn Warin, a former employee. "They have all of their KPIs [key performance indicators] and metrics.
It's really, 'This week, we focus on nothing but retention, let's identify ten activities that can increase that.' In the first 60 seconds of Monster World, there are 13 to 15 tracking points. For a new user, when they start playing, every three or four seconds, Stephanie and Jens can see what is happening. Usually something has to be improved, and that's when creativity comes in."
Wooga's users don't just play a game; they design it.
This paint-by-metrics approach has proved successful. Founded in 2009, wooga is now the third most popular games developer on Facebook (it was briefly number two, ahead of EA, before the launch of The Sims Social). Wooga games have 32 million active monthly users from 231 countries; seven million of these play a wooga game every day. The majority of its games have more than a million users who play daily; only Zynga and EA have managed the same feat. In the last year, the number of wooga users grew by 300 percent.
Wooga doesn't make money from advertising, but by selling virtual goods. Using Begemann's statements and public information, wired estimates annual revenue, after Facebook's 30 percent, at between £12.9 million and £20 million. Last summer, the company raised $24 million (£14.8m) from Highland Partners (who invested in Digg), taking its total backing to $32 million. At the time, Roberto Bonanzinga, a partner at Balderton Capital and one of wooga's first investors, said of Begemann: "He's obsessed by consumer feedback. These guys release a new version of each game every week, based on testing and feedback. It's a huge testing lab."
In 2008, Begemann didn't have a company, or even an idea, nor did he know what a social game was. But he did know that a games studio should be no different from any other web service, and that data comes before art.
At 10am on a Tuesday morning in August, 35 people are gathered in the wooga offices. Drussila Hollanda, the new lead on
Monster World, a Facebook game like FarmVille but with beasts instead of humans, is holding her first weekly meeting.
She is explaining the game's latest updates: the introduction of a long-worked-on windmill feature, how the game is faring on Google+, scheduled A/B tests of different loading screens and currencies, and the number of daily active users (DAU) over the week. Wooga holds six weekly meetings, one per game. Begemann asks if the windmill was A/B tested, or introduced wholesale. Hollanda replies that all users have the new feature. Begemann frowns: "We could also have A/B tested that. But OK. That's fine."
Behind his desk is a sign: "Be fast and be bold. Only do features that increase DAU monetisation." He's expecting his second child within a fortnight. A week earlier, he launched Magic Land, which already has about 800,000 users. Loud and large, he leans forward and explains how a company he founded two years ago is taking on giants.
Begemann grew up in Barkhausen, a tiny village in west Germany.
His parents were farmers and also taught in the local school. When Begemann was ten, they gave him his first computer, an Apple II, and he began coding. After studying business at the University of Applied Sciences in Berlin, he wanted to join a startup. In 2001 he joined Jamba, known as Jamster in the UK. "The vision was to be the
Yahoo! for mobile," says Begemann. "It didn't work out."
Jamster sold premium-rate SMS content, ringtones and games. It earned a reputation for misleading customers with its ads and contracts, as well as for its low-rent content. "Remember the Crazy Frog?" he says. "I'm sorry for that. Very, very sorry."
In mid-2008 he left the company, determined to be an entrepreneur, but unsure what sort. He travelled to TechCrunch50, a tech conference in San Francisco, in search of an idea and returned with a vision. "The games industry has become perfect at creating games for a niche," he says. "Maybe ten percent of the population. My dream was creating a company that would specialise in games for the rest, for everybody." And Facebook now offered the perfect platform for reaching everybody. Begemann also saw that distributing games through Facebook changed the nature of publishing. Games no longer needed boxes to ship. They didn't even need to be finished before release, and in fact could incorporate live user feedback as part of a continuous design process: each wooga title is released as a "minimum game", then updated every week. Begemann combined this insight with another he learned in the US: that some of the most successful web companies conduct split testing.
On May 20, 1747, James Lind, a surgeon on the HMS Salisbury, carried out one of the first recorded A/B tests. He chose 12 sailors suffering from scurvy and made sure "their cases were as similar as I could have them". Lind divided them into six pairs and gave each different supplements to their usual diet. "The consequence," he wrote, "was that the most sudden and visible good effects were perceived from the use of oranges and lemons; one of those who had taken them, being at the end of six days fit for duty."
A/B tests are, in effect, designed experiments and they date back to Galileo. All that has changed is scale: they can be conducted on millions of users, in real time. Jeff Bezos, who founded Amazon in 1995, pioneered split testing on the web, proclaiming at a staff boot camp in 1997: "At Amazon, we will have a culture of metrics!" James Marcus, then working at the company, later wrote a book, Amazonia, about his time there: "Gone were the fuzzy approximations of focus groups, the anecdotal fudging and smoke-blowing from the marketing department. A company like Amazon could (and did) record every move a visitor made, every last click and twitch of the mouse."
The companies that took this approach tended to be retailers and software providers. Begemann realised that A/B and usability testing could be applied to more creative sectors too, and set out to make them part of wooga's identity. "We built it into our infrastructure from day one," he says. Bonanzinga says this is what convinced him to back wooga. "I had already decided I wasn't going to do an investment in social gaming. But they had a very specific view of how they wanted to do it," he says.
Coming up with the game ideas would be the easiest part -- wooga studied successful games. Begemann incorporated wooga in January 2009 with cofounder Philipp Moeser. Their first game was Brain Buddies. "The working title was Brain Sports -- we wanted to take this success from the Nintendo DS to the web." In the 12 weeks before launch there were 12 user-test sessions for
Brain Buddies. These "changed the game quite a bit", says Begemann. In July 2009, the game went live -- and the real work began: intensive testing. The effect was dramatic: by November,
Brain Buddies had six million daily active users. The same month, Balderton announced it would invest €5 million in the 25-person company.
Wooga was set for success -- but then Facebook changed the rules. Previously, users had been subjected to a tirade of notifications about social games, even if they themselves weren't playing them. This annoyed many, but made it easy to market the games. Facebook's changes curbed this virality. "Almost all companies suffered," says Begemann. "Our numbers went from six million monthly active users to three million by January."
Developers had become used to fast, viral product launches: so far, Zynga has released 49 Facebook applications; EA has 45. These tactics wouldn't work any longer.
Another threat to Begemann's business was renewed consolidation in the market. In September 2009, Playdom, a rival firm, raised finance from Disney that valued it at $260 million. Two months later, in November 2009, EA bought Playfish for $300 million. "Sitting in this office, my cofounder and I, with a few interns -- we realised how small we were. We realised that, in this market, you need critical mass.
That was my hypothesis in 2009, that cross-linking in games
[whereby players of one wooga title are pointed towards new releases] would become super important. We had maybe one or two years to get into the top five. We changed our whole approach to games, focusing on engagement instead of virality."
Wooga's next game was Bubble Island. Released in February 2010, it was an immediate success; more than two million people still play it every day. Brain Buddies and
Bubble Island had both been free-to-play and were not supported by advertising. Their purpose was simply to build a user base. But the next title,
Monster World, was more ambitious. It would be the first wooga title to charge cash for virtual goods. It would be proof of concept for the entire business.
Begemann turned over the game to Kaiser, a former colleague from Jamba, who had never developed a game before. Kaiser took her inspiration from Wurzelimperium, a web browser game developed by Upjers that looks like an Excel spreadsheet in which players cultivate a garden. She would change the perspective to make it look more 3D, but keep the mechanics. Kaiser's team went through the now-standardised development process, performing usability tests even with paper prototypes. But while the game was in development, other farming games appeared: Zynga's
FarmVille and Playfish's Country Story. The team changed direction and "decided to look into monsters".
Monster World launched in April 2010. But it soon stalled, with only 300,000 daily active users by August (wooga considers one million users the minimum mark of success). "It was not growing virally and it was not a success at all," says Kaiser.
The team focused on three topics: engagement, virality and monetisation, and went to work on the first. Kaiser began with the "user funnel"; she studied 38,863 users who began the game tutorial one week, to see where they dropped off. "A 1.3 percent drop is unacceptable and the game is optimised accordingly," she says. When such a loss was identified, Kaiser's team would develop two solutions, put them both live as an A/B test, and find out which performed better. And so on across every part of the game. It worked. On November 16, Monster World reached a million daily active users. "What we learned was that you could really turn a game around post-launch," says Begemann. "It had always been my belief, but that's the first time we really proved it, by doing nothing else other than A/B testing, and of course being creative.
Four months after launch, that's when some companies would have given up."
With this larger user base established, wooga "switched on the monetisation". Monster World offers several ways for a user to pay to customise their game. But two-thirds of wooga's revenues come not from these adornments, which account for around only two percent of total sales, but from the items that turbo-charge a player's progress in the game: magic wands, which harvest crops instantly (240 wands cost 480 Facebook credits, worth roughly £76), and "woogoo", which produces several other items of value. These may sound whimsical, but "a feature has to be driven by metrics, it can't just be cool," says Kaiser.
Begemann says that fewer than five percent of wooga's users spend real money -- "a few euros, a few dollars, sometimes in the double digits". Its aim is to promote a deep engagement with the game. "It's our biggest monetisation driver," says Begemann. The revenue mainly comes from people who have been playing wooga's games for maybe six months.
The emphasis on engagement ahead of virality is paying off.
Begemann contrasts wooga's deep approach with that of web portals offering flash games. "Their philosophy is creating lots of games, two a day, and then you play them for an hour and you're done. I wanted to create games that are easy to get into but are so difficult to master that you spend weeks and months playing them." "I don't fucking want innovation," CEO Mark Pincus reportedly informed his staff at Zynga, according to an article in the San Francisco Weekly, in September 2010. "You're not smarter than your competitor. Just copy what they do and do it until you get their numbers."
It's difficult to patent a game idea or mechanic: certain formulae appeal to users and so repeat themselves, as in music or films. Some degree of copying is to be expected. "If you look at the history of the computer games industry, how many distinctive genres have been invented?" Begemann asks. "How many first-person shooters have come out? Of course we're inspired by existing ideas, but we always try to bring something new to it."
Over the last 30 years, the distinction between video games and art has been eroding. Recent titles such as Bio-Shock,
Heavy Rain and LA Noire aspire to a movie experience. The same could not be said of FarmVille or
Monster Land. In the social era, bad games are making very good money. Developers of social games do not try to bring a compelling idea to life, then release it: they find a compelling market, then fit an idea to it. "We've moved in the gaming space from the age of artists to the age of mathematicians," Shervin Pishevar, MD at Menlo Ventures and founder of the Social Gaming Network, told a panelat GamesBeat 2011 in July. "I don't think Zynga is a gaming company, it's a business-intelligence company." "Zynga and wooga and companies like that have no interest whatsoever in the outcome of the product," says Edward Castronova, author of Exodus to the Virtual World. "They have no prior vision of what they're making. All they want to do is provide an environment that people spend time in and click on and spend money on."
Such criticism is especially vociferous from traditional hardcore gamers. Begemann says they're not comparing like with like. "Social games are taking away [hardware] barriers and making everything accessible. Yes, if you're a gamer playing 50 hours a week, some of the games will not resonate with you, just as how hardcore games do not resonate with our target group." Nor does Begemann think the emphasis on metrics makes his company a business intelligence operation. "Wooga is heart plus brains. We have this creativeness and these analytics, and both are equally important."
Social games come with new rules. Traditional titles can broadly be divided into games of skill and games of chance. Monster World and FarmVille are games of labour: plant a seed and you will eventually grow a plant. And this appeals to the new type of gamer: the average wooga user is a 40-year-old woman who logs in eight times each day. "The mum with two kids and a job, she works really hard all day, then comes back home and takes care of the kids," says Mikołaj Jan Piskorski, an associate professor at Harvard Business School who studies social networks. "When the kids go to sleep, she's completely knackered and wants to relax or talk to her friends, but it's too late to call. Playing the game with your friends is a low-cost way of keeping in touch."
Quality is improving. For many social gamers, FarmVille was the first video game they had ever played, but they're now more discerning. "Early on, [Facebook users] did put up with really bad games, because they hadn't seen them before," says Wilhelm
Österberg, product manager at wooga. "That's how the platform is now maturing -- from viral chaos to promoting the best games."
Making the best games represents a market opportunity for wooga, which lacks the scale of EA and Zynga. "If you're trying to compete with Zynga on the city concept or ville concept, you'll have a really hard time," says Piskorski. "But if you're developing a new way of engaging... I think it's quite conceivable that you might be able to replicate a lot of the success of Zynga."CityVille reached 100 million monthly active users in only 43 days, but a month later it had lost four million. It's still the most popular game on Facebook, but now has around 75 million users.
FrontierVille, a newer Zynga title, lost a million users in a week in September 2011, while Magic Land added 600,000, to take it to three million monthly active users.
Wooga is preparing to release one game on Facebook per quarter in 2012; it currently has three as yet unnamed titles in production. This portfolio is giving wooga the critical mass that Begemann wants. Only five percent of users of wooga's new games are acquired through advertising: the rest are introduced by existing players. Spending heavily on advertising, as Zynga does (Silicon Alley Insider reported that it spent $72 million on Facebook ads in 2009), means a lower average revenue per user; Zynga makes about $1.60 per unique user per quarter. In the second quarter of 2011, Zynga's profits fell from $14.4 million to $1.4 million -- a drop of 90 percent caused by development and marketing costs for two new titles.
The fight is moving to new battlegrounds. Wooga recently developed Diamond Dash for iOS, ported several of its games to Google+ and is building an HTML 5 version of Magic Land. It is also firmly targeting Europe. "In aggregate, Europe is bigger for us than the US -- much bigger," says Begemann. "And there are markets which are growing fast at the moment. We're testing how much better engagement is if we localise." From the beginning, wooga localised its content. Its games are now available in seven languages, with variable success in each region (for example, wooga says that France monetises four times better than Spain.)
Begemann aims to have grown his team to more than 200 employees by the middle of 2012. "Our big, big vision is to be one of the leading companies by 2020. We know that's a little bit crazy, but we believe it's possible. That would be billions of dollars per year. If we continue to grow over the next nine years like we have over the last two, then that's a realistic goal." Speculative?
Wooga doesn't take punts: it tests everything.
By lunchtime after the Monster World meeting, the windmill feature is undergoing A/B testing, as per Begemann's query. A week later, Drussila Hollanda sends an email: "The initial A/B test showed that there's a 75 percent chance that woogoo consumption is lower and didn't affect DAU. The feature will remain on for only 50 percent of the players as we'll investigate it further and tweak it for a new test."
Tom Cheshire is associate editor of WIRED. He wrote about Recorded Future in 12.11.
This article was originally published by WIRED UK
