Episode 34: Gaming Mobilescriptions With Multiscription

Introduction

[00:00:00] Jon Jordan: Hello and welcome to the Mobile GameDev Playbook. Thanks for tuning in for another episode. This is a podcast all about what makes a great mobile game, what is and isn’t working for mobile game designers, and all of the latest industry trends. I’m your host, Jon Jordan. Joining me today, we have a regular guest, Kalle Heikkinen. Kalle is a senior market analyst at GameRefinery by Liftoff. How’s it going, Kalle?

[00:00:23] Kalle Heikkinen: I’m very good. Thanks for asking, Jon. How about you?

[00:00:28] Jon: Good. Yes, raring to go. Raring to go, another great episode. Not that Kalle isn’t a special guest, but our particular special guest, I suppose in today’s episode, is Teis Mikkelsen. Teis is the co-founder at Multiscription. How’s it going?

[00:00:42] Teis Mikkelsen: Excited to be here. I can’t wait to talk about it.

[00:00:45] Jon: Good. I will not give away any secrets here by saying that Multiscription is a mobile game subscription service. Over recent years, we’ve been accustomed to consuming many entertainment products via subscription. This is a very successful model if you can work with these recurring services. We’ve seen it well for premium games.

We’ll also talk about Apple Arcade, a premium arcade service. You’re trying to do something a little bit different regarding mobile games. We’re going to dig into this, but I will hold us back from getting too deep into the details to begin with. To start, can you just talk a little bit about the vision for the company and how you founded and where you are?

Multiscription and Unleashd

[00:01:31] Teis: Our entry into this probably differs from many other monetization companies because we come from game development. I’ve been developing games for more than 15 years and was really on the other side of the table. We started in PC console, moving into web, mobile, et cetera.

My co-founder, Martin Walfisz, founded Massive Entertainment in Sweden, which is more years ago than he would admit, and ran that for several years as the CEO.

This company is now Ubisoft Massive, of course. We all have this background in game development. We met through work as well, Martin and I. One of the things we saw was that companies were struggling to monetize. Martin had created a company after he left Massive, a mobile studio. They had a very successful game regarding players and reviews and were super popular but had a tough time monetizing. That led him into this track where he was talking about the challenges. I came from another angle; having worked with successful subscription models as a game developer, we said, “Hey, we have some problem and solution here. Let’s work together on fixing this.”

[00:02:51] Jon: I forgot to point it out at the start. Multiscription is the company behind it, and your consumer-facing brand is Unleashd, which is currently live on Google Play and coming to Apple. That’s your consumer brand. What are people getting? At the moment, I always think consumers are pretty happy.

They’ve got many, many thousands more games than they can ever play in their lifetime on mobile. The vast majority are free-to-play. They can enjoy those. Tentatively, it’s not clear to me that they’re crying out for something new from a gamer’s point of view. You’re offering them something new. How are you packaging this service for them, and why do you think it will work?

[00:03:41] Teis: What we see is that, first of all, we come at this, again, from two angles is that, first of all, we know that game developers are struggling, a lot of game developers/publishers, we’ll use the term interchangeably, but they’re struggling with, again, monetizing and retaining players, even for great games. You’re right. There are more great games out there than we can ever play, and too many games and too little time.

At the same time, we see consumers moving away from the business models we’ve seen that were very successful for the last ten years towards subscriptions. This is a move that comes from outside the industry. Still, it’s something they’re already very comfortable with and is then seen as the preferred choice of monetization. I think that’s the move we’re seeing right now.

We’re offering then a chance for game developers and publishers to be part of that movement and a different way for players to engage with the game and really to pay for the games and reward the developers for their hard work.

Subscriptions inside games are not a new thing

[00:04:49] Jon: Kalle, do you want to be our outside observer, looking into this space? How do you see this sort of thing? Personally, do you like subscription services? Is that something where you think, “Oh, yes, that could work for our free-to-play type of games”?

[00:05:09] Kalle: Yes. Subscriptions inside games are not new, so we’ve had them as long as we’ve had live games and free-to-play games. Of course, we’ve been discussing battle passes for the last couple of years. Still, there are also these autorenewing subscriptions that are becoming increasingly popular. 

We researched them and found that in the top 200 grossing games, we currently have about one-fifth of them using autorenewal subscriptions. If we look at all kinds of subscriptions in the top 200 games, about half the games use those. Then if we looked deeper at what kind of games are using subscriptions, the autorenewing ones are mainly used by mid-core games.

Yes, as already pointed out, subscriptions also have various benefits. Of course, there are perks when you think about doing fair monetization and stuff like that. Still, they also have these strong engagement triggers for players. If they opt for the subscription, they are incentivized to stay in the service or the game to enjoy the subscriptions they paid for.

Business model behind Multiscription

[00:06:49] Jon: Good. Those are good points that, yes, free-to-play as a monetization mechanic and in-app purchase have moved towards subscription within the game. I guess what you are doing, Teis, is, I assume, trying to bundle those up in a bigger sort of package. How does it work? If I’m a mobile game publisher and we are having a business meeting, and you want to get my game in your service, how does that sort of thing play out? How does it work for the developers themselves? Excuse me, can they offer the game as they usually are? How does that work?

[00:07:32] Teis: Yes, it’s not exclusive, and we work alongside other monetization methods actually in the game, so you can keep having your in-app purchase and your ads for non-subscribers as when you integrate Unleashd. It works because there’s technical integration with our technology that links all the different games into Unleashd.

It works because, as a publisher and developer, you still develop and publish your games precisely like they used to be. We don’t publish them. And you don’t move them to a walled garden platform like some other services. You still control the game. You still own everything. You just have this additional monetization option in the game like you have had added, over the years, other monetization options.

Again, the things you should include, Kalle gave some good examples of it and what are the primary triggers for buying a subscription. One thing is we provide the technology and the business network around it. As part of our offer, we also provide expertise around subscriptions. I worked with several different models for years before even founding Multiscription. Over the years, we have picked up much of the knowledge about it. We are engaging with the publisher/developer in designing which offer they should have in the game. Ultimately, it’s their decision in the end, but we have some strong recommendations on what kind of things work. Some of the things that work, I can say you have to change your mindset from thinking about monetization as a transactional approach. Like when in a purchase, you’re always selling something, right?

You’re always selling, on the next purchase, the next thing, so it’s a series of transactions. When it’s a subscription, you’re engaging in a relationship. I used this before, but it is a relationship with the player. It is that they commit upfront to pay you for X period, let’s say a month, with the expectation of getting something back. They’re building something into it without getting it immediately but thinking, “I’m going to get this back over time.”

You have to build on top of that and then engage more and more in that relationship. It’s a philosophically different approach to monetization. Of course, you’re still selling the same items and rewards in the end, but you package them differently. One thing that drives subscriptions is access to features, levels, and content like things you can buy. We have a racing game, for example, on Unleashd.

Of course, it’s all about the skins, rims, and all these different things they would get access to. One of the things we recommend is that you don’t, for example, give away the content but instead give people access to buy it. This way, you can still balance your economy, and you’re not stuck in a situation where people claim the things you give and then just cancel the subscription and keep it. This way, you engage them over time. That’s just some of the things, of course.

Do subscription systems work better in certain genres?

[00:10:45] Jon: I guess it’s pretty early where you are in terms of the launch but are there genres that you think will work better than others? Have you got any sort of early data on that? I guess one thing with subscription services is there is a temptation to show how valuable it is by, in this case, including as many games as possible. Still, then obviously, it becomes a little bit diminishing returns.

You see a list of 100 games, and you’re like, “Now, which one do I play?” It may be early for you to say this, but have you got any thoughts around genre, and is there a sweet spot in the number of games you want to offer?

[00:11:26] Teis: I would say it’s more about how the game is rather than the genre. Because some games can sustain their subscription model, but 99% of games can’t. Any one of those is relevant. You can take the hyper-casual genre, which is under much pressure nowadays. There are some really fun experiences to be had in hyper-casual. Still, I think selling a one-game subscription hyper-casual, I don’t think it’s the best kind of approach.

I think bulking many of these hyper-casual experiences into a combined subscription makes a lot of sense, so that’s one genre. Kalle talked about the mid-core, obvious example; deep engagement, returning players; things you can engage in longer, definitely, a focus for a subscription of our kind. Again, because ours is across games, it’s not so much about the deep engagement in one game. That still is important, of course, but since you’re moving on to the next game in the service, it’s really about the width of the service and the different experiences you can have there.

[00:12:39] Jon: If you’re thinking, you just said that’s maybe not ideal for games that can’t sustain their subscription model if I have a mid-core game that is doing okay with battle pass, that’s probably not one, that’s not the simplest fit for you, do you think?

[00:12:57] Teis: We just launched, actually the other day, an excellent example of this called Conduct This!, which is a train game. It’s not your casual train game. It’s like Twitch gameplay and is fun. They have their subscription service, a single-game subscription service that runs alongside our subscription offer.

In that situation, we’ve kept their offer and added new benefits to the Unleashd offer. Hence, as an Unleashd subscriber, you get all the benefits in the specific subscription for Conduct This!, plus all the other benefits. The price point’s a little bit different.

I can’t speak too much about each game because of being sensitive to the publishers. Still, I can say that when you do some things like that, you can often see an uplift in the other subscription because, now, suddenly, there’s a choice, right? The choice is not “Should I have a subscription or not? but “Which of the two subscriptions should I choose?” In that case, the cheaper one might get a bit of an upswing.

How Unleashd fits into the game’s already existing economy

[00:14:10] Jon: I guess one essential thing for any platform like you’re trying to do aside from this monetization bulking-up thing is if you’re going to offer scale and discovery and all those things, and obviously, that’s valuable in and of itself, and that’s the point of any platform which is to combine products and then try and build something that’s going to attract more eyeballs more easily than any individual game, again, you’re probably early in the project for that sort of thing, but how are you thinking as Unleashd as a consumer brand?

Is that something that is a consumer brand? Or is this more you don’t want that to be a brand as opposed to the titles in there because there is, I guess, a slight sort of balance there that you’re not going to take away? Two, the games are essential, but they’re in Unleashd because they’re there, so it does need to have something.

[00:15:14] Teis: Yes, that’s true, and I think we have this saying, I’m not sure it’s a universal metaphor, but we don’t want to outshine the bride. Instead, we want the games to be the stars. We are servicing the games. We’re still a brand. Unleashd must be recognizable across games so you can quickly see, “Okay, this game is part of Unleashd. So, I get the benefits since I have my Unleashd subscription.” But the games are the stars.

I say we do so much not to take anything away from the games. They’re the ones doing all the hard work. Again, I think this comes from our background in game development, understanding all the hard work that went into it. Then we don’t want to see it just being taken over by something else. This is also why we have the branding as we have it today: to find this approach where we are not louder than the games but to stay in the background while still being recognizable. I think that’s a great point. In that sense, we are a B2B2C brand because we’re, of course, making deals with the publishers, and we’re also selling the subscription, in the end, to the consumers.

What does the mobile game subscription service market currently look like

[00:16:25] Jon: Kalle, to bring you in there, I guess, now, obviously, the mobile space, as we’ve mentioned, Apple Arcade has been the most high-profile, although obviously, it’s very different. It doesn’t have in-app purchases or ads. How has that gone? Has that given us a taste of whether consumers like these subscription services for mobile? Because I can see Apple Arcade would be, for a specific group of people, a stronger option. Because it’s just like, “We don’t like free-to-play games, we don’t like ads, we don’t like in-app purchases, we’re just going to get the games”? There have been some great games, but how many years on? What’s the feeling around Apple Arcade, do you think?

[00:17:14] Kalle: Yes, I guess my personal opinion is that I think it’s always good to have different kinds of options available. For someone who wants to play games as a product, games on mobile devices, there’s definitely, value in the service. I would also assume that, for example, for parents who want to provide add-on IAP-free gaming experiences to their children, this is a good option for that purpose.

For example, I’m thinking about Netflix, its gaming business, its value proposition, and whether it will be aligned with Apple Arcades. Will players then think, “Hey, I’m already paying for this Netflix subscription, and it has great games in it, so what do I need Apple Arcade for anymore?” We still don’t fully see which direction Netflix is going with that. Still, I’ve been thinking about whether there will be direct competition on that front.

[00:18:28] Jon: Teis, whether you see this competition or not, I guess maybe not direct competition. But Apple and Netflix as potentially two people in this same business as you. Is that terrifying, or is that comforting?

[00:18:45] Teis: I think, first of all, there’s, I think, around 200 games on Apple Arcade and, I don’t know, 25 on Netflix or whatever. That leaves how many? 200,000 for the rest of us. I think the industry is likely big enough. I was delighted when Apple Arcade was announced because we founded the company way before Apple Arcade was even leaked.

I can tell you that Apple Arcade and now Netflix is helping us convert publishers. The discussions we had before Apple Arcade when we talked to publishers about subscriptions are completely different from the ones we have now. I think there’s room for more for Apple and the big PR muscles and the money that’s being thrown around for helping show the way to subscription.

As Kalle said, there are different types of games and different kinds of players that enjoy the games, and I think that Apple, first of all, has a great selection of games. I love the games. WHAT THE GOLF? is one of my favorite games in the last few years. It’s on there. It’s a brilliant game. I think the challenge we see and why Apple Arcade may not see the mass audience that some people expect it to meet is because it wasn’t intended for that, right?

It’s intended to sell more iPhones, and that’s fine. That’s a greater goal in itself. I have an iPhone. I love the iPhone, so it’s great to have games on it, but the drive is more to showcase very few games that show how the iPhone works. It’s an excellent showcase for the product. That’s why they’re being picked; that’s the curation around it. Again, that’s fine. That’s fine. It means it’s not mass-market games, the most prominent publishers are not on there, and it’s a walled garden. That is why very few people will see it. I think many people will find that the kind of games there are not necessarily the ones that will appeal to the mass-market audience. As I said, it’s great.

I think they’ve also changed focus recently, as has been pretty evident by bringing in free-to-play games, realizing that you can’t just bring in a free-to-play game and remove the monetization. Because it breaks the game because part of the game is the cooldowns, the grind, and all that; if you play, I’ll just take an example of a game I love to play with my kids: Hay Day.

Suppose you take Hay Day, unlock everything, have unlimited money, and there are no cooldowns on anything. In that case, there’s no game anymore, right? I think that’s what they’ve seen, but they’re changing their profile slightly. If it focuses more on subscriptions and gives more great games to players, then everyone’s a winner.

[00:21:45] Jon: I guess in all those cases, those companies are using their subscription model, as you say, in a slightly different way. I think, to some degree building out the ecosystem or filling in all the gaps. They’re not necessarily, asking those services to be highly profitable in the way that you running a company might want your favours to be highly profitable. That also feeds into how much they charge because it affects everything.

With Apple Arcade, you get three months free if you buy a device or something like that. Of course, the more business models you have, the more content you’re giving away. If games are just part of that, you can be more flexible potentially in how you charge. What are your thoughts on monetization and the value proposition? I guess, really, for consumers, that’s going to be the thing that there’ll be a gut feeling about the price.

Then I think there’s a certain amount of time free, and then there’ll be an idea about how much value I’m getting from this. Of course, all those things are anchored on how much I will pay monthly. What have you thought about that?

[00:23:00] Teis: You’re right that it’s not the most exciting to be competing with a product that’s a loss-leader for the owner of that product. That’s for sure. I read somewhere that Apple lost around $5 million per game. We don’t have that kind of money. I don’t mind that because the only thing we do is we don’t have TV shows like Netflix. Again, I love Netflix.

It’s great, and I’m happy they’re coming to games because, finally, people stopped calling us the Netflix of games. We kept saying, “Don’t call us the Netflix of games because I’m pretty sure Netflix is going to do Netflix of games,” and a few years later, they did. I’m happy about that, but anyway, I think we have a tendency, in mobile at least, to sell ourselves a bit too cheap.

I think we are undermining the value of what we’re creating. I would have hoped that the age of subscription we’re entering now would reset the idea that games are just cheap junk that you don’t have to pay for, the same way you pay for other entertainment. As we talked about now, I guess because these subscription offers are being used to drive something else, then, let’s say, revenue, that’s not happening.

I think that’s unfortunate. I think we should be at the same level as Spotify and Netflix when you look at the different countries and their subscriptions. We’re launching with an intro offer of $5 or $4.99. We think that’s the right one; just looking at the market and look at that, we’re not that established yet. We believe that’s the right one, but I hope we’ll reach a higher point.

I think that’s interesting with our model again, compared to all-you-can-eat models like Netflix or Apple Arcade or others, because not everything is unlocked. As a developer, you can still have the in-app purchase that you can sell on top. You can still show ads to non-subscribers. We allow certain ads for subscribers, which are rewarded video ads as long as they’re voluntary and player-initiated.

One of the things we learned is that when we started the company, we just said, “No ads,”. But over time and tons of publishers reading lots of game reviews from players, people like rewarded video ads. They complained and gave 1-star reviews when the games took out the rewarded video ads. They said, “You took away my free stuff”. To them, that was the way they wanted to pay for the game. Maybe they were too young to be able to spend, or maybe they didn’t have any disposable income, so that was their way.

They like it. We keep that in and say as long as it’s voluntary and player-initiated, so this would typically be: earn extra coins, get extra free lives, or things like that. We still allow that. This means our model has no cap on the publisher’s potential earnings. What we’re doing is we’re taking a large group of players who are not comfortable paying under the current monetization models. They like the game, and they’re playing the game. They keep returning to the game, but they’re not buying anything. What’s the problem? Well, you’re probably not offering them something they want to buy, the right kind of product. They may not want to buy in-app purchases, but they want to get a subscription that has these battle pass mechanics of the rewards. We recommend, for example, a welcome gift of some sort. I’ll say you shouldn’t give away content. A welcome gift is one thing we do recommend. It’s like this immediate gratification of “Yes, I got something.” We do recommend these things. Besides that, you can still sell on top and show ads to those who don’t subscribe.

More importantly, your game is not limited to those who subscribe to the service. When we take Netflix and Apple, we talk about those. Your game’s growth is limited to the number of people subscribing to Netflix and Apple. On Apple, you’re already cutting out the majority of players because it’s on iOS. You don’t have those constraints with our integrated services.

How is the revenue split?

[00:27:14] Jon: From a developer’s point of view, is there a fixed revenue split? Maybe that’s a bit more complicated, depending on exactly what’s going on there. Maybe if it’s not specifics, can you generally talk about your thinking around how the money is shared out?

[00:27:30] Teis: Yes. We have a very, very transparent revenue share because we have criticisms on subscription services like Spotify and followed on through Apple Arcade, which is that they’re not transparent. Our revenue share is very simple. We sell a subscription. As you said, we’re live on Google, and Google takes 15%.

It’s very important. People mostly don’t know that, but Google only charges 15% of subscriptions from Day 1. Several years ago, maybe 5, 6, or 7 years ago, Apple and Google changed their terms. So on the same day, what do you know, they charge 15% after the first year of the subscription, but now Google changed it to 15% from Day 1. This tells you that Google expects to make more money by 15% from Day 1 if you can get them into a subscription. They’re pushing for subscriptions this way: incentivizing publishers and developers to put in subscriptions. They take 15%. We take 15%. That leaves 70% to the publishers. Again, we are not taking all the spotlight, and we’re not taking all the revenue.

Many publishers smile a bit when they hear that number because they take more than that in that cut from the developers. That’s a different story. We’re giving 70% to the publishers. We have two ways of distributing, and this is pretty interesting. The first one is the first $1. There’s always a flat fee of $1 given to the game that converted the users.

Again, as I told you, it’s an integrated service. You sign up through a game, so we can see which game converted the user. In our example where I mentioned Conduct This! as one of our games, if they converted the user of the game, they get the first dollar of that company share. They get that $1 every month as long as the player subscribes to Unleashd, even if they stop playing Conduct This! This is a unique way.

I haven’t heard of any other ways like this where you can make money on players who are not playing your game. We’re not talking about someone who clicks an ad and starts playing your game. We’re talking about recurring revenue, $1 a month, on players who are not playing anymore as long as they stay in Unleashd. This is interesting because now we are building a network effect, right?

Now we’re building an incentive for other games to bring in more games. When you have these platforms, they can be afraid to bring in more games because they think there are more games to share the revenue. Still, in this case, it’s not because it’s really about getting more games that means you can now keep your $1. That creates a great network effect.

In the other part, the main revenue is distributed based on how much time an individual player has spent. If we take Kalle, for example, if you don’t mind, let’s say you play Conduct This! seven hours a month, and you play Flow, one of our games, three hours a month. Then we separate the remaining 70%-30%. This is different from other models that aggregate all the time spent, then all the revenue, and then distribute it based on licensing agreements.

This is, for example, how Spotify does. This is based on the individual plan. This is something that all publishers are happy with because they’re really afraid of losing to others that are either better or bigger than someone. Every single publisher we talk to fears losing revenue to the other publishers. This way, we mitigate it by only looking at the individual plan.

To answer the question that might follow up now is, “but isn’t it then split into 10, 15 games?” It’s not. People typically play 1.5 games a month, some data says up to 2.5 games a month, but that’s high. That’s typically when you’re talking about hyper-casual as well. People don’t play that many games, even on Apple Arcade. That’s because you have your go-to game. This is the one you always return to. An example of that could be Hay Day, or for us, it could be Conduct This!, the one we come back to, and then you have the new flavor of the month that you’re trying out a new game. It’s not like people play ten games a month. It’s really, like I said, between 1.5 and 2.5, depending on which data you look at. That’s who you would have to distribute revenue with if that game is also on the list.

There is still a slight chance that the other game is not on the list. That’s the model, and we see this is something that clicks, again, with people because it’s transparent. They like the idea of rewarding the game that brings on the players because the player will be shared with everyone, and everyone will be happy.

Balancing the game supply

[00:32:12] Jon: Obviously, it’s a quality-based thing. You would hope that the games are, in some ways, the best. The games that most people are spending time with are the ones that are going to get the bulk of the revenue. Whether that’s your game or not, that seems the right way to do it, doesn’t it? As you say, transparency there. And I guess it incentivizes publishers to go, “If I’m going to put a game into this service, I’m going to make sure it’s my best game. I’m going to put some effort into getting people into that sort of system,”.

As I said, you end up with thousands of games just in some big carousel and this bit of a mush. That’s not a very strong experience for the consumer where fewer is better to some degree and you want the strongest titles.
[00:33:06] Teis: Yes, it’s about striking a balance between really giving people the freedom to choose, but also, there’s no point in having 30 different runner games, I think, because people have this idea that if someone plays a runner game, then the competitors for that player’s time is other runner games, but it’s not. Typically, people pick one runner game, and they typically pick one match-three game, and then they play a runner game and a match-three game. Still, you rarely see people who play 3, 4, or 5 different types of running games. Again, we know this from console, right? For example, we don’t see many people who play both FIFA and Pro Evo or shooters.

What’s next for Multiscription?

[00:33:49] Jon: Cool. We’re coming to an end. Do you want to give us an overview of what’s going on for the next few months with you? Is that just a case of getting more games in there and building up the network, or are there any other big features we should be aware of?

[00:34:04] Teis: Yes, first of all, the upcoming iOS launch later this year. We’re currently in submission with Apple, just sorting out the last few quirks in the submission. That’s looking promising. We are excited to launch on Apple as well. We’ve been able to help publishers on Google. That’s the first; for us, it’s this conference season time of year.

It’s about being present at all the conferences, meeting with publishers and developers, talking through the solutions, answering the questions, and just talking about how the model works because it works a little differently than other services. Our focus is to keep growing, bringing on more games, and selling more subscriptions.

[00:34:56] Jon: Cool. Good. Excellent. Well, thank you. Thank you very much for your time, Teis.

[00:35:01] Teis: You’re welcome. Thanks for having me.

[00:35:03] Jon: Thanks. Thanks, Kalle, for being on as well.

[00:35:05] Kalle: Thank you.

[00:35:08] Jon: Thank you for watching or listening, depending on how you consume the podcast. Your takeaway from the podcast today is to go check out Unleashd, currently live on Google Play, and look out for when it comes on iOS. Check it out. You get the slightly cheaper $5-a-month subscription at the moment. It’s well worth checking out now. Now would be the time to check it out before prices go up. Other than that, thanks for listening to the podcast. Don’t forget to subscribe through your podcast or videocast platforms of choice. Come back next time, where we’ll be talking to someone building out this dynamic mobile game sector, which is now the biggest part of gaming and still one of the most innovative. Thanks for watching, and see you next time. Goodbye.