Can you tell us a bit about Insel Games and your experience in the gaming industry?
Insel Games is a publisher of Massively Multiplayer Online (MMO) Games on PC and Mobile Devices and was set up in 2016. I am a gamer myself, and I started my career as a journalist, but I was then hired as project manager by big German media houses, including Bertelsmann and Axel Springer, who wanted to get closer to the gaming industry in the early 2000s. In 2006, I set up my own company IME in Hamburg, which grew into a global consulting company and content agency for the Online and Mobile Games industry. IME mostly services Asian companies wanting to enter Western markets. We assist in game production and monetisation strategies for free-to-play online and mobile games, as well as in licensing and community management. Through IME I also got in touch with many game developers, who were seeking a publisher, rather than a service company. That’s why I also founded Insel Games, which focuses on the publishing part. Our strengths are in marketing and community management, as well as in the localisation of Asian games for Europe and North America.
A few years ago, a game developer needed a publisher to make sure the game found an audience. With easy access to game platforms today, how do you view your role as a publisher?
We are a start-up, and although we sometimes pay royalty advances, we call them minimum guarantees; we don’t finance games at the moment. We see ourselves as advisors to the game developer, especially when it comes to developing or localising games. Developers are often very much in love with their game, so when it comes to game testing, we try to be the voice of the gaming community. However, our main job is to market and sell the game. This is also reflected in a typical revenue-share agreement. The publisher usually keeps 70% of the revenue, with 30% going to the developer. However, we will spend around 30-40% of our revenue on marketing.
What are the major challenges in marketing games today?
The fact that it is so easy to publish games on platforms like Steam also means that standing out is more difficult. I have read a report that said that the number of games released on Steam in 2017 has surpassed 6,000. That’s around 1,500 more than last year and almost as many as the total number of games released between 2005 and 2015. The sheer flood of new games makes it very difficult to gain players’ attention. Distribution platforms are also very much algorithm-driven these days. It is all about personalisation, and it is difficult for a game to appear on the front page of Steam. If your game has really good KPIs, it will show up on the front page. If it doesn’t, it won’t be on the front page and will be low on the list. That’s also the reason why publishers are still needed, even though self-publishing is relatively easy these days, to kick start the communities on these platforms by drawing attention through external marketing.
So what makes a good game?
We are looking at similar KPIs as the iGaming industry, such as the player retention rate and the conversion rate for a free-to-play game, but it is extremely difficult to say what makes a good and successful game. For instance, even releasing a new version of an old game can be quite profitable, as many players are very loyal to a game. I have also seen games which I thought were ridiculously bad, but had good KPIs and turned out to be very successful. Generally speaking, graphics are extremely important for any video game; a game simply has to look good, but more importantly, it has to be fun. Defining what is fun for a large number of people is difficult. We also have to talk about monetisation when it comes to free-toplay games. The increased use of in-app purchases means a game has to motivate people to keep on spending money. I would say it is almost impossible to predict if a game will really fly. That’s also why it is still a hit-driven business, very much like the film industry. Most companies actually just score one, or perhaps two, massive hits, which then fund their entire content line-up.
Looking at the iGaming and the video gaming industry, how do you see the two industries evolving?
There are certainly similarities between the PC gaming and iGaming industry. Both industries are very technology driven. We sometimes employ the same people, especially when it comes to the marketing and customer support side. Many online casinos are also trying to provide a more social and entertaining experience and are looking at the gaming sector for inspiration. This will slowly but surely increase production values in the iGaming industry. I think gambling and gaming are definitely moving closer together. Then there is the issue of pay-to-win loot boxes in video games. Different regulators are currently assessing whether these constitute gambling.
What’s your opinion on loot boxes?
Loot boxes have been around for many years. In the beginning they were mostly about selling vanity items that define how a character in a game looks like. They didn’t contain anything that was needed to win the game and were just a way to monetise the game. However, there are currently a few examples where those loot boxes contain items that can help the player progress through the game. They are essentially a lottery because they
reveal randomised rewards, and that’s why many people view them as gambling. I don’t think that’s true, but what is certain is that the line between PC gaming and gambling is being blurred.
Compared to the iGaming industry, the video-gaming sector is small in Malta. In your opinion, what makes Malta an attractive hub for companies from your sector?
I think Malta is particularly attractive for start-ups. For us, the funding that we received was very important. We participated in Malta Enterprise’s B.Start programme and subsequent programmes. Initially, we received a grant of €25,000. This is obviously not a big amount, but when you put together a financing plan, including angel investors and your own money, this suddenly helps a lot. I also found the attitude and openness towards gaming start-ups very refreshing. There is a clear desire to attract companies from the wider digital gaming industry to the island. When it comes to costs, Malta certainly beats Germany, especially in terms of salaries, but also for other operational costs. Then there are the tax advantages; however these did not play a role in our decision. The reason for this partly being that we are a start-up and not profitable yet, but also because I believe if one
lives and works in a community, one has to give his fair share back to that community.
You said earlier that there is an overlap between gaming and iGaming in terms of recruiting staff. What talent are you currently seeking to hire?
We primarily require product managers and community managers in addition to marketing staff. It is important that our product managers have strong project management skills and our community managers know how to deal with customers, mostly in writing. But more important than anything else, is that they are gamers. They need to understand the industry, they need to know how gamers think, how demanding gamers can be and
understand the language they use.
What role do you expect Virtual Reality (VR) and Augmented Reality (AR) to play in the gaming industry?
I think the development will be similar to what happened in the mobile games sphere when the iPhone came along. Mobile games suddenly exploded. Once VR devices are better and become more main-stream, the sector will be huge. VR is an amazing piece of technology. We are actually planning to launch a VR game but we are not planning to launch that game to make money. We are simply launching it to gain experience and learn about the market and the technology. I really believe that one day VR will be big, but right now there are still big problems, for instance when it comes to motion sickness. I have less of an opinion on AR, but with Pokemon GO we have seen a glimpse of how big it can be. However, the hype also went away, and there hasn’t been anything else of the same scale since then.
What are your plans and priorities for the future?
We are planning to launch our first console game next month, as well as a PC MMO game, which had a production value of 8 million euro and had been in production for 3 years. We are also planning to launch our own portal, where we will present not only our own games but also third-party games. This is an attempt to be a bit more independent of the big portals like Steam, where we have no control what is shown to the users.
How do you see your relationship with the iGaming sector developing?
I think we can learn a lot from each other and should talk more to each other. We, at Insel Games are open to cooperation, for instance when it comes to cross-promotion. PC gamers seem to be very receptive to online casinos. They are achievement-driven, hard-core players and they are already online. We have already met a few companies that are interested in gamifying their iGaming offering a bit more. I really think the exchange can work both ways.
Patrick Streppel studied Media Management in Germany. In 1999, he started to work in the games industry as a journalist before being employed as Project Manager for Bertelsmann AG (Fremantle Media,arvato) and Axel Springer AG. He re-structured, grew and internationalised Games PublishergamigoAG as “Vorstand” (CxO). He founded IME GmbH in Hamburg in 2006, Insel Games Ltd. in 2015 and Miles & Games Ltd. in 2017.