What is the background to Karmafy?
I have worked in the video games industry before and came up with the idea to combine time spent playing games with supporting a good cause. I had worked on a project in Zimbabwe, which was an educational tool modelled like a Farmville-style game with the goal of helping fund the largest nature conservatory on the continent. Based on this experience, my co-founders and I started thinking about creating a platform allowing players to support charities while playing any game or using any app or web service for that matter. We were all located in different cities at that time, and we spent about a year in a virtual office thinking long and hard on how we could receive support for our cause. The discussion landed on the conclusion that we needed to physically co-locate somewhere together and we moved to Malta in January 2015.
How does your platform work?
The Karmafy platform is an overlay for computer games that works on iOS/Android, Steam and a number of different platforms. The core idea is to take the time spent in a game and convert this time into points for doing good. We created something called karmafy points. Since we could monetise this, we can convert the time people spend playing a game into actual cause support. On average, if a player watches five in-game video advertisements, it converts to the amount of clean water necessary for one person in Africa for one year. Achievements are tracked, and players are updated whenever their contribution helped, for example, install a water pump in Africa. We aggregate all games played and the achievements into total karma which can be compared to that of friends. In simple terms, our overlay is using gamification game systems in a non-game context and synchronises gamification with philanthropy. We call it freemium philanthropy. We improve retention and engagement through motivating players to do good while having fun.
What percentage of the revenue is going to philanthropy and how does this impact on retention?
Retention and revenue depend on the individual products. We normally strike deals for revenue share based on the level of retention and engagement our overlay contributes to the game. When starting a game, the players using our overlay can choose an organisation or a cause to support. We have about 40 organisations to pick from unless developers specifically want to add their own.
Players using the overlay do play longer. During a year, the cross-retention engagement and its overall impact in a more traditional video game is roughly 17% in terms of bottom line improvement. Players tend to stay 10% longer using our overlay, and we saw that 50% of advertisement revenue was generated by the 20% of players who chose to engage with a good cause.
In freemium games, revenue components are advertisements and in-app purchases. But for the player, it is free. In a typical revenue-share model the game developer keeps 80%, we split the remaining 20% fifty-fifty between us and good causes. If a player chooses not to support any of the causes via the overlay, the game developer keeps all revenue. Of course, some choose to provide weekly or monthly pots for the players to direct to chosen causes as part of their CSR goals.
What was the main reason for relocating to Malta?
First of all, it was November when we thought about it. On the one hand, we received support from Malta Enterprise, and on the other hand, the weather and the English language make a big difference. Obviously, we will be bootstrapping for quite a while, so sitting in London would have been costly. What I love personally here is that I have a seven-minute walk to work, and I don’t need a car. From a quality of life point of view, things are spot on.
What is your unique selling point with this product?
There are plenty of customer reward programmes out there. For example, we can use geolocation and reward customers who check in somewhere. We could do it for HR systems for the workplace, giving employees karmafy points for showing up on time or meeting sales objectives. We have already integrated with Salesforce and other project management tools. Imagine turning HR and CSR into profit drivers, and employees would be able to use their karmafy points to decide where your company is going to spend their CSR budget. Then they feel empowered and involved.
If we are allowed to be the Devil’s advocate for a second, given how problematic gaming has become for one entire generation from a socioeconomic view, what is the nobility in making them play even more?
Gaming is going take place anyway. What we do, is finding a way to do good with the entertainment aspect of games. With Karmafy, those 10,000 hours that a player has spent can be transformed into something good. I think that is a solid and positive outcome beyond games just being a lot of fun.
What is the market size and customer profile for this kind of business?
The number one online casual game player is pretty much a 35-45-years old female. The number one giver of money to charities is also a 35-45-year old female. If you look at something like Candy Crush Saga, female participation is massive, and women outweigh men. Millennials and mums are the key. They play games that you could play while doing other stuff; games that allow you to grab the phone for just five minutes and be social and connect with your friends.
Jonas has helped guide award winning entrepreneurs (Ernst & Young/Microsoft BizSpark) and game teams (BAFTA,AIASS) to create exciting games focused products. Prior to joining Karmafy, he served as Managing Partner of a small angel investment network in Sweden. As Executive Producer, he has helped set-up 5 game studios, participated in 4 company trade sales and has brought over 75 games to market.