At last month’s Xconomy Mobile Madness event, Andrew Paradise hinted that his company, then called Lookout Gaming, was going to be coming out of stealth sometime in April with a big gaming industry disruptor. Well today, Paradise’s company, now called Skillz, announced the launch of a new competitive gaming platform for Android where players can earn money in head to head competitions.
Skillz’s goal is to make a viable method for the monetization of mobile games that is, as Paradise explained, more “game-centric.” Where most gaming apps are strictly single-player, integration with Skillz’s SDK (Software Development Kit) creates a tournament system where users can wager virtual currency or, where legal, real money in battles with other users.
Starting today, when opening up an app such as 3D Mini Golf Stars, a player can choose a new option added to the start page called “Multi-Player”. This brings you to Skillz’s signup page where a user can create a Skillz account and add a credit card or PayPal account (if their state allows “skill gaming” for prizes). From that point, players only need to find challengers to start earning money. Each matchup costs a user a 25¢ entry fee, and a victory earns the winner of the head to head matchup 45¢ total. (Skillz takes 5¢ from the total paid to the victor. The money is then split between Skillz and the game developer.)
One of the most interesting aspects of the Skillz launch is the availability to make real money in the states where “skill gaming” is legal. As an example of skill gaming, Paradise pointed to the for-profit chess players in Harvard Square who charge a fee of $5 to play a skilled chess master for a prize. Skill-based gaming is legal in thirty-six states including Massachusetts, California, New York, and Texas. Those users who can’t play the cash prize version of Skillz games can use virtual currency in their competitions.
It sounds simple, and it is. Skillz is disrupting the gaming sector in a way that makes you ask, “Why didn’t I think of that?”
Paradise explained the motivation behind Skillz, saying, “The mobile gaming industry monetization tools are broken.” Developers have traditionally made money through “in-app-purchases” or mobile advertisements. However, only a small group of game developers are actually making a profit. (In a classic example of the Pareto Principle, 20% of developers are making 80% of the money involved in mobile apps.) Paradise even referenced some of the well-known gaming industry horror stories like that of the creators of a game called Gasketball, who went from a huge success to homelessness.
Paradise believes that the gaming industry is ready for a new, better way to profit from all of the work that goes into app development.
“There’s a huge disparity between the amount of time people spend using mobile games as a form of consumer media versus other types of media.” Paradise gave me some data to explain his logic. He told me that 23% of consumer time is spent engaging with mobile content, compared with radio at 11% and print media at 6%. Of the amount of time users spend on mobile devices, 50% is spent on gaming.
As Paradise said, “The amount of money being spent on this kind of media versus all other categories of media is dramatically lower.” What it comes down to, the Skillz founder explained is that, “there are a lot of people enjoying this type of content but it is very under monetized.”
With Skillz help, that hopes to change. If some of the numbers from the products pre-launch testing is any indication, it will.
Before its launch out of beta today, Skillz already has 10,000 users. The lucky users who have tried the app are raving about the new integration with the trial-period gaming apps on the Google Play Store. As Paradise pointed out, this is highly unusual, “There has never been an in-game ad network that users were excited about.”
Additionally, the game developers are seeing dramatic bumps since joining forces with Skillz:
* The first game, 3D Cave Runner saw its user retention increase from 4% to 18% in the month after the introduction of Skillz.
* On Big Sport Fishing 3D Lite, Skillz users spent 260% more time “in game” than non-users.
* Dirtbike racing app Gnarbike increased its user numbers 3X in the first two days. Even more impressive, their revenue increased 3x in about ten days.
Paradise summed it up best, “It’s pretty wild how lucrative this could be for developers.”
Creating a tournament system that’s part of your favorite games is the next step in mobile gaming. Referring to Skillz SDK as a “tournament in a box,” Paradise said that ten developers have integrated ten games for the initial launch.
The initial launch will be on the Android platform only, but Paradise plans integration with iOS soon. Part of the decision to focus on games in the Google Play Store has to do with the market dominance of iOS apps. As Paradise pointed out, “iOS developers make the lion-share of revenue using traditional monetization techniques.” Skillz saw the Android platform as an opportunity to earn profit in a huge market-Paradise said 68% of mobile use in on the Android platform.
Today’s launch marks a huge opportunity for the company that was founded a little over a year ago and closed a Seed Round in November. The $1.3M round was led by Atlas Venture, Nextview Ventures, as well as angel investors.
Skillz looks to be a major disruptor the ongoing innovation of mobile monetization, but it also has the improvement of mobile gaming at heart. As Paradise puts it, “We built this company because we think that the people who make great content should be rewarded for that content. We want them to be rewarded so that we can make more content that we love.”
Dennis Keohane is a teacher, journalist and contributor to VentureFizz. You can follow Dennis on Twitter (@DBKeohane) by clicking here.