While it seems like mobile gaming companies are getting acquired left and right this spring, there are still plenty that are staying independent and doing just fine.
Storm8, which is totally bootstrapped and was founded by Facebook alums, is one of them. The Redwood Shores-based company is saying that it has passed 300 million downloads and that its network of games reaches 100 million devices. CEO Perry Tam believes this means they reach 1 out of every 5 iOS and Android users (assuming 500 million devices sold or activated to date, which is pretty consistent with the numbers Google and Apple have shared so far). Storm8 declined to share anything about its daily active usage numbers.
“The company is profitable and we can stand on our own feet and sustain growth,” said chief executive Perry Tam in an interview. He plans to double Storm8’s headcount to 240 people by year-end.
Storm8 was one of the very earliest movers in mobile gaming. Chief executive Perry Tam used to work at Facebook on the Credits team and saw the rise of social gaming giants like Zynga. He bet that there might be a similar opportunity on mobile phones and left Facebook to start Storm8. They first became known for menu-based, role-playing games like iMobsters and World War, but they also built out a casual label called TeamLava that launched Bakery Story, Restaurant Story and Fashion Story.
Being first to market meant the Storm8 was able to take advantage of cheap distribution when the iOS platform was less competitive (not unlike what Zynga did in the land grab era of the Facebook platform). The company had 10 of the top-100 grossing apps on iOS last year, according to Apple’s iTunes Rewind. Storm8 then moved onto Android and repeated the formula. Earlier this year, they were one of the first gaming companies to test Amazon’s in-app purchasing system and made $700,000 in the first month.
Last fall, Jason Kincaid said that the company might be raising $300 million at a $1 billion valuation, which I reported was unlikely. It didn’t end up happening.
The reality — at least so far — is that mobile platforms have turned out to be very different from Facebook. There is no single company that has Zynga-like market share on iOS and Android. That’s a blessing and a curse. One the one hand, it means that there can be several successful and profitable mobile gaming companies. But on the other hand, it means that it’s hard for any single company to justify a valuation with a generous revenue multiple (since their fortunes are that much more dependent on whether they can sustain hits or not).
So the valuations in recent acquisitions, like $180 million for Zynga’s deal to buy OMGPOP and $210 million for GREE’s deal to buy Funzio, are much more moderate than the numbers that were talked about last summer. As a side note, Funzio’s founding team actually came from Storm8. They split over control of the company and then left to found a competing mobile gaming company.
Tam declined to share his thoughts on the recent deals. “We’re definitely aware of those transactions,” he said “It’s very interesting and we certainly don’t know the details or internal numbers so we cannot really comment on specifics.”
Even with these deals, there are plenty of companies that seem to be doing just fine without any buyers. Rovio this morning said it had $106 million in revenue for last year and Glu Mobile posted 73 percent quarter-over-quarter revenue growth last week, with smartphone revenues reaching $17.4 million up from $10.1 million in the holiday quarter. Outfit7, another totally bootstrapped mobile gaming company, also recently passed 360 million downloads and signed a deal with Disney to have its characters appear in an animated web series.
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