Mobile and social game developer Crowdstar is at it again with a new CEO at the helm. The company is promoting from within and giving Jeffrey Tseng, the general manager of products, the top slot.
Peter Relan, who co-founded the company and has served as CEO for the past year and nine months, moves into an executive chairman role. This is a marked change from two years ago when the company hired a chief executive externally and brought in Niren Hiro, a veteran from AdMob, the mobile advertising company that Google acquired for $750 million. Hiro left the company amicably after less than a year.
“The reality is that this is a company that’s going to thrive under a product CEO,” said Relan, who is a prolific investor in the gaming space that has backed companies like OpenFeint, iSwifter and HTML-focused Spaceport.io. “The last time we brought in an external CEO, he had more of a business development background and I’m completely sure what we need now is a product CEO.”
Tseng helped Crowdstar make its transition from the Facebook platform to Android and iOS, where the company got another wind from titles like Top Girl and Social Girl. Tseng was on the founding team at Secret Level, which was acquired by Sega in 2006. He’s also a graduate of Cornell University, which has weirdly produced a lot of mobile gaming CEOs including Storm8’s Perry Tam, Pocket Gems’ Daniel Terry and Funzio’s Ken Chiu, who became a senior vice president at GREE after the company was acquired for $210 million.
The company is now “100% mobile,” Relan says.
Crowdstar, like many other early social game developers (Zynga included), have had to make a big shift onto mobile platforms over the last two years as Facebook clamped down on cheap virality for games. The same dynamics are now taking effect on the iOS platform, however, with Apple tweaking the ranking algorithm to push games lower on the free charts. The cost of user acquisition, or how much developers have to pay to get an engaged game player in the door, has stayed fairly consistent over the last year. App marketing company Fiksu said they saw developers spend an average of $1.34 for a user that opens an app three times.
Relan has said they’ve managed to optimize their marketing spend in such a way that they haven’t had to keep with the GREEs and Zyngas of the world in costs.
“We’re not making exaggerated expenditures on marketing,” he said. “We try to stay on the efficient frontier between the cost of acquiring a user and their lifetime value. While you do occasionally see high bids around $6 for an install, that would be nuts unless you had incredible performance.” Crowdstar is focused on a slightly younger demographic than Zynga as it aims to attract women ages 13 to 35.
He also said he’s not that concerned about the disastrous performance of Zynga’s shares over the last year, with a roughly two-thirds decline in value since the company debuted last December, and the impact that it might have on Crowdstar’s private valuation.
“Zynga got hit because of the mobile pivot. When we raised funding, we made the strategic decision with our board last May to go after mobile gaming with the financing,” Relan said.
Crowdstar raised $23 million last May in a strategic round including involvement from Time Warner Investments, Intel Capital, Shanghai-based gaming platform The9 and NVInvestments. The company has raised about $35 million in total. The company has also expanded internationally with partnerships with Japan’s GREE and China’s Tencent.