Bigpoint, the European free-to-play online gaming company that has seen shareholders invest around $460 million since 2002, is finally announcing a new CEO. Khaled Helioui, formerly Bigpoint’s Chief Games Officer, is taking over the role, some four months after founder Heiko Hubertz announced he would be stepping down. The change comes as Bigpoint, like other online gaming companies such as EA and Zynga, faces a wave of challenges, the biggest being market saturation and trying to drum up loyal gamers from a savvy but fickle user base.
Hamburg-headquartered Bigpoint creates and publishes a portfolio of free-to-play online games, including casual titles like Farmerama, Rising Cities and Skyrama, along with “core” titles Drakensang Online, Battlestar Galactica Online and Dark Orbit. It currently claims 300 million registered users and 1,000 “global” distribution partners, and largely makes money through the up-sale of virtual items and add-ons in its games.
In the official announcement, Helioui, who originally joined from private equity firm TA Associates – an investor in Bigpoint – candidly makes reference to the “transition” that the industry is facing, although he says that Bigpoint has “undergone a number of changes over the last year” to address this, namely through a renewed focus on the quality of its games, innovative content, and longer development cycles.
Broadly speaking, the free-to-play online gaming industry is being attacked on several fronts. In the last few years, it’s moved from being a market that was underserved to somewhat of a gold rush with supply outweighing demand. As a result, consumers are wising up, particularly casual gamers who now expect a greater level of quality from an industry that has become plagued with “me-too” offerings and an avalanche of sequels. Hence, Bigpoint’s emphasis on returning to a strategy of quality and differentiation.
Conversely, the traditional console and PC gaming sector has seen smaller developers being squeezed out due to its inability to keep up in terms of development budgets that often exceed $50 million, notes Bigpoint.
This has contributed to an exodus of talent from traditional games companies who have been recruited to free-to-play online games outfits. And in fact, Bigpoint says it’s made a number of such hires, as well as partnering with traditional gaming companies, such as Square Enix, to help them build online, free-to-play business models in a way that doesn’t eat into their existing revenues.
Then there’s crowdfunded projects which throw in a relatively new unknown.
But the biggest attack has arguably come from mobile, an area where Bigpoint hasn’t had much success (it reportedly closed its dedicated mobile business last July). And in fact, there’s no specific mention of mobile as a strategy, although the company does stress that its browser-based games target multiple devices, including tablets, and that its browser technology offers a “level of graphics and gameplay competitive to consoles and client based games”.
So, yes, the industry is certainly in transition (and I’ve barely made reference to Zynga).
Helioui comments: “I am really excited about the new concepts and the quality of the games that we are going to see over the next few years. I genuinely believe we are entering a new era for gaming and the space is going to experience a disruption that is not driven by a new business model, technology or platform but by unleashed creativity.”
As for the timing and reasons for founder Hubertz stepping down as CEO, this certainly isn’t a case of “when it’s time to scale, it’s time to bail”. The company has existed in one form or another since 2002 and, despite recent layoffs, Hubertz has grown Bigpoint to over 700 employees with offices in Hamburg, Berlin, San Francisco and Paris.
After doing a little digging, however, it seems that this is a classic example of a founder feeling fatigued and that they are no longer able to do what they enjoy most (and arguably do best), which is to come up with and give birth to new ideas, instead of being bogged down in the day-to-day running of a company the size of Bigpoint.
I also understand that Hubertz remains a shareholder and is both publicly and privately talking up Bigpoint’s future despite a difficult period for the industry. He also retains an advisory role.
That said, the timing of these things rarely looks good and Hubertz, a strong leader within the company, is undoubtedly a big loss to Bigpoint, although I have the feeling that the writing was on the wall for some time. Even back in 2011, he tried spitting the role in half and for a short time Bigpoint had two CEOs, as part of the company’s push into North America, which it’s since pulled back from, shuttering its U.S. development studio after disappointing results, although it still has an office in San Francisco.
Finally, there appears to be some acquisition noise bubbling up around Bigpoint, with rumours that a large European media company has been sniffing around. In addition, new CEO Helioui has a fundraising and M&A background from his time at UBS.
According to CrunchBase, its backers at one time or another have included GMT Capital, Peacock Equity, TA Associates, and Summit Partners. The latter two currently own a majority stake in the company.