Mind-Candy

Mind Candy Reports Losses As Moshi Fades And It Pins Hopes On Warriors

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As was widely predicted after Mind Candy’s Moshi Monsters smash-hit game failed to make the shift from Web to mobile in any meaningful way — apart from a few cursory apps — its financial results looked dismal. The company has announced that it lurched to a net loss of £2.2 million ($3.5 million) in 2013, after making an £8 million profit in 2012. Kids have clearly left the headline Moshi game in droves – which had a web-based subscription business model which pre-dated the tablet era. But in Mind Candy’s defence, its new model of creating an ecosystem of complimentary mobile products which support each other could well lift it back up again.

Chief Financial Officer Divinia Knowles admitted revenue has continued to fall this year.

Revenue fell 35% to £30.5 million in 2013. Revenues from subscribers fell to £13.2 million in 2013 from £19.8 million in 2012. In the last few months staff head count has halved from around 200 to just over 100. But these are just results for 2013. Results for 2014 will not appear until this time next year.

Mind Candy launched the subscription kids game Moshi Monsters in 2008, garnering 80 million users at its peak, and franchised into toys, magazines, music and a movie.

But it was clearly not prepared for the sea of red in the mobile games arena. King.com’s stock has plummeted as it struggles to produced a follow-up to “Candy Crush,” Rovio has laid off 130 people this year as the Angry Birds has slowed.

In July Acton Smith stepped down – rumoredly under pressure from the board, though the company said it was to allow him to concentrate on the creative side and to look for a new kind of CEO.

Moshi Monsters mobile apps have been scant. Inexplicably there has never been a full-blown reproduction of the main game. This year Mondy Candy made six new apps, four related to the Moshi brand, but none were the full game.

Instead the strategy is now to effectively mothball Moshi Monsters as an “evergreen” legacy game, while doubling down on new products.

World of Warriors, which launched on iOS last week and PopJam, a sort of Instagram for kids, are now the main products going forward.

PopJam has been limited to a UK release, downloaded 100,000 times, but it’s being touted to entertainment companies and other brands in the U.S., according to CFO Davinia Knowles.

On the positive side, it’s an indication that Mind Candy’s flip into mobile has been better thought out than might appear externally.

Acton Smith told us: “The figures are not great but on plus side we’ve started to diversify.”

He said that “Popjam is growing nicely”.

Furthermore, after getting a ‘Global Editors’ choice’ on the Apple Store, World of Warriors had garnered “well over a million downloads” in the first four days after release. He also said it was already pulling in a “six figure sum in revenue”.

Acton Smith said this was Mind Candy shifting from a “one product company to a multi-product entertainment company.”

Knowles said: “We love Moshi – we want it to be an evergreen, animated series, with shorts and ongoing content.”

Acton Smith said: “We do have 8 Moshi apps and they get good download numbers, but it’s very difficult to commercialize kids products in the app store. Web subscription was better.”

“Moshi had a great run for 5 years. Some kids still love it but many have moved on to others things. Shift of web to mobile was a double hit for the company. We Still want to nurture it but it won’t generate same revenues,” he said.

Mind Candy now plans to have multiple brands with the first of these being World Of Warriors.

Working with publishing partner Penguin, Mind Candy has created a game of historically accurate characters with a lot of depth.

Warriors is also not just aimed at kids, “but at the whole family” and is a “new type of family franchise” says Acton Smith aimed at “hooking in Mum and Dad, Teens and Grandparents.”

So far the game has had 4.7 out of five stars reviews and over 50,000 reviews in total on the app store.

If Mind Candy get this right, PopJam will have enough ongoing popularity to spread knowledge of new Mind Candy products, and become a sort of distribution platform underneath, says Knowles.