Kongregate: a Next Generation Web Games Marketplace

Kongregate is an alpha stage online gaming site that will let users upload games they have built, charge users for premium play or features with a one click payment system and share revenues with the site from premium payment and advertisements. The company aims to take the site live just after the holiday season.

Co founders Jim and Emily Greer say they expect to get a term sheet for a seed investment from an unnameable tier A VC by the end of this week. I can see why – I think it looks like a solid business. Jim Greer has ten years of experience in the gaming industry, most recently as Technical Director for EA’s successful web gaming site Pogo.com. Kongregate has a very interesting model with a tech-experienced executive team and a well put together alpha site.

The basis of the site is the user generated content – Kongregate co-founder Jim Greer says he is working to build a brand like YouTube (Who isn’t? But his point is valid here) where visitors to the site don’t expect every game available to be good – but know that the ones highlighted on the front page will be.

Kongregate believes that status plus community form the kind of attainable but long term goals that compel committed use by game players. That makes sense and sounds like the basis for everything from gaming in general to Kathy Sierra’s “committing passionate users.” For that reason they will include inline chat, a metagame point system to track general prestige in all the games, Individual challenges, league play and loyalty points for contributing to the site. Those points will be redeemable in game or with brick and mortar advertising partners.

Revenue sharing

Unlike other sites where game creators share their work for prestige alone, the revenue split at Kongregate is compelling. Competitor Newgrounds, for example, emphasizes that contributers are likely to gain big traffic spikes back to their own sites.

Kongregate will offer between 25% and 50% of ad revenue to game contributers, depending on how closely and exclusively the game is integrated into the Kongregate site. 80% of revenue from in-game microtransactions will go to the game creator.

All of this sounds like a very compelling package. With backing by a prominent VC Kongregate could go all the further. The timing is definitely right. From Second Life crossing the one million user mark to media like Infoworld highlighting the connection between gaming and business, game playing is increasingly being seen as far more than a niche market. User generated media content is now widely seen as having value. I know I enjoyed playing some of the games on the Kongregate site and I expect that many more people will in the future.