Netlog, the company that sagely changed its name from Facebox in 2007, is taking this gaming thing pretty seriously. While the bread and butter of the Belgium-based operation is still social— with 69 million members on its youth-centric social network— gaming is now nearly 20% of revenues and climbing, according to Netlog founder, Lorenz Bogaert.
Twenty percent is fairly significant when you consider that its gaming operation, Gatcha!, launched just 8 months ago. At its core, Gatcha! is a gaming distribution platform. The service creates its own in-house games but the bulk of its business is helping other developers add social layers to their games and achieve distribution across the major social networks such as Facebook and Netlog. Gatcha! gets a cut of the developer’s advertising deals and those highly lucrative micro-transactions, the developers get Gatcha!’s support and easy entry into Europe’s market— Bogaert says they can get a developer in front of a large European audience within 24 hours.
Gatcha! has been working with several European-based game developers like Sakari Games and Electronic Arts’ Playfish and now, Bogaert says, they’re ready to put more muscle in the US market. He has no desire to tackle America’s social network market with Netlog, but he sees real opportunity for gaming partnerships. Last week, Bogaert flew to San Francisco to meet with a few key players in the industry and to look into opening a new office dedicated to Gatcha! and gaming (this will be Netlog’s first US office). He hasn’t signed a lease yet, but he says don’t be surprised if you hear of an announcement soon.
That’s not to say that Netlog is giving up on Netlog, its social website. The company is planning 40-50 new hires this year, half will go to Gatcha! and the other half will be dedicated to expanding the social network (a sort of Euro-heavy Myspace, geared towards the 14-24 demographic). Bogaert understands he’s in a challenging field— lots of big players (like Facebook) are gaining traction abroad and by targeting a younger audience, his typical user is only engaged for a certain amount of time before s/he graduates to a different social network. He’s not ready to broaden the appeal of Netlog just yet (although he’s looking at options), but Bogaert is planning to aggressively hit his key European markets and double-up efforts in the Middle East.
Since 60% of Netlog’s traffic comes from less than a dozen countries— most significantly from France, Austria, Switzerland, Italy, Belgium, Netherlands, Luxembourg— the company plans to change its strategy this year by shifting resources to the most important markets. That means new offices in Switzerland, Austria, Germany, France and Milan (which is already in the opening phase).
However, the question I find really interesting here is: what Netlog will be able to do in the Middle East? The network is getting a lot of new users from Saudi Arabia and Egypt, with the number of monthly uniques from the Middle East growing 5 to 10% per month. That translates to roughly 2 million uniques per month. Yes, it’s still a small fraction of Netlog’s total uniques (roughly 30 million per month). but 5-10% is an exciting pace, compared to Europe/s more languid 1-2%. Bogaert seems to think so, Netlog has plans to open a Dubai office very soon.
Our video interviews with Bogaert below: