HTML Mobile Gaming Site Cellufun Is Now Tylted, Eyes Up “Substantial” Facebook Play, Virtual Goods, Ads

Facebook is banking a lot on the future of HTML5 and the idea of people going web-first instead of native-apps for their mobile content fixes, and today mobile gaming company Cellufun taking one step in its strategy to position itself as a key player in that space, too: it’s announcing that it is rebranding itself as Tylted.

Tylted — a name chosen from 30,000 entries in a competition run by Cellufun (the unnamed winner got $10,000) — says that strategy also includes the launch of a new ad platform, the expansion of its virtual good business, and — as you might expect from a social gaming company doing a lot of work in HTML — plans to do a whole lot more on Facebook’s mobile platform this calendar year.

The company today also launched a new game to kick off that virtual goods/advertising push: CuBug, it says, is a “Tetris-style” tile matching game where captured bugs “hatch into virtual features like wall papers that can be gifted to other players in rainbow colors.” As for advertising, Tylted gives brands the option of integrating in different parts of the game from chat rooms, to score comparisons, customized virtual goods and so on.

Founded back in 2005 way before our smartphone world was changed by the iPhone, Tylted today attracts some 10 million monthly unique users, with half a billion monthly page views covering 33 different casual and social games, with the most popular of these currently Pocket Beanie Babies, Mobile Wars and Vampires Rising.

The big task ahead is to make sure that it changes with the times: can it remain attractive to a base of consumers that are wowed by brands like Angry Birds and Draw Something? This, says CEO Lon Otremba, was part of the logic for rebranding: “When we wanted to take the company to the next level, and we thought people might think ‘Cellufun’ looked backward.”

Tylted’s revenues are currently split 50 from advertising and 50 percent from virtual goods — both areas that the company want to grow in future. And for what it’s worth, Otremba has a background that seems to lend itself well to the tasks ahead for Tylted: among his past roles, he was EVP for AOL’s interactive marketing group, where he led the strategy and operations for AOL’s advertising and e-commerce business. And he also has background in helping legacy companies turn themselves around: another past role was as CEO of Muzak, where he took the company best known for cheesy instrumental versions of well-known songs, and helped it pivot into one of the world’s largest providers of commercial music services and custom music programming.

In virtual goods, Otremba says these need to be appealing to a “wider base of users.” That speaks to a problem other gaming companies have also found, with Kongregate noting last month that in its high-ARPU games, typically two percent of users account for 40 percent of all in-game revenue, and 90 percent of revenues come from users who spend more than $100 in games.

For Tylted, that will mean focusing on virtual goods that it has seen already gain traction with more than just hardcore gamers: these areas include anonymous personal avatars, in-game chat, and the ability to share virtual currency with other users. Otremba also says the company is looking to sell more virtual items, the kinds of things a “more casual user might buy without taking away from the interest in virtual currency for more avid users.”

On Facebook, Otremba admits that for now the company has not “done much yet” but that it is “substantially increasing our involvement with Facebook” this calendar year. “Facebook’s overall strategy of embracing the mobile web is absolutely in line with us,” he says. That move may be about the launch of new games and “new ideas that could be more appropriate” to the social network, he says. Advertising, he says, is an “explosive” area that has been relatively untouched so far by his company.

It is in the process of building up a new ad sales force, including hiring some of his ex-colleagues from AOL. He says that Tylted’s unique selling point for Madison Avenue is that it has the scale that “would matter” to them. “To establish a direct relationship with those companies is a huge opportunity,” he says. While companies like Zynga and Rovio already offer advertising alongside their games,  what is perhaps notable here is that Tylted may be willing to go much further than bigger players in bending its own branding in favor of that of advertisers.

One of those areas where you can see advertisers potentially calling the shots more is in the area of apps. That’s an area that so far Tylted has steered away from — something Otremba notes as an advantage: “We have been somewhat immune from the discovery problem that has presented itself to app developers,” he says. “Our site is one of the busiest on the mobile web and is a destination in its own right.”

But he also says: “I don’t rule anything out on apps. I’m happy to say that we are looking. We are very opportunistic, and certain partners have asked us to do something different from what we’ve traditionally done.”

Tylted has had just under $8 million of backing to date and was profitable last year, but to accelerate growth the company has gone back into the red. “We could be immensely profitable right now if we chose not to invest in the future,” says Otremba. That may take the company into looking for more funding towards the end of this year.