The success of web-based games in the past couple of years - and particularly newer social network platforms - makes it easy to forget that this was once a frontier, with large potential numbers but significant challenges around turning those users into revenue streams.
Once company that set up in the midst of industry transition halfway through the decade was Owlient, focusing on a handful of products and seeing some success with micro-transactions long before they became sexy in the Western markets.
Here, CEO Olivier Issaly looks back over the company's history, explains why it's found that success, and why it's in a great position going into 2011.
Q: Owlient started as a business five years ago - tell us a bit about the journey since then.
Olivier Issaly: Well, Owlient started as a company with the game Howrse.com - game about raising horses, where you can manage a horse centre. We created the company when we were students and the game took off really from day one, and grew daily.
It enabled us to bootstrap the company for three years - 20 people and about EUR 1 million in revenue - and then we raised EUR 3 million in venture capital from Innovacom, to help us go further in the internationalisation process, and to launch a new product line and new browser games. That's how it started.
Q: A lot of browser game companies seem to find success by publishing lots of games - 40 or 50, for example. You've decided to focus on one specific market, with three games - what was the reasoning behind that? Does it enable you to provide deeper experiences?
Olivier Issaly: Yes, we try to both develop games with a deep design that are highly strategic, and also to focus a lot on the community building and management. That's really the founding value of the company - creating community and animating it. We want to let it live for as long as possible.
For example, this summer we organised the Howrse Summer Tour, going to 14 cities - five cities in France, six in Germany. We went to London, and two cities in the US, and the community managers were in the cities to meet around 50 players in each location.
It's really important to strengthen the community, so we do a lot of focus on that area - which is probably why we haven't made as many games. So far we're focused on these three games, and specifically the Howrse game, and we're developing it with some physical products. We created two series' of collectible cards that you can buy and play with, and we've also designed a board game for horse-riding. There was also a book in France.
Q: What's the demographic you're targeting?
Olivier Issaly: It's almost the same demographic for all three games - about 80 per cent of the audience is between 12 and 20 years old, and 90 per cent is female.
Q: When you launched, in 2005, the landscape for games - particularly online - was very different. What did people tell you about your plans? Were they sceptical over the micro-transaction business model, or the target market?
Olivier Issaly: It was a funny time - it was the Web 2.0 bubble. When we explained at the time that we were generating lots of revenue from people who were paying for a product, people were looking at it and asking us how we were doing it. They wanted to know how we were getting young girls to pay by SMS, or would they pay by credit card, and so on.
Still today it's not very common in the web industry, so I think people were quite interested, and surprised that it was possible to buy items for virtual stuff - but they don't really buy it because it's virtual, they buy it for emotion, for what it represents. It gives the buyer some visibility in the community, so it's really the social interaction that you have to understand.
The second thing is that back in 2005, when I told the games industry that we had 90 per cent women, people said "Wow!" There weren't a lot of game products that were targeting that audience - some big players started, such as Ubisoft with some products, but there weren't a lot.
Now it's more common, with Facebook and social games - but five years ago it was really uncommon.
Q: And what kinds of numbers are you pulling in now at Howrse.com?
Olivier Issaly: It's got 16 million registered users over the last five years. Today it has 1.6 million monthly active users on the web - they're more sticky than some social networks I think.
Q: Speaking of Facebook, you're just launching a version of Howrse.com there - but you don't see that as the primary business, more of a way to channel traffic back to your own site?
Olivier Issaly: I think for us Facebook should be a way to generate more traffic. If we started from scratch today we'd have no choose but to launch with Facebook, which is obviously possible now - but not as easy for monetisation given the cost of customer acquisition... and the rise of Facebook Credits and the famous 30 per cent.
Today we have the chance - we know how to monetise the audience on the web, via our own website and payment gateways, our own database and so on. Our first objective therefore is to generate traffic for the website - if we can generate revenue, even better.
Q: So how does the next 12 months look for you guys?
Olivier Issaly: Well, going back to this year we've had a huge focus on internationalisation. We've launched six new international versions for the horse game, with two more yet to launch. Right now we have 11 versions of the game.
Next year we will continue on that path, probably with Asian launches - we'll also be focusing on multiple platforms. The web will still be our main platform, but we want to develop connections with Facebook and mobile.
And then we're also rolling out a new product next year - number four.
Q: Asia must be a very exciting potential market, given the region's history with micro-transactions?
Olivier Issaly: Yes, that was where it was all born.
Olivier Issaly is CEO of Owlient. Interview by Phil Elliott.