It's Good to Talk

Formed in 2006, Palringo was originally conceived as a simple internal communications tool. In fact, the then 21-year old founder Martin Rosinski built it for his father's engineering company as a way to log issues easily, focusing on compartmentalised chat groups which allowed for the convenient sharing of information. Five years later, a $650,000 seed funding saw the app go commercial, attracting some more big name corporate clients. Now, it's positioning itself as the European alternative to Line - a messaging service, social network and open-platform gaming service, which sources 85 per cent of all revenues from a gaming market.

"It all sort of originated because Palringo had to make a pivot, to become more of a white label messaging solution, which you could log into and talk to someone on MSN or Yahoo etc, like a mediation tool," Palringo's CMO Magnus Alm explains to me. "But we realised that we really wanted more loyal users who came for the Palringo app itself. Then, we found that we actually already had that, that there was a core layer of users who had stopped using it as a mediating layer and came for the app itself. So we were able to use those users as a sort of test group and really focus on them - to prove our model and stand on our own two feet. It really took off from that, it grew exponentially."

The exponential growth he's talking about all came about because the app was performing so well in certain sectors that some services had banned it, fearing its impact on their own customer bases. Because of its convenience and simplicity, Palringo was fast becoming the chat app of choice for hardcore gamers: guilds, clans and looser groups of friends were using it as a miniature social network to discuss their hobby.

"We realised that people from all over the world were using Palringo to discuss games," says Alm. "Things like iMobster and Clash of Clans - they were gathering their clans there to discuss things like raids, strategies, stuff like that. Our CEO did some research on it and found that some of the larger social game companies had banned Palringo from their forums, you couldn't post about it there. They'd realised that people were leaving their forums to come to us to talk about their games because Palringo was cross platform on PC, Mac, iOS and Android. Easy to access, handy."

Finding your product banned anywhere is generally not a positive thing, yet for Palringo, it opened a door to an entirely new market - one which now constitutes the foundation of its business. Discovering that they already had a loyal, tightly-targeted gaming audience, Palringo reconsidered the core functions of the entire business, embracing the existing communities which came to discuss games every day, and building them a better service by implementing games of their own. The first step was simple, chat-based games which integrated directly into the chat rooms themselves, but the company's plans are bigger than that.

"Two of the most popular things that people do on their phones are social networking and gaming," says Alm. "If you can combine those two it should be a pretty potent mix. So Palringo started having Friday hackathons, trying to get rough games together for release. The business model was that if you buy a game, everyone in your group can play - sort of like buying a round of beers in a bar. Gifting is a big part of our community - you can also gift the in-chat games, or Bots as we call them.

"The Bots are simple, things like hangman, but there was a lot of interest. Then they actually localised them and the revenues soared. After that they realised that this was the future for Palringo, focusing on games, making sure they catered for those users"

"The Bots are simple, things like hangman, but there was a lot of interest. Then they actually localised them and the revenues soared. After that they realised that this was the future for Palringo, focusing on games, making sure they catered for those users. They saw this as a two-fold way forward: developing more in-depth apps for a richer, deeper experience, made by game developers; and also doing native games which connected to the Palringo platform.

"Palringo is innovating within a chat app, the ways you can actually play within a chat complex. That's where Elina (Arponen) and Tribe (acquired in May) come into the picture, so it made complete sense to acquire them and their technology. Whereas my company Free Lunch Design (acquired by Palringo last year) is more involved in the external games. In the coming years, we'll see more complex games in the chat and more external games. We're building an SDK so we hope to become an open platform where devs can pick up the SDK and integrate games into the chat component. It should be of huge benefit to them, because we can offer those developers a lot of users if they integrate into our platform."

"The ultimate goal is that you download or come to Palringo because there are cool games there, our fishing game is cool for example, but it's not going to do that. It's a long-term goal"

"We hear a lot of comparisons to Line," adds Elina Arponen. "Most of the chat apps concentrate on communicating with existing friends, but with Palringo we have communities where you can play games together with people you don't know. Plus, with the in-chat games you don't even need the separate apps, so we feel we've really enhanced that. Messaging is becoming a platform of its own - that's very recent. Hangman and fishing have been some of the biggest successes so far. Hangman, especially, is very much a group effort. We're working on new ways to implement multiplayer, too, perhaps asymmetric. We're also working on things with deeper gameplay, maybe even story-based games, perhaps some graphical elements. We want to avoid too much graphical complexity, though, so we don't bloat the size of the app. What we've been doing with the multiplayer so far is building things where the chatting is sort of part of the gameplay, where you're building tactics or negotiating.

"The ultimate goal is that you download or come to Palringo because there are cool games there, our fishing game is cool for example, but it's not going to do that. It's a long-term goal."

Whilst the Tribe office in Helsinki handles the chat games, Alm's team is developing the external apps: games which are available separately in the App Store, but which are built with Palringo functionality and connectivity firmly in mind. I'm shown three during our demo: a Clans-like, a Mafia Wars-like and a match three title. They're polished and well produced but stick tightly to type. I ask Alm if there's going to be more diversity as time goes on.

"We've just started to build the SDK," he says. "We're looking at various different audiences within our current community. We've got a match-three game and some others to start with. What we want are top-notch game play experiences, but it's important for us to not venture too far out into the experimental side."

But every app has to pay the piper, and just because the games developed for the Palringo eco-system work better when connected to the chat app, Doesn't mean Apple will forgo their cut. Will Palringo also be taking a percentage? If so, will the allure of an established audience be enough to attract developers? Alm says it's "too early to speculate" on the finer points of the business model, promising instead that "it has to make sense for the developers." It'll likely be a fine line to tread, but with user acquisition costs spiralling and the potential benefits of this sort of platform model already ably exemplified by services like Cacao and Line, the firm might well be on to something.