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Zattikka's Matt Spall

Company's product development head talks digital monetisation models and the iPhone gold rush

For a company that was only formed this year, online and mobile gaming network Zattikka has made some bold moves. Last month the firm acquired Gimme5Games, gaining its development team and gaming portals in the process. Shortly afterwards, it revealed investment had been secured from Atomico Ventures - money that would be used to fast-track the fledgling firm's growth.

As Zattikka prepares to stamp its name across flash gaming communities and a range of digital and mobile platforms, Matt Spall, founder of Gimme5Games and now Zattikka's head of product development tells us how the company plans to do things - the best models for digital, why the PSPgo is looking attractive and why monetisation methods need to be less "grotesque".

Q: First off, could you give us an overview of the Zattikka business - its aims and where it is at the moment?

Matt Spall: I'm coming very much from the product side of the business, so this is my viewpoint from that side. Right now, the focus of the company is kind of two-fold - they're very closely connected to each other. We are producing game content that's specifically designed for online and downloadable play - so no focus on retail or boxes or any of that. But what's important for the business is that we take a very joined up approach.

One of the things that I did - the focus in the last few years - was to make sure that we produced product in the market space that expects that sort of product. So you don't produce a cartoon-based children's game for a market that's predominantly filled up with adults and stuff like that. We're thinking about which formats we take product to. What that means is that the initial approach will be to produce Flash content, initially downloadable and freemium content through the portal and portals that the company is generating. So it bought Gimme5Games, which is a portal that carries a lot of third-party content but also a lot of its own IP content and will continue to produce content in that market but also to then produce portals and places to go for different sectors of the market space.

Gimme5Games is a very family-focused site so that means you can't have very violent products on there, or stuff with bad language, or questionable content. The approach would then be to produce another site, Bad Hed, which we've talked about, which is very much aimed at the blood and guts market, so a younger more male market with darker and more action-orientated content. And then, off the back of those, what we're then looking at is taking the IP and the kind of games we pick up through those services and take them to other content platforms.

Q: You've just announced you've received investment from Atomico Ventures. What's that money going to be spent on?

Matt Spall: The initial focus on the company is to continue to grow, and what we're doing now, which is to grow the free and premium content online and also to expand into the smartphone markets. So we're already working on a couple of iPhone products and we've got a Blackberry game on the way.

Q: Do you know if that growth is going to be fuelled by further acquisitions? (Spall's own company, Gimme5Games was Zattikka's first purchase last month)

Matt Spall: Yes, beyond the blend of videogame and internet platform and mobile stuff that we're working on right now the company is targeting a fast-track growth through acquisition long term.

Q: And are you currently working with third-parties outside of Zattikka?

Matt Spall: Yes, that's one of the things that we do through Gimme5. Gimme5 has a kind of internal remit to release a game every week and there's no way we can do that through internal. So what we're doing is that we have a traffic growth strategy that's around distribution of existing content, so we go out and we work with a lot of developers that we've got relationships with from the past, look at the products they're working on now and then sign up through a sponsorship system. The strategy is to release a game weekly in order to grow the profile and the traffic of the site.

Q: You mentioned you're also looking to put IPs onto other mobile formats. Are there any ones that stand out as most exciting for the company? Are you looking to bring products onto iPhone for instance?

Matt Spall: Oh yes, we've got iPhone games in development now that are built on the IP that we already own. This is where the very joined up strategy comes in, in that as we release product online we'll look to release on complimentary formats. It's the classic videogame strategy of releasing multiformat games so when you market it once, you're marketing it for multiple formats anyway.

The iPhone, obviously, is the most exciting right now. In relation to digital formats the PSPgo is very interesting but it's yet to prove its market space. Similarly DSiWare. We're not ignoring them, we just haven't had time to look at them yet – our focus has been on iPhone and we've also started looking very closely at Blackberry, because there's so many of the things. But again, it's about being very careful about what games you put on what format. There's no point doing a cutesy platform game for the Blackberry market because they just don't want it, they don't get it.

Q: You mentioned PSPgo – so you're going to be keeping an eye on what level of popularity Minis achieve?

Matt Spall: Absolutely. The thing about the PSPgo and the PSP market is there are 50 million PSPs. The PSPgo isn't a new format, it's an extension of the PSP brand. It just doesn't have a UMD drive in it. You get your games on PSP the same way you do on PSPgo.

Q: The markets Zattikka is it - mobile, social and flash gaming - are obviously growing in popularity and awareness, and hence getting more crowded. How do you plan to compete?

Matt Spall: On quality really. It's quality and experience. It's what we think we've got over everybody else. It's the heritage of the people who started the company, so Tim [Chaney - CEO] is from Virgin Games, and that wasn't a small company, and then my background is 20 years in videogames – I'm not coming at it from a different world where it might be a marketing thing – Flash for me has always been a games format and casual has always been a proper games format.

It's about the quality and it's about the market. And also it's addressing the correct market space. The thing I'm going to keep banging on about I'm afraid is that as long as you're producing content that's directly aimed at the market space that you're attacking, then you tend to stand slightly above everybody else's product.

Q: The iPhone is clearly a popular market for developers to come into...

Matt Spall: There's a gold rush going on, definitely.

Q: So do you think because you're coming at it from a traditional gaming background and with so much experience, that gives you an edge?

Matt Spall: I think it's really important. It's also knowing how to talk about the product. Getting a product to market isn't just a matter of releasing it. Actually making a game and getting it on somewhere, on the iPhone or anywhere else, is only half the story. Getting people to know about it is also a very important factor associated with it. And the nature of videogame marketing I think maps across whichever format that you're working in.

So really letting people know about the quality and using the network of press and marketing and general announcement network that comes along with the traditional videogames market applies. And a lot of people just don't know how to use it.

Q: Big download figures are often bandied about for iPhone apps and online game downloads, but profit isn't mentioned as much. How are you monetising the visitors to your sites and the people downloading your games?

Matt Spall: There are a lot of ways you can do it. There's the obvious, which is advertising, but no one's going to get rich on site advertising. So there's a lot that we've been doing and work we are doing in relation to in-app monetisation. So that's through things like selling levels, and doing a lot of the things that guys like Playfish and Zynga are doing, where you've got game upgrades and items but also, on a more social level, we're also looking at options in relation to meta-items and site upgrades and game upgrades. There's a whole broad range.

Q: So this micro-transaction model is the one you see as the best right now and in the future?

Matt Spall: I think so, but I also think there's a lot of work to be done in relation to how you present that to the user. Right now it can be a little bit grotesque – like when you get products where people just say, alright well you've played ten levels now, if you want the rest of the game you're going to have to pay. That's a bit unfair. I've experimented with that in the past, and it doesn't really work. So really you need to give the user a product that essentially is good in the first place but will be better if they invest in it.

Q: Do you see the model working on iPhone as well now that feature has been enabled?

Matt Spall: I think we've got to do some experimentation on that. There doesn't seem to be a huge number of people on iPhone that are actually using that service. Because it very much depends on how you run it as well and what type of product you've got.

Again, game upgrades, things like buying extra levels and stuff, I think has the same problem – if someone buys your game and then halfway through the game you charge them for more game it's like going to the cinema and watching half the film and then having to pay to see the rest of it. It's not necessarily the case because what they're getting for their money is what you've delivered to them and then what the user pays for afterwards is in addition and it costs more money to make it. But unfortunately with things like an upgrade halfway through the game it feels a bit jarring as a user.

Then you can go down a lot of routes like allowing people to buy stuff that makes their game more interesting, so that might be a different suit for their character or a cheat mode – things that enhance the gameplay rather than extend the game as it stands. We still need to do this experimentation really. To use the film model again, you wouldn't expect to pay halfway through the film to see the end of the film, but you probably wouldn't mind paying to go and see the sequel – which is new content, essentially a new product.

Q: You've come from a gaming background making regular retail products to setting up your own company that uses this new distribution method that is really still evolving and experimenting. What have been the challenges in doing that?

Matt Spall: It's working out how to monetise it – that's always been the issue. I've kind of made a career in working in new business models. I was in mobile gaming before it became big and was trying to work out how to do that. I've been working on online games and online monetisation models for a couple of years now, and the challenge is really finding the ways and discovering new business models. There are a bunch that are already established but we're just looking for new ones.

Look at the way that a lot of other media has gone. Things like TV media is switching very much to a user-centric consumer model in that – I use myself as an example – I don't really watch much television as in I don't go and watch TV when it's on. TV programmes are shown to me when I'm ready to see them now. So with BBC iPlayer and all of the broadcast channels now you can watch anything that's been on them pretty much any time that you like. Certainly after it's been on anyway. So essentially what you've got is a video recorder that records everything that's ever on and then you just pick whatever you like.

And that digital delivery model is challenging a lot of people. If you look at ITV's model now – a lot of the stuff they do on broadcast, they're actually driving users online now to consume additional content. So things like Coronation Street is a good example – at the beginning and the end they send you to ITV.com to watch more raunchy scenes, or additional scenes or ones they can't broadcast. And what they're doing is driving you online to look at more content that carries more advertising, which is their model. But they're finding new ways to deliver that. I think what they're doing is trying to discover new business models for ways of creating more broadcast content. And that's really what we're doing as well. But what we've got to do is take apart the old model and try to work out how it works the new way.

There are people that are doing it very well already – again people like Playfish and Zynga – who have got the micro-transaction model of you earning bits of money and then spending that money within the product, but what they do is calculate it very carefully so it always tends towards zero so you always get to a point where you run out of money and you top it up if you want some more, or you have to work at it. And working at it tends to mean you're going to see more advertising.

Q: So you don't worry that digital distribution could get a bit lost – that people know there's money to be made but can't all manage to monetise all this content they're putting out there for users?

Matt Spall: No, I don't worry about it. I firmly believe that it's the next step. I absolutely firmly believe that this is the way that it's going to go.

There is a middle ground I think. It's going to be a while I think before a 2-3GB game is delivered over the air to a console. Harddrive technology is getting cheap, but how long it's going to take a 1 terabyte drive turn up in a console I don't know, because that's still a substantially expensive part of that piece of electronics. When you get a game delivered on a dual layer DVD that's 6-7GB, that's still a great big download.

The people that work in the games industry might have a 20MB internet connection at home, but even with that it would probably still be quicker for me to walk down to the shop and buy it. It's convenience for the user. Which is why probably the hardcore market might be the one that props up the retail. I seriously don't believe that the next generation of consoles will have standard media delivery any more. They'll probably have DVD slots in them but I don't necessarily believe that that's the way that games will be delivered.

Especially when you consider all the noise that's going on around things like OnLive and Gaikai, it's switching to this cloud computing model where the power has been unloaded away from the home. You're getting these phenomenally powerful, essentially super computers, in people's homes.

The choice has become quite hard for a user. They're like, what do I buy a PS3 or an Xbox 360? I know if I buy an Xbox 360 there are games only available for that console. If the next round of hardware that comes out is based around things like OnLive and Gaikai and things like that, you start to end up with a model that's very similar to Freeview and Sky now where you can still consume everything on both of those formats.

Q: Which is what a lot of social gaming companies say is so important about their games – that anyone can connect with any of their friends – that they don't all have to own the same console to do so.

Matt Spall: Exactly, and what it comes down to is that it switches the model from a hardware manufacturer trying to sell you their hardware to a manufacturer of some piece of equipment selling you a network, and it becomes a service that's about things that you're part of. So essentially it's a way of connecting your circle of friends.

Matt Spallis head of product development at Zattikka. Interview by Kath Brice.

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