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Bigpoint's Heiko Hubertz

The CEO on growth and over-valuation in the browser and free-to-play markets

German online publisher Bigpoint is growing significantly in an expanding market, striking big-name deals with SyFy, Universal and Playboy, and at the same time making itself more attractive to independent developers through its self-publishing operation DevLounge.

GamesIndustry.biz recently sat down with CEO Heiko Hubertz to catch up with the company and to find out how it can protecting its interests in the web space, why it's approaching console developers for acquisition, and where it sees further growth in the next two years.

GamesIndustry.biz A couple of weeks ago you announced significant changes to Bigpoint's publishing venture DevLounge, flipping the revenue share 70/30 in favour of the developers - what was the reasoning behind that?
Heiko Hubertz

We started DevLounge around a year ago and it was more of an experiment to see how it would work, what were the needs of the developers, what are they asking for, do they want community management etcetera? We've seen from that the biggest need they have is users. They just want community management and users. So as that was the case we don't need all the other resources, and we can give developers a much higher share because we don't need so many people to manage it. We've changed a lot of the API so it's an easy integration for developers and we've changed the business model - we now give 70 per cent to the developers and we only keep 30 per cent.

They get access to our 130 million user base and access to all our media partners. We have around 1000 media partners and they can choose to promote particular games, so I think we have a very interesting business model for developers. We are also not signing any exclusive agreements so you can work with any other portals, or host on your own website. It's just an additional channel where developers only have to pay 30 per cent of revenues.

GamesIndustry.biz How conscious were you of bringing that inline with the deals offered by Apple and Facebook?
Heiko Hubertz

We've had developers in the past who were happy to just get 30 per cent and with that they got more resources from us. But they've now told us they don't need so much from us so we're okay with splitting it 70/30 in favour of the developers. We now compare with Facebook and it's the same with Apple. We give developers the payment system and the user base on a non-exclusive basis and it just makes more sense that way.

GamesIndustry.biz Looking at the portfolio of Bigpoint games, you seem to be pushing higher in terms of quality and production values. Would you say you're looking to rival that quality bar associated with home console games?
Heiko Hubertz

Yes, because people want to play wherever they are an at any time. With console games you can only play at home in your living room with a HD TV and a PlayStation or Xbox and it costs a lot of money to play quality games. In a browser you can play on any PC and the same quality will be possible in the future on the iPad. Why not create these quality hardcore games for PC users or for any device? We don't know how big yet the market can be, but we believe in it very strongly and that's also why we're developing many games at the same time. We want the same quality standard across our games that launch in the next six to twelve months.

GamesIndustry.biz Is there a danger of ostracising smaller developers who can't afford to create these high-quality titles, and push them out of the market?
Heiko Hubertz

It's not necessary. There's still a need for gameplay over high-quality graphics. That's still very important. Our game Farmarama is very successful. It's not something that has 3D technology, it's a simple Flash game and we have millions of active users generating really good revenues. And that was much cheaper to develop that game than something like Battlestar Galactica. There's a market for both areas, for really high quality games and a market for casual Flash games.

GamesIndustry.biz There's a lot of consolidation and acquisition in the web, browser, online and social space, and a lot of money being thrown around - what's you're perception of that and do you see it slowing down in the next 12 months?
Heiko Hubertz

You're absolutely right and at the moment it is a crazy time in the online space. There are many companies that have paid crazy valuations, just look at the Disney and Playdom acquisition, that was a crazy valuation from my point of view.

But we're also in the same segment and if you want to grow at the same speed as your competitors you cannot only grow organically, you have to buy other companies. We did it last year with smaller acquisitions in Germany and this year we did one bigger acquisition with Radon Labs. We are looking still for other targets, so M&A is definitely one part of our strategy but we are not paying any crazy valuations. We want to only focus on high quality development resources or companies that are already established in the online market.

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Matt Martin

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Matt Martin joined GamesIndustry in 2006 and was made editor of the site in 2008. With over ten years experience in journalism, he has written for multiple trade, consumer, contract and business-to-business publications in the games, retail and technology sectors.