A series looking at the unique challenges facing Canada's midmarket companies and how they innovate, stay competitive and grow. This piece looks at a Video-game maker that lets users keep playing from device to device and has many games in its arsenal. But can it compete against larger rivals?
Chris Ye makes video games, but he’s really in the business of seamlessness.
In five years, his company Uken Studios Inc. has grown from two to 72 people as it made its name building games that work across mobile devices and social media, letting players pick up where they left off no matter which platform is most handy. With games ranging from mafia role-players to bingo, Uken has built a millions-strong legion of devout fans whose in-game purchases have fuelled massive growth.
As a mid-sized studio, Uken has found itself in a sweet spot; it avoids the bureaucracy of larger firms and the heavy individual workloads small shops can bring. With dozens of developers and designers attached to each evolving title, the company is nimble enough to react to the shifting industry.
“We can take more chances and we can try to be a bit more innovative in the things that we’re working out,” says Mr. Ye, 27.
That freedom and flexibility has pushed Uken to 35 million game installs and more than 11,500 per cent growth over the past five years. As the company continues to add employees, Mr. Ye is mindful of the mid-sized shop’s strategic advantages: “We can put out game ideas that would otherwise immediately get rejected at other companies.”
Canada’s video game industry has moved beyond its nascent days, contributing as much as $2.3-billion to the economy each year, according to the Entertainment Software Association of Canada. While the majority of companies – 54 per cent – have 5 or fewer employees, nearly two-thirds of the 16,500 people employed in the industry work for larger firms.
That leaves a lot of ground for mid-sized companies such as Uken to win over gamers.
The first seeds of the company were planted in 2007, when Mr. Ye met his future co-founder Mark Lampert at a Facebook developer meet-up, soon after the social network opened up its development platform to third parties. At the time, “gifting” apps were in vogue, and, with an assist from snack-maker Nestle, the duo built a simple service where users could “gift” pixelated avatars of Kit Kats, Coffee Crisps and Smarties to their friends.
Users exchanged more than a million of these digitized snacks within a few months, putting a little bit of cash into the fresh-faced developers’ pockets. By then, though, Mr. Ye and Mr. Lampert recognized that gifts might not be a sustainable long-term business model.
“With any gifting app, engagement dies off – you send a couple of gifts and leave and there’s really not as much reason to come back,” Mr. Ye says. “It’s very viral, but there’s not a lot of long-term retention and engagement.
“So that’s how we got on to games.”
He and Mr. Lampert launched their first game, Superheroes Alliance, on Facebook in 2009, and Uken was born. They quickly began to expand beyond single platforms; Apple Inc.’s App Store had just launched, and the co-founders realized they could get their product on mobile phones, too, from iPhone to BlackBerry to Android.
Soon, Uken’s games were getting attention for their seamless experiences, allowing users to move from mobile device to computer and back again – perfect for someone who, say, plays while taking transit home after work then sits down at the computer to continue.
“That was our initial value prop, in terms of being truly cross-platform,” Mr. Ye says. Uken was one of the first studios to design games this way. “A lot of companies have since bridged that gap.”
Today, Uken offers a suite of nine games across different platforms, including role-players such as Crime Inc. and Age of Legends, and the immensely popular Bingo Pop. The company’s 10th game, Titans, comes out in January. Most of Uken’s revenue comes from purchases players make within the games. Only about 3 per cent of revenue comes from ads, which Mr. Ye prefers to steer away from.
The studio’s role-playing games, in particular, are known for building a strong sense of community among players, packing in strong replay value. This social-focused design is reflected in the company makeup: 20 per cent of its employees are in charge of community management and quality assurance.
Another 45 per cent are programmers, and the rest largely handle design. Uken tries to hire people who are passionate about games, luring top talent away from more lucrative tech firms such as Google and Facebook with competitive salaries, flexible time-away programs and a gaming-centric work culture. “You’re creating something that really resonates with other people, and providing some entertainment or relief,” Mr. Ye says. “I think that’s really rewarding for the folks who come and work here.”
Uken competes against much larger studios, such as King Digital Entertainment plc and publicly traded Zynga Inc., for digital dominance. But Mr. Ye believes that his slimmer, more flexible firm has competitive advantages. “Those guys have to perform, and it’s really tough in a hit-driven industry to keep putting out hits,” he says.
It can be an uphill battle against those firms, though, as smaller firms such as Uken compete with immensely popular titles such as King Digital Entertainment’s Candy Crush, says Kenneth Goh, an assistant professor of organizational behaviour at the University of Western Ontario’s Ivey Business School. These companies can also break down into smaller teams to work on more projects at once, getting product iterations out faster – all while having the benefit of more investment.
But it’s easier for larger firms to get stuck in a rut, too, as a legacy of hits can prevent them from experimenting with new ideas. “When the marketplace changes, it can be really difficult for them to change,” says Dr. Goh, who studied innovation in video-game companies as part of his PhD. Smaller companies, such as Uken, meanwhile, “can run with one idea now, and if it doesn’t work, there’s less baggage to switch to something else.”
Mr. Ye says King’s dependence on a single title, Candy Crush, for much of its reputation and revenue, is a troublesome tactic: If Candy Crush’s star fades, so, too, could the company. His approach to Uken is to provide a suite of offerings, regularly revised and updated to respond to the marketplace.
With those multiple products and only a few dozen employees, “it’s still very hard to manage, for sure,” he says. Still, it’s worth it. “It’s crazy here every day, but it’s a lot of fun.”