Playco raises $100 million at $1 billion valuation for instant games across platforms

Playco has raised $100 million at a $1 billion valuation for instant games across a wide variety of platforms. It is partnering with multiple platforms. …

Meet one of gaming’s newest unicorns. Playco has raised $100 million at a $1 billion valuation for instant games across a wide variety of platforms.

That’s a lofty valuation for a company that is making a web browser gaming engine for instant games, which are playable on a web link and can run on any platform. The funding comes at an interesting time when the industry is discussing a “post-app store” world, and instant games may be the vessel for delivering games that have the potential to reach billions of people.

Sequoia Capital Global Equities and Mino Games founder Josh Buckley led the round, with participation from Sozo Ventures, Raymond Tonsing’s Caffeinated Capital, Keisuke Honda’s KSK Angel Fund, Taizo Son’s Mistletoe Singapore, Digital Garage, Will Smith’s Dreamers VC, and Makers Fund.

Targeted platforms include cloud streaming, Google Play Instant, iOS App Clips, Facebook Instant Games, Snapchat Minis, and others. Playco will make games, provide the backend infrastructure and analytics as well, and distribute the games across a number of instant-game platforms.

“There are a lot of different technologies that can power what an instant game is, whether it’s cloud streaming like xCloud or Google Stadia,” said CEO Michael Carter in an interview with GamesBeat. “It could be on the web using web assembly, or JavaScript. And there’s a new push with binary streaming, which is quite interesting with iOS App Clips, which comes with iOS 14, as well as Google Instant Play. They let you play a game before you’ve installed it.”

He added, “Every single major tech company — Microsoft, Facebook, Apple, and Google — is investing in this type of technology in a big way. And there’s no company that is focused on answering the question of what is the killer game for this new shift. We decided that we’d go after this as a content company.”

Playco is making instant games you can access via a link on any platform.

Above: Playco is making instant games you can access via a link on any platform.

Image Credit: Playco

Tokyo-based Playco has some high-profile leaders like Justin Waldron, a cofounder of Zynga; Carter, developer of the open-source connectivity protocol WebSocket; Takeshi Otsuka, a former director at DeNA; and Teddy Cross, an HTML5 gaming pioneer.

Playco’s expertise comes from the merger of Carter’s technology background in building new computing platforms and Waldron’s experience at Zynga in connecting players together in massive social gaming experiences like Zynga Poker. They met while Waldron was advising Carter on his previous company, Game Closure, which started on the same vision back in 2011.

“We want to expand the games market and have more people playing games,” Carter said. “That’s the mission of the company. We want to bring the world more closely together through play.”

Game Closure heritage

Game Closure went through Stanford University’s StartX student-led accelerator, and it was creating cross-platform instant games that did not require downloads. The company raised $12 million in 2012. But it was early, coming out at a time when some browsers did not support HTML5 or could not run it fast.

Game Closure continued until this year. But Carter and Waldron created a new company, acquired some tech and employees from Game Closure, and hired new people from the game industry. Carter said some Game Closure people decided to cash out and leave while some have joined Playco.

This time, the technology is more mature, with multiple ways to execute instant games from cloud streaming to App Clips on iOS (which distributes instant games on iMessage). Playco has partnerships with Facebook, Line Messenger, Rakuten Viber, and Snapchat. Playco also plans to build its own games.

“The business model is improved from a margin standpoint,” Carter said. “Instead of having to pay for marketing that goes through 20 clicks, here, you can get a user with one click. The user can also share the game. You have extremely low friction, and that can give you massive virality. It opens the market to people who have never played games before.”

App Store

Above: Are app stores the only way to reach gamers?

Image Credit: Apple

While some investors joined from Game Closure, most of the investors are new. The company has 75 employees, and many of them are making games.

Playco’s funding comes as digital gaming continues to explode with COVID-19 further accelerating the growth of the gaming category, with some analysts estimating increases of 75% in past months. Stuck at home, people are seeking real, tangible connections with others, and turning more and more to gaming.

But Playco sees a big hole in the gaming market that they are setting out to solve. Even though technology has created more ways for us to connect and play games together, the opposite is actually happening. The gaming market has grown more niche and app-based, Carter said.

Developers and platforms are more concerned about monetizing smaller hardcore audiences – playing to the millions instead of the potential billions. Moreover, app stores and gaming platforms are in essence creating walled gardens, with major entry hurdles (logins, downloads, etc.) that defeat the purpose of allowing people to instantly jump into a game and play together with friends and family, Carter said.

Above: Game Closure’s team back in 2012.

Image Credit: Game Closure

Playco wants to make instant games within widely appealing genres that can appeal to billions of people, with gameplay that is simple to pick up and play whether you’re 8 or 80, a hardcore gamer or casual player.

All players need to do is share a link and the game can be accessed instantly from anywhere. Playco sees the real opportunity in its games being able to live and thrive in the communications platforms people use every day — from Facebook or Instagram Messenger; WeChat and Snap; Tik Tok to Tinder; Zoom to House Party — where they can be instantly accessed to greatly enhance the fun, engagement, and connection people are having with others.

Carter said that advances in open web technology have made it possible for Playco to launch this gaming vision where games can work everywhere. Its introduction also comes at two big inflection points for the games industry. The concept of instant social gaming continues to be a rising trend, with the top social and gaming companies investing greatly in this sector.

The post-app store world

Meanwhile, the idea of a post-app store world is beginning to be a hot topic of conversation. Epic Games, for instance, is suing Apple for antitrust because of restrictions that Apple places on selling games in the App Store. Instant games, distributed via a weblink, can bypass the app stores.

“There’s a lot going on in the world right now, with these big platforms,” Carter said. “For us, one of the reasons we decided to start this company now is because we saw Apple and Google both embrace this concept. And before we felt it had been tangled up, where the idea that two people can easily play a game was somehow tied to how payment models work, and who controls the future of the platforms.”

He added, “That’s besides the point because this is actually really good for consumers, and it’s something that really should be a part of all ecosystems. The struggles will happen. The social networks are optimistic because they see how people can play games easily together. And Apple and Google really care about good consumer experiences. It’s going to be an interesting time, but for sure it’s a time when instant play is possible.”

Carter said the company has a big war chest and it can prove the thesis of instant play across a number of platforms and take advantage of the advances when they happen.

“This has been easy to ignore for a long time,” Waldron said. “Now companies are talking to each other about how it will all play out. The tech is at a place where it’s a real thing.”

One of the problems was that instant games were ad-based in the past, and they often prompted players to do downloads and make purchases with a downloaded game — after you click the screen a lot. In the future, it should be possible to make purchases within the instant game itself, Carter said. Apple’s App Clips, for instance, enables this now.

Carter said the company believes it can get a couple of games out this year, as it is happy with the prototypes it has been creating.

Recruiting a big team

Carter said the company was able to raise a lot of money because he and Waldron recruited some of the best talent known for their interest in instant games. By bringing those people under one roof, the investors got excited.

“We decided to be really aggressive at building the killer team,” Carter said.

Otsuka helped build DeNA’s popular Mobage game platform in Japan during his time there from 2005 to 2015. And Cross worked with Carter at Game Closure on HMTL5 gaming. Tom Fairfield, another Game Closure veteran, is joining Playco’s board.

Everwing is an Instant Game on Facebook.

Above: Everwing is an Instant Game on Facebook.

Image Credit: Facebook

The founders and executives are working from home in cities such as Seoul, Tokyo, San Francisco, and Los Angeles. Deyan Vitanov, previously the CEO of gaming company Chobolabs will be chief marketing officer, and Jimmy Griffith, creator of the instant game Everwing, will be a senior producer. That game got more than 380 million installs.

Why the timing is right

In the past, instant games were wildly successful in reach, but not so much in dollars generated. Now the companies involved are zeroing in on better business models.

“At some point, people will hit a switch and the $70 billion a year mobile gaming industry is going to move over to this,” Carter said.

As for being too early with Game Closure, Carter and Waldron said there were a lot of advantages in learning, particularly figuring out what category of games will do well.

“When we built Zynga Poker, it was magic, as you could land on a web page with your friends and just start playing,” Waldron said in an interview. “I was almost shocked at what we had done. I saw it wasn’t a single game company. It was a new way of building games.”

He noted that Zynga went public in 2011 when Facebook, its main platform at the time, had 200 million users. Now Facebook has 2.6 billion users, and the technology to reach people through instant games is a lot better. Meanwhile, the app store doesn’t have as much virality. To get new games to take off, game developers have to spend a lot of money on performance advertising to get new downloads.

Facebook will not take a 30 percent cut on Instant Games on Android.

Above: Facebook is among the companies working on instant games.

Image Credit: Facebook

“The channels got more and more expensive,” Waldron said. “And so you have to target people who are going to spend money. The mission isn’t to target the widest audience. You have to target a small group that spends money. Game companies are targeting 10 million or 100 million people. I feel what’s missing is the bigger picture here, where play is a human need. It’s something everybody wants to do with the people they care about. It’s something that can bring people closer together.”

Waldron believes the tech can also deliver more than just the retro look of games that came from the first decade of gaming. Playco hopes to tap the technology of 3D game engines via WebGL, cloud computing, and 5G networks to deliver interesting titles that are both fun and frictionless.

Carter added, “We now have access to the same underlying hardware that other platforms have. We can deliver quality. I do think there will still be a gap. It’s just not going to be a 40-year gap. We’ll try to figure out what is the new game nobody’s even thinking about. There’s more risk factors. But at the same time, it’s a much bigger opportunity.”

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