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What Subscription Apps Can Learn About Monetization From Gaming — Mathias Gredal Nørvig, Subway Surfers
00:48:31
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- [00:01]
A
Welcome to the Sub Club Podcast, a show dedicated to the best practices for building and growing app businesses. We sit down with the entrepreneurs, investors and builders behind the most successful apps in the world to learn from their successes and failures. Sub Club is brought to you by RevenueCat. Thousands of the world's best apps trust RevenueCat to power in app purchases, manage customers, and grow revenue across iOS, Android and the web. You can learn more@revenuecat.com let's get into the show. Hello, I'm your host David Barnard and with me today, revenuecat CEO Jacob Biting. Our guest today is Matthias Gradle Norvig, the CEO of Sybo, the game studio behind Subway Surfers, the the most downloaded mobile game of all time with over 4.5 billion lifetime downloads. On the podcast, we talk with Matthias about building the Subway Surfers marketing machine on salaries, not ad spend, leaving money on the table to protect player experience and why more apps should try rewarded ads, season passes and other tactics from gaming. Hey Matthias, thanks so much for joining us on the podcast today.
- [01:23]
B
Hey guys, I'm happy to join.
- [01:25]
A
And Jacob, nice to have you as well.
- [01:27]
C
I'm here. Let's talk subway surfers.
- [01:30]
A
Yes, two CEOs on the podcast. These are always fun for me, getting to be a fly on the wall.
- [01:35]
C
If it happens like usual, I'll sideline David and just ask you a bunch of tactical questions for my own education, but I'll try not to today.
- [01:43]
A
Awesome. I want to kick things off with the longevity of Subway Surfers. I think everybody in our audience will know what Subway Surfers is, so we don't need to talk about that specifically, but it is very uni in how long it's been popular. I mean, I think you just celebrated 4.5 billion downloads, which is just insane. And so I'd love to hear from you what you think has contributed to that. I mean this is what all subscription apps would love to have an all trails kind of thing where decades duolingo you want to be this long lived, keep subscribers for a long time, keep people active. So I think there's a lot to learn from the longevity of Subway Surfers.
- [02:25]
B
Yeah, I think we came at the right time. There was definitely both a timing aspect where Bode and Sylvester saw the need for next generation Runner. So Temple Run came out and designed the genre but Sylvester and Boddy perfected it. So we can see that not only are 4.5 billion downloads and of course half of those are reinstalls approximately we could see that their formula of the three lane mechanics the swipes, the curvy sort of lift leaning horizon, all those things have become the formula for all other runners. So I think combined more than 15 billion downloads on that formula.
- [03:04]
A
And I think, you know, in recent years, you can't hardly get on TikTok without seeing subway surfers be part of these viral TikToks. How has that played into and what other strategies have you worked on over the years to kind of keep it fresh and relevant?
- [03:23]
B
I think early on the guys came up with the world tour, which was a way of every three weeks going to a new part of the world and inspiring people either to see their own hometown or a nearby town or a part of the world they hadn't traveled to. So I think that helped us keep fresh. And then I think the intuitive gameplay means that new players coming in because you have to imagine that in 2012 this was a game from adults to adults, but then everyone that have started playing since also plays Subway Surfer. So now we know that also a lot of kids are playing the game, but it was never designed for them. And it's just a product of a really good and intuitive game that can also be played by everybody. It starts capping off at 45, 50, then people think it gets a bit too twitchy and a bit too sort of hard to move the fingers. Not judging, but I think overall we've been able to to stay Evergreen first and foremost. I think we are in that bracket of Angry Bird, Subway Surfers, Candy Crush, all from the Nordics, funnily enough. And then I think the founders very early on said it's about longevity. We want to be a truly free to play app where you can play the core on as much as you want. We will never pinch you, we will never guard you from content. Anything is achievable through playing. And then I think that as you say, with TikTok, we've become a cultural phenomenon as well. So we can see that when Jimmy Fallon mentioned us on tonight's show as an example of how you make sludge content when Justin Bieber tweets us or the last week tonight John Oliver mentions us that those are things that other companies would pay for. And we're having the luxury of being mentioned because they think that this is how you do TikTok or this is how you work on verality. Right.
- [05:12]
A
How have you all leaned into that aspect of things? I believe I read that you've made it very clear that folks can use your IP in video and you're not going to come after them. And things like that. But are there any other ways you've leaned into that? Virality.
- [05:25]
B
So we've always had a strategy of producing content that could be used for ugc. So every user generated asset is also amplified if we think it's cool. So not only do we allow them to do it, we also share it afterwards if they do something cool. The team is also very autonomous. So we've had a very proactive team for many years that have managed to make several viral ways where we could see that the audience really is picking up. But I think in my 12 years running this studio, I came the year after launch, I've said no to the marketing team twice. And they produce, what, five, ten assets a day? So there has been very few instances where I said, maybe this is too much.
- [06:09]
C
There's often very little downside to it. Right. If something's bad, it often just doesn't go anywhere. Nobody sees it anyway.
- [06:15]
B
Right? Yeah. That's also why I like what they're doing. A cool example was we had Rami, the Hall of Famer, who also happens to be the keyboard player of Foo Fighters, produce the soundtrack for one of our cities. And I had agreed with him that, look, we used this picture and we know how cool you are as a musician. We're super honored that you wanted to jam with our in house audio designer. But then the team said, oh, we also want to make this video and send a video that I didn't know how would land with Rami. So sending a text to someone saying, look, I know my team is super creative, but I don't want to step on anyone's toes and I admire all the creative work you've done. And I don't want to come off as overly sassy by sending something that just pisses anyone off. Thankfully, he loved it. But sending a video where you're not really sure was meeting the two worlds of our professional partners and the in house creativity. That was one of the more fun texts I've had to send in the last month.
- [07:11]
C
You said in house answers my question, but is all of your like ad creative and sort of marketing creative done in house?
- [07:18]
B
Yes. It's basically a content flywheel, like a furnace just spitting out things. They brainstorm, they remember to keep a balance of in game relevant material. Which means that we don't want just to create virality and then people don't know where it comes from. Some of the viral videos we did in the past basically was just the team having fun, which generated 100 million views on a Video. But people didn't know that this had anything to do with Subway servers. It still helps us with the algorithms because of course they can see which account it comes from and they know that that account is tied to this thing. So when I speak to Apple and Google, they also acknowledge that part of the algorithm is of course also seeing what works on other platforms. So if our content works on TikTok, we're also featured more on our app stores. But the gameplay relevant material is still very important. So people see the game and don't just associate us with being funny viral. The other content is basically just riffing off of everything that's coming. So whenever a TV series goes global, we also did the honey cake from Squid Games as a Subway surfers logo. We do the last of us, then we do a take with our characters and we constantly try and when I say we, I mean the team to just ride the waves of virality because we are one of them. We also have a swing at Duolingo. Every now and then they have a swing at us.
- [08:39]
C
I was going to mention it's very similar to Duolingo's kind of strategy. Right? Of course it's in house. I kind of think I knew the answer to that because you just can't outsourced creative agencies can't take risks with the brand. You know, there's just, there's no incentive for them to do it right. And it's just very difficult if they don't have buy in from whoever the this key brand stakeholder is.
- [08:58]
B
We had a new person joining the team. We just bought the mascot costume for God that chases you in the game and she did a dance with that costume. And I don't know if it was her very first video, but basically one of the first videos she produced had 75 million views. And that's a really tough, that's a really tough start to beat because of course everyone was like, oh, make one more.
- [09:19]
C
Yeah.
- [09:21]
B
Then fair to say she could say make another game. It's super hard to make success.
- [09:25]
C
Much like games, content for games is a hits driven business. Right. It's hard to get lightning in a ball model twice.
- [09:31]
A
You know exactly what does that look like on the paid side and how has that evolved over the years? Like are you putting money behind these UGC things? Are you paying for brand? Are you doing like playable ads and things like that? Like what's the paid strategy behind the kind of brand and content? Flywheel.
- [09:49]
B
The short answer is that we spend nothing, we spend salaries. So it's all organic. But it's also fair to say that we use very small budgets to boost things when we see that they go viral. So we do amplify it, but we're talking tens of thousands of dollars. We're not talking hundreds of thousands or millions of dollars. We're doing it very strategically. When we see that some content picks up, then we might put a few hundred dollars behind it just to create.
- [10:16]
C
Like, other opportunities for it to go viral.
- [10:18]
B
Right, Exactly. So it transcends different platforms because of course, if you see it on one platform, then we see that this content could perhaps ignite in other places.
- [10:26]
C
So bring it over to inst. And then spend on some ads to get it to go viral on that platform as well. That makes sense.
- [10:33]
B
So, but in general, the flywheel runs by itself. It's simply just them producing things. And also, Justin Bieber makes a new album. They make a post where the guard says that Justin Bieber got me the chokehold for his new album, and then he posts that. And the first thing some media does is Justin Bieber hints new collab coming. And of course, we just sit tight and don't comment because it's not our business to correct it. Who knows? We would love to work with Justin. He should reach out. If you listen to the podcast, it.
- [11:05]
C
Could be in the works. It's just a very early stages, you.
- [11:07]
B
Know, I mean, we're up to play. But it's just to say that those things also live in a world that is somehow out of our control, where just the fact that we are viral gives us the ability to serve more content. But we also really have to protect the brand so we don't end up just becoming fart sounds and whatever is trending that month. So we didn't go all in on Skibidi toilet, even though quite a few brains did. Right.
- [11:34]
C
Is there one person there that is the. Is the arbiter of when fart sounds is too much? Is it sort of like in the culture, like who's. Who's guarding against that? Like, you know, jumping the shark?
- [11:45]
B
We have a couple. So I'm. I'm probably the ultimate pun intended. I'm the ultimate boss to beat if you want to get through with fat sounds. But in general, Christian, running the team is doing a great job, but I also know that he's passed with both his peers and Celia, our head of PX Player experience, as well as Adam, who is currently our head of brand. They're both doing a phenomenal job of saying this is on brand. This is too much.
- [12:14]
C
Yeah, it's tricky to get in a world where people are allowed to take risks. But then you don't. But you also need some, some safeguards. But you don't want, you don't want the extreme of that which is everything has to be by consensus. Right. Because then you just get really.
- [12:25]
B
That's also why I think even if you ask them, Celia and Adam, I think they would say we often. We don't often say no either. So it's not a vibe of approvals, it's much more. Let's brainstorm. And then we see for example Hypen from a K Pop band post video where he does the facial expressions to the sounds in the game. We've seen several content creators do that and again people think well, how much did you pay? And it's simply just that they think that this is a cool content piece.
- [12:53]
C
To make these brands really become self sustaining at some point. Think about Nintendo or Mario or something like that. They don't have to pay somebody to do viral things with the Mario ip. Right. It really does become and sort of self sustaining And I guess like something you mentioned earlier, you're not pinching people so hard. You almost have to have this very efficient content creation engine like if you want to not have to pinch people. Right. To make the game playable and a great free to play experience.
- [13:24]
B
It's also because I think the founders originally didn't want to monetize at all. They just wanted a game that kept staying free and playable and therefore that would generate money. Of course we have further ambitions now and the industry has also matured so that would not be enough in the current climate. But we are definitely winning or gaining from just being an evergreen and seeing that we in the top downloads every year we are in top five. We have been since launch. Every year there are a couple of. Not every year we have also been number one but in most years there are a couple of positions that are taken by companies paying. So that's currently Roblox and Garena Free Fire. They are above us and they're paying for their traffic. They're making a lot of money, all good. Then you see the occasional, the yearly trend. So you had among us you had the Piano Tiles 2, then you had another game that people remember very well from that year. But they're out the next year of top 10 and we're still third or fourth and that means that every year we're also gaining because either the spenders will stop spending or the one year Peaks will go out, but we are the evergreen that keeps giving.
- [14:38]
C
It's much better to be in position three, not spending then to be in position one or two and having to spend a lot to be there. Right? Like in terms of like in a business. Right. In which your margins are and everything. It's a much more enviable position.
- [14:47]
B
Plus then we see that, for example, in the Mario movie, not a lot of people realize that they actually also made a reference to us. So in the early scene where they flood the sewers, the newscaster starts explaining that this also affects the subway surfing. And again, that's just a little love from some writer that had fun saying that this is a game. Let's give love to the industry. And we like to do the same the other way around.
- [15:12]
A
I love that you said we don't spend much except for on salaries because a lot of people I think do confuse the kind of UGC and organic go viral kind of stuff. Still spending on marketing, you're just not spending on paid the way we typically think of it. But I would imagine you have a pretty big team, so you are spending quite a bit on salaries and have a big team running this. How do you think about balancing that and how big you grow the marketing team and that sort of thing?
- [15:42]
B
So marketing for us is several things. There's both platform relations and growth and content and player support and so forth. The core part, producing content is less than 10 people. Wow. So they are super nimble and very efficient at producing. And therefore I still think that we have fair salaries. But it's just to say that it's not because we're then spending a full paid marketing budget on 10 individuals. They are themselves growing with both the creation ordinary process as well as the virality training. We had a really great talent with us for several years and when he left, I remember thinking that how much is in him as a creator versus the strength of the brand or the virality. And the team definitely had to sort of readjust. Okay, these were some of the ideas that he would bring. What new ideas are we bringing? We managed the transition and of course that's a nice feeling for me as a CEO that we can build on regardless. But it's definitely also talent driven. So both the people that have helped us along the way and those that are helping us now are worth their own weight and gold.
- [16:53]
A
That's an incredible achievement. With ten folks on the.
- [16:57]
C
I don't think you can have much bigger than that. You know, like on Mad Men, Don Draper didn't have 50 people in the room helping him co write, you know what I mean? Like for creative processes like that, it really goes sour the bigger the group. So.
- [17:08]
A
Well, I wanted to transition and dig into the monetization side of things and apps, I feel like still have so much to learn from gaming. We do have examples like Tinder with the Consumables and multiple subscription tiers and things like that. But I still feel like apps are behind the monetization curve from what mobile gaming has done this past decade. I'd love to dig into how you think about monetization and then especially, I mean, you know, as you layer on different levels of monetization. I know you have ads and then, you know, in game currency and multiple in game currencies and other IAP offers and there's a lot of complexity that have been layered in there. So I'd love to start just at a high level. Like when you started monetizing, like what was the thought behind it and how did that evolve over time? And then we can dig into the specifics of the economics.
- [18:05]
B
Very early on, as I say, the founders of Sibo, Sylvester and Bodhi believed in having a very simple, just pure game experience and that if people kept playing that they would watch some ads and by watching ads, it would pay the bills. The discussions we had with the publisher for the first eight years, Kilu Games in Aarhus, were much more on the side of them saying, well, we could also put in these things. But they also generally liked the approach of a truly free game that could monetize through ads because we've been live since 2012. It also means that we cannot be as sophisticated as you see some of the other games because that would alienate a lot of the elder players that basically just like the way the game works today. So we just this morning launched the biggest mobile collab, I think ever with Brawl Stars, where Brawl Stars visits Subway Surfers and Subway Surfers visits Brawl Stars. And that's one way where we can say, look, you still have the core run to yourself. It follows the environment of a Brawl Stars universe, but in a month's time we will visit a new city. But the game mode that we do with Brawl Stars is a way of also seeing how are the players actually engaging with us, both playing with other IPs as well as trying out game modes that are so clearly an event for a duration of time to see if that scares away people. Do they stop playing the core run, how they're engaging with the PvP mechanic and does that allow us to monetize those players in a different way than they are in the game. Because Subway Surface obviously is constructed in a way where if you play for an hour without dying and you shut down the app when you die, then you haven't paid anything for your entertainment. And I think in the future, at some point we have to figure out what do we do with that, because that's unfair to the players that die a lot that would then see more ads because they would probably feel that the experience is worth while. Those that play five hours perfectly would actually not contribute to paying the salaries of those who make the product. So it's a constant sort of balancing act of saying, how do we entertain as many players as possible with something as available as possible, but also allow those who want to spend time on or want to spend money to progress or get more content to do so without the expense of ruining the fund for the majority?
- [20:33]
A
I read an interview you did that somewhere between 80 and 85% of revenue still to this day comes from advertising. Is that correct?
- [20:40]
B
Yes. Yes. Wow. So it's a mix of interstitials and rewarded videos.
- [20:45]
A
How do you think about those rewarded videos? This is something I've wanted to experiment with and I feel like I've seen some subscription apps experimenting with this. But it's such an interesting mechanic to allow somebody to pay with their attention versus paying with money. And it's something that is very common in games. Again, I can't think off the top of my head any subscription apps that are doing this, but how do you think about that mechanic? And how do you think about that mechanic not, you know, breaking the game or alienating users? Like you said, you kind of already alluded to it that if you could play for an hour and never see an ad, that maybe that's too much or 10 minutes, minutes or 5 minutes is too little. How do you think about not completely breaking the experience with those rewarded ads? And what maybe subscription apps can learn from that?
- [21:32]
B
I think the conversations we have around monetization regards the fairness sort of when is it fair to require payment? And whether payment is then through a reward video or a subscription or a premium feature or an in app purchase. There is no right answer. Especially when you have a player base like us of between 100 and 150 million people every month. We know that we're not talking to a player Persona. We're talking to all types of players at all times in all markets. And that means that for me, what the ads allow us to do is to also be available and support markets that would not traditionally have subscription apps or use in app purchases. So tier two, Tier three, where most other big brands would not advertise and therefore not have a lot of downloads, we are still the most download games in those territories. But specifically for the US and for tier one for Europe and for the sort of higher earning countries, of course we would like to have a share of wallet and to know that if you're paying in all your other games and you think, well, it's nice over here that it's free, we would love to share with you the characters or the unlocks that would sort of convert you and share, take part of the salary payments here and the sort of the business of Sibo. So from that point of view, it is definitely an ongoing conversation whether we have the real estate on screen to show a banner or launch a reward video. And where do we actually allow, if you've spent money in the game, to remove some of the interstitials and whether that should be permanently or whether that should only be for a period of time to say, well, if you paid then you won't have any distractions that you haven't chosen yourself. And those, those types of balancing acts are ever ongoing.
- [23:22]
C
You use the word fair, which is I think what a lot of developers do implicitly when they're thinking of pricing. They're trying to be like, okay, what is a fair price in this case, you're not talking about dollars for software, you're talking about like attention in exchange for software as well as like blending that into dollars. Right. Which is really challenging. Right. I think this is. And one of the reasons that, you know, app developers have avoided this, I think one is the market has not been sort of primed for it versus gaming. It's been like this since as long as mobile gaming is a thing. It's just, it's complicated, right? It's complicated to blend. You know, you have an ad network and there's a third party driving that. And then you're figuring out how it fits into your experience. And then, and then of course you have your own monetization, something you mentioned. It kind of highlights how challenging this is. It's like, you know, only showing ads to somebody when they die. Probably your best and most engaged and maybe the most likely to pay people are the ones who don't die. Right. So you've actually like completely blocked off monetization from them. Right. So yeah, you have to figure out how can, and what can we sell them and Then you know, to some degree another thing they bring to you which not necessarily their attention but it's their word of mouth, right? And so if you're extracting from them, are they going to be as likely to share you on TikTok and get you your next, you know, 10 users, right.
- [24:35]
B
And we still have 13 years in, we still have a million daily new installs and as I say, half of those are reinstalls. But that means that it's also worth for us to keep the content furnace and the virality going and not jeopardize it by trying to extract too much value. I think that's part of the discussion we have is that okay with these feature we can try these new mechanics with the call run, we want to keep it clean. But then of course we see more and more game companies saying, well now you need a short break from the game, we'll show you an ad and that helps pay for the business that serves this game to you. I actually think that's fair as well. I have a 9 year old son myself. When he watches an ad, I'm also explaining him that this is the way that we pay for that game. Entertainment is business. No one goes to the cinema and doesn't expect to pay. So the fact that ads came in, and I know that that annoys some people, the premium segment that just would like a core experience from story driven sort of A to Z, that's fine, fine by me. I like the fact that in mobile gaming you can actually play a lot of games without spending and you use a part of your time to watch games and then the playable ads are now so fun that people actually also sometimes just get stuck in playing a quick level of some other game trying to advertise.
- [25:55]
A
Now I got stuck in that loop yesterday. I was playing Subway Surfers knowing we were going to talk today and one of the playable ads was so fun. I spent probably five minutes playing the playable ad and then came back to the game. But I'm glad you brought up your nine year old son. How do you think about protecting your brand in the ads that you serve? I had a freemium weather app and I ended up removing ads because I was having so much trouble filtering. I would get comments, you know, bad reviews on the app store, emails to support saying, you know, why are you showing ads for guns? And I'm like what the heck? And I'm going into Google, you know, AdWords and like trying to turn off like all the, like make it as, you know, age appropriate as possible. And then I get another one like, why are you doing gambling ads? Because it would have like the slot machine ads. And I go and try and figure out how to turn that off. So how do you approach keeping those ads kind of brand safe and kid safe? And so many kids are playing the game.
- [26:55]
B
So we're doing two things and now it gets a little technical. But obviously when you install the game, you show your age. And if you are younger than the legal age in your country, then you get placed in what we call the copper segment. Depending on the country, it's 16 or 13. And if you're in the copper group, then you are only served copper ads. And it's only certain ad networks that, that have COPPA groups. So they are not showing anything that would not be copper compliance. But even in the adult version, if you say that you're older than that age, and I'm saying you can still not, you should not be able to see ads for gambling, for guns, for pornography, for anything that is R rated. And that's because we don't believe that that's the way we should be making business. When I say should not, it's because, of course, the ad networks sometimes make mistakes. And when you're a show of a billion impressions a month, as we are, then of course, I'm sure the viewers of your podcast could come with an example of, well, once I saw this ad and we would actually actively go into that network and say, this is a mistake. Remove this. Because we have heard from a player that this ad was shown. That's not how we want to make our money. So we also very proactive in the sense that we we've blacklisted a lot of categories that should not be shown. We've done all the copper compliance and GDPR compliance. And then we also make sure that if anyone says I was shown this, that we also flagged that to the ad networks.
- [28:29]
C
Yeah, I was going to say you must have a team that's just dedicated to one responding when a customer writes, but then figuring out what ad networks you are and aren't working with and what's your. Obviously, you know, expectations for yield and stuff like that, but it must be a substantial amount of effort.
- [28:46]
B
It's a very efficient system and we have very few complaints. So we're actually not, we're not a lot of people doing it, but they do it really well. And then I think because we also have SDKs in the game that allows us to show what ads were they shown pipeline that shows us that these were the ads that people engaged the most with and these are the ones that they didn't.
- [29:04]
C
Are you seeing this, like, outside of the ad network's own analytics, you all are tracking to like, what ads are.
- [29:10]
B
Performing the best, basically which ad is prompted?
- [29:13]
C
Okay, yeah. Because it can be very kind of black boxy. Right. Sometimes how the auction resolves and all this stuff.
- [29:20]
A
Yeah, that was my problem. And then how do you think about.
- [29:22]
C
I mean, you're a team of one. David. I know it's challenging.
- [29:26]
A
It was so challenging, I just gave up and pulled it out. But the other thing I found really fascinating as a weather app developer, I download a ton of other weather apps and check them out. One of the fascinating things there is is you will see ads for other weather apps in most weather apps. So how do you think about and prevent cannibalization? You know, like me yesterday, I spent a minute or two playing this other game that was prompting me to go to the app store and download that game instead of Subway Surfers. And so how do you think about that aspect of cannibalization that you may lose a player to this other game that was advertised inside subway servers?
- [30:07]
B
I mean, that's the business of free to play. So we know that the cross promotion or the potential cannibalization of an ad prompting you to leave is a risk. We treasure the work the ad networks are doing to make money for us. But of course, sometimes they do it so well that we also see our retention drop a bit because David chooses to go into another game that he finds more funny. Our confidence in our product and also the longevity that we've proven means that we are also confident that you will come back, that you in your next PlayStation sit down and don't join the game you download necessarily. But you remember why you play Subway Surfers and why it's one of the games that you remind yourself of. When you're in the subway and flying somewhere on a bus with no connectivity, then you're like, that's the game that you open. But it is definitely a thing that we have had two instances of very direct sort of competitive titles. Just when Subway Surfers came out, Singer did a game called Running with Friends which was a complete copy. It was a bull chasing you in Pamplona instead of the guard. And we were actually quite not afraid but aware and concerned that what does this mean to Subway Surfers if one of the big games come in and just sweeps the market? But it wasn't as fun. So it went away quite quickly because people could tell that Subway servers in Silvesta and Bode had cracked. Something about the tactility of the game and some of the intuitive nature of it that cannot just be copied page by page, but needs specific sort of metrics that we keep as our secret sauce. And then we have King came with Crash Bandicoot, which we knew that they wanted to make a runner that would monetize. They had put one of the best teams on it. The IP is known, the game looked amazing and they did a very hard monetization. And we thought this is interesting because of course we would also like to do a runner that monetizes. And if they came in and took just half of our downloads but made $2 per player, then that should have been us. Right?
- [32:07]
C
It's a good experiment for you to watch, right?
- [32:10]
B
Yeah. And I mean, we actually had to talk. Should we tell the ad networks that please don't show ads for Crash Bandicoot because that's probably the only game where we don't want people to then get excited and leave the game and then find something that was then better designed for monetization. In the end, we actually didn't do anything. And it turned out that again, Subway Surfers is just the gold standard.
- [32:34]
C
Crash Bandicoot is his ip. I kind of think Subway Surfers might be a little more relevant in 2025.
- [32:39]
B
That's true. That's not me. We're super happy that we are still the go to runner. We consider ourselves the king of runners. And of course we hope with future launches that we have other types of runners than just Subway 1.
- [32:55]
C
Can I ask you, you talked about this, you just launched today. This, this promo with Supercell and Brawl stars. Yeah, I mean that's a classic example of your. You can't play both games at the same time. Right. So I assume we won't get into too much specifics. But like, how long does a deal like that take and like how do you think about approaching those and working with other companies and stuff like that?
- [33:17]
B
The initial exploration for deals like that usually start a year before. At least a year before it starts with high level concepting and sort of these brands would be cool. We also did it with Crossy Road. We've just done it with eight Ball Pool, which is of course part of the miniclip family. And we have other ideas for the rest of year or next year. The concepting is sometimes challenging to explain because. What is concepting? Well, that's a guy throwing ideas up on a whiteboard that eventually Sparks the interest of a partner that says, we want to do that with you. How do we make it happen? Then you put engineers and legal and.
- [33:55]
C
Everyone, you just start sending them ideas. Or do you get to one of your creative people, one of their creative people in a room? What's the process?
- [34:02]
B
I carry a lot of the outward pd, so the business development side, I attend conferences, I speak from stage. The mobile space is a relatively small industry, so we also know each other.
- [34:14]
C
And you're all in the same like five countries, so that helps too.
- [34:17]
B
It's a short flight to Finland, but it's also from the friendly atmosphere. We don't consider each other competitors because we want people to enjoy games. And if they're playing my game, they will also play yours and they will come back to mine if mine is still.
- [34:32]
C
Yeah, it's much less of a finite set of customers like B2B can be, right? Like there's. There's only so many companies in the world.
- [34:39]
B
I think the weather app is actually a good example because you might only be using one weather app and then if you really have a wedding or a round birthday, then you might check two apps, but you have a habit of only opening one once a day to check which clothes you should wear. Where games is much more of a fluid activity during the day and if you are going on the bus or the metro subway service is likely one of the games that are open because you lose connectivity sometimes. But if you sit at home and you bring out the console, then we also know that we're not people's primary game. We are the game that they play in between the other sessions because they spend money and time in GTA or Call of Duty or Sims and then they play subway servers before falling asleep or because they have time in precedent sessions. Right. So I think from that point of view we can also allow things to be a bit more 3D. And therefore back to your question. A year before, when we start pitching high level ideas, it's not very concrete. And then as the team start working together, of course it becomes more and more concrete. How willing are we on each side to do something in our own game? Or is it more of an activation for the other title? And with Crossy Road, it was a very sincere collaboration. It also has been with 8Ball, Pool and Supercell because the teams on both sides are excited to work with the other IP and we see a huge overlap in players that knows both titles. And I'm excited to see what does that look like in the game. I Play. I also know the other game and I also want to try that out. So we think there is a lot of also reactivation of players that would come back just for the fun of it and see what does that look like in the other game.
- [36:19]
C
Are the deals fairly standard? Is a lot of time spent on the business economics of it or is there a pretty standard understanding of what's industry norm?
- [36:27]
B
Actually these deals have been pretty bader. So we're exchanging traffic where we're saying, look, if we send players your way and you send players our way, then what you monetize and what we monetize is different, but it boosts both of our numbers. So we actually haven't made commitments to each other other than delivery of quality.
- [36:47]
C
Assets based on what you're going to do and whatnot. I guess it makes sense. You kind of mentioned that both brands have to work with each other. You almost have to be somewhat co equal right in sense for it to be interesting for both parties. I've always found that with partnerships generally is that if the parties aren't of somewhat equal size, somebody gets crushed or somebody's uninterested or it's just very difficult. Not for any reason. Right. It just kind of happens that way.
- [37:10]
B
We have a lot more downloads than Crossy Road, but Crossy Road did an amazing effort in their game to integrate Subway servers. So I know that they got a bigger bump in their downloads than we did in ours, but it didn't feel unfair. And I think it actually also helped with the virality of both games in the long term that you just see games that love each other and teams that love each other like just to get their ip.
- [37:33]
C
And your IP is positive, right?
- [37:36]
B
And with Brawl Stars specifically, I know that they make a higher LTV than we do, but that's also their day to day. So it's not as if we're coming in and tripling their ltv, but they will probably make more money per player than we do. Also after this game, we just like that we can create something cool together that is authentic and native to the brand.
- [37:57]
A
This is something I hope we see more of in the subscription app space. Strava just bought runa and when that initially happened, when I saw the news, I was like, oh, that makes a lot of sense. They're just going to integrate the running features and what makes RUNA run into Strava. But no, it doesn't seem like that's the strategy at all. They bought RUNA and now are pushing people back and forth between the two apps and Run is like a great brand in and of itself. And they're working together like that. In that case, it was an acquisition. But I hope to see more of this amongst those kinds of apps where there's. With that one, maybe there is a little bit too much, you know, conflict for them to not buy and just, you know, do a partnership.
- [38:37]
C
Or it might actually be easier. You know, sometimes BD can be just difficult. Right. Maybe it's just easier to buy the company.
- [38:43]
B
It's a meeting of minds. When we have these meetings. Also the partnerships we haven't announced. It's just exciting to see the creative teams hitting it off together and then seeing that what comes out excites people. We've gotten a ton of love of people saying, wow, we can't imagine you got Brawl stars. And we're getting the same feedback from our Finnish counterparts at supercell saying, people saying, we can't believe you got subway service. So it's also just synergistic, sort of one plus one equals three, right?
- [39:11]
C
Yeah. I mean, the music industry figured this out a while ago, right? Is that like just collabs help? Right. If you can get more names on a track, it just almost only upside. Right. To bring in other people's fans and trade the music back and forth. And it is a similar economy. It's like an attention. There's. There's much more elastic demand, I feel like, in attention than in a lot of different categories. And which is maybe why we haven't seen it in apps so much, because, like, for utility, you're filling a niche and like, there maybe is only. To your point about weather apps, there may be only like room for one or two apps in somebody's life. But as apps become. We're in this phase right now where apps are just proliferating at an incredible rate into more and more niches that might become less true. Right. As the niches become more narrow, then suddenly, like, you can collaborate between adjacent niches. I think the hard part will be gaming is like a decade ahead of apps. It's kind of wild, right? Yeah. Considering we kind of both started at the same time, I guess like gaming, maybe you could count the Nokia days, right, as like a head start. But it always feels like we're. Apps are just a little bit behind and we're still figuring stuff out. So maybe it's a good thing to just look and see what y' all are doing and expect that we'll be there in a decade.
- [40:17]
B
Gaming is. Has been at the forefront of monetization since and I joined the industry in 13. It's an amazing industry to follow. And of course sometimes people also take it too far. Right now with apps in general, I think I see the trend of of course subscription is the most best way to monet. It also sometimes feels annoying that in order to scan this document then you have to keep subscribing to some utility app. And then eventually of course Apple and Google allows another app that is free to do it. So the Notes app allows you to scan and a lot of people know that so they still subscribe to some scanner app because they had one document they had to send to the state. Right. So I think there is definitely also a longevity factor for apps, especially utility apps or apps that serves a specific thing where I would as a payer prefer to the premium model or a yearly model that is more fair than right now where you feel like everything is $100 for a year of using something that is like yeah, but then it means I cancel. If it was priced more friendly to the consumer then people would actually perhaps not cancel it. That's the balancing act that games because it's been so massive for so many years and we have so many people are players. It's also found its equilibria in the different aspects of this is what players are willing to spend. Where I think apps for me in some aspects I end up spending too much because I have one day's need of something and therefore I don't become a user of other than the Stravas of the world. Because you are a runner or because you do these things.
- [41:59]
A
That's actually where I wanted to take things next is. And again speaking of like being so far ahead of the app industry, the idea of a season pass in apps and all the in app purchases and the rewarded ads like all of this hybrid monetization, I think we will see the industry start to adopt over time where hey, you just need one scan. Okay, five bucks. Like just make it happen and like you know you're done or slopes is we had the founder of that on the podcast and he now does a season pass. It's like hey, if want season pass.
- [42:32]
C
Day pass they do a bunch of like buy as little as or as much as you want.
- [42:37]
A
But then they also have the to your point, they have this subscription for people who are avid skiers and who are going to go out six times a year or whatever. And. And so they kind of, you know they're a good example of kind of making this work however the user wants to pay and how frequently they want.
- [42:51]
C
To see advantage games have though. I mean like you all, you start with a store, right? Like you don't start with a single ip, you have a whole store. And like so adding like a little thing here and slice there. It's just that there's, there's just out of the gate games always start with like a higher level of sophistication on monetization which makes this stuff easier. And apps and this is something like in our mission at Rodecan we're exploring now is like is this is the reason this isn't in apps related to that inherent complexity and can we bring these tools to the app developers sooner so they, I don't know what's going to work. But like, you know, if we can remove the technical barrier at least like that would let people experience that. You were mentioning finding that equilibrium because like I think apps in general, to your point, like have kind of left the freemium user out in a lot of cases. Right. Either have some like very heavily ad monetized thing which often don't work very well. Right. There's very few because I think they also just don't generate as much revenue as like a good high paid subscription app for the subscription apps. Like it just doesn't generate as much. Right. It's harder to work ads in and they haven't developed these like sophisticated models. So like I don't know, maybe there's, maybe there's the underlying difference in like demand elasticity and amount of need for utility versus like need for entertainment. Maybe they'll always be different. But I, I, I would almost equally bet that, that we might see these things like converge.
- [44:13]
B
Yeah.
- [44:13]
A
And my specific question around that too is like, how do you think about the season pass? And you know, have you explored the idea of subscriptions as some apps are starting, some games are starting to do. But yeah, how do you think about balancing all of that?
- [44:26]
B
What I really like about, and this is actually probably supercell introducing the season pass, at least the way we saw it in Clash Royale, what felt really fair about it and why I've spent a lot of money on season passes and games is that I also know that I don't forget about it and then I'm charged forever. So we all have these discoveries where we realize we've been spending $100 more than we wanted on something that we haven't used since last March. And that's an annoying feeling where the season pass gives you a very clear Overview of these are the things you can get in this period of time if you spend this amount of money. And then it requires you to engage with the app or the game in this case, and it requires you to play to get to it. But it unlocks a separate track of rewards. And I think that's a really fair way of saying, because when I think back to my childhood days in the late 80s, early 90s and we didn't have a lot of devices my parents couldn't afford, but those things that you then finally got your hands on were obviously premium titles that were paid and sometimes you would have spent $60, $70 on a game that you didn't like. And now you can get a ton of hours of Entertainment out of $60 and $70. So I think even if you then spend $8 or $10 on a pass, that's a lot of entertainment if that unlocks a lot of rewards in a game that you like. So if the trade is fair, if you feel that it's transparent what you get for that, then I actually really like the season pass idea. And then of course, if your app is a utility or a thing that you either need. But for example, when I signed up for a marathon and I want to sail as many places as possible, I will do the marathon, but I would love an app that said I will get you to the marathon, but I will not charge you for two years after. If at the end of that said let me become an annual subscriber, then I like that transaction. But I think back to the scanning app, then sometimes you just need one scan, but you have to sign up for 800 krona or $100 to get that one thing or a monthly thing that reactivates and you forget about it. And I think the season pass, figuring out what is the right duration of time, is this a one day do everything you want? Is this a one week? Is this in subway service three weeks for this season or in most other apps a monthly thing that happens and then you choose whether this also is a month where you feel that this is worth paying for.
- [46:56]
A
Well, Matthias, it's been so fun chatting with you. I feel like we could chat another two hours. Honestly been an absolute pleasure having this conversation. And again, I think so many things that subscription apps and the kind of productivity side can learn from gaming and I think you've demonstrated that today. So many great lessons. But anything else you wanted to share as we wrap up?
- [47:17]
B
I think it's been a really good conversation and I appreciate the question because it also makes me think how games are far in some areas, but also other areas where we can definitely learn from apps. And I'm happy to come back another time to discuss another hour. I think my main thing is just that the monetization and the gamification, that term is sometimes used a bit too widely, is about figuring out how you make the player journey or the user journey as frictionless as possible with a few friction points. That also makes it clear that here you have the value points if you want to make those decisions. And I think in general it's hard to make games, so we're not saying it's easy either. I know it's also hard to make apps, but I encourage everyone who has an idea to try it because I really like this. The creativity that comes when people become entrepreneurial on areas that can help others.
- [48:07]
A
Awesome. Well, thank you so much for joining us today. This is a really fun conversation.
- [48:11]
C
Thank you.
- [48:12]
B
Thank you.
- [48:15]
A
Thanks so much for listening. If you have a minute, please leave a review in your favorite podcast player. You can also stop by chat.subclub.com to join our private community.