Today New York City-based LoopJoy launched its mobile game monetization platform in private beta, showcasing its first pilot run with Budapest-based Goroid’s popular mobile game TheEndApp, which has been downloaded over 3.5 million times. LoopJoy lets mobile players purchase branded merchandise related to a game while in the app, and looks after all the logistics for game developers, from manufacturing to shipping to get the product into the user’s hands.
For TheEndApp, users can now purchase branded iPhone cases for the iPhone 4 and 5, in addition to stickers and baseball hats with their logo. “First we wanted to produce a few games, and one of the first things we were looking at was how do we monetize games. And then we realized it’s a big problem a lot of games have, because they monetize through virtual goods, advertising, or paid apps but it’s still not enough,” co-founder and CEO Ruth Polacheck said in an interview. “On the other hand, users are really excited about the games and would love to have merchandise, and we just found a great place for us to be.”
The company is currently working with iOS developers who already have a large user base but want to add additional monetization streams. Through LoopJoy’s software development kit (SDK), game developers only have to add a few lines of code to kickstart the process. They then work with LoopJoy to determine what kind of merchandise would work best for their app, and once the product and design have been finalized, LoopJoy works with its network of manufacturers to produce the items and ship them to users.
Mobile game players don’t have to leave the game to purchase the merchandise, rather developers decide which levels or achievements a user has to reach before they become eligible to purchase. Similar to in-app rewards startup Kiip, once a user reaches that level they unlock that merchandise, and can enter their credit card details or link to a PayPal account which then enables to buy the product and go back to playing the game.
Unlike LoopJoy, Kiip’s rewards are free, so users unlock and then redeem rewards without having to pay. Rewards include coupons, special offers, among other targeted retail-driven physical rewards in partnership with brands. However, Polacheck was clear in stating that LoopJoy is not necessarily a rewards provider.
“We don’t see ourselves as reward providers, sometimes we’re grouped into that category. But we’re in a separate category which is selling in physical goods, it’s not free to get physical goods, you might be eligible to buy them, but you have to buy them,” Polacheck said.
The company doesn’t charge game developers for manufacturing of the merchandise, rather they operate on a revenue sharing model, taking a percentage of each in-app purchase. Polacheck wouldn’t share what percentage goes to game developers, but said it’s “very generous.” Currently, the company is only working with iOS developers, though they’re planning to integrate with the Android platform in the coming months. It will also be looking to provide a similar platform for web-based games as well.
The prospect of not having to worry about figuring out the logistics behind manufacturing and shipping of merchandise could prove to be very appealing for game developers, who would likely much rather focus on building their core products, but would benefit from increased brand awareness through the process of merchandising. While companies like Zynga have long mastered the idea of selling virtual goods as a business model, Polacheck believes physical goods and rewards could be the next way to get gamers to part with their money.
“A few days ago, one of the game developers told me ‘we spent all this time trying to convince users to buy virtual goods, now we’re going back to physical goods.’ Even the numbers suggest that users obviously attribute more value and understand that physical goods are worth more to them, its been that way in web and now mobile is also getting there.”