Huuuge Games came late to social casino games, launching its Huuuge Casino in late 2015. But the company has carved out a niche in the $ 4 billion global market.
Anton Gauffin, CEO of the Palo Alto, California-based company, said in an interview that the company will hit about $ 150 million revenues in 2017. That puts it at about No. 9 in the market, behind leaders such as Playtika, Scientific Games, Zynga, IGT, and Aristocrat. The latter just acquired Big Fish Games for $ 990 million from Churchill Downs, combining the No. 5 and No. 6 companies in the space.
That could put pressure on Huuuge, but Gauffin isn’t deterred. His company has grown to 300 employees, and it recently raised $ 50 million in funding. Huuuge has grown because it has tried to make the “most social” casino game, and it has targeted younger players with its advertising.
“Companies like Playtika and Scientific Games have been active on the M&A front,” Gauffin said. “But we were not interested in selling huge. We felt that it was too early and we had a massive opportunity in front of us. We were far from done with our vision.”
Here’s an edited transcript of our conversation.
Above: Anton Gauffin, CEO of Huuuge Games, at Casual Connect Europe.
GamesBeat: You had your news about the $ 50 million raise. Could you explain that first, and talk about where you are as a company?
Anton Gauffin: We started working on the deal around the last GDC. We realized we had a good thing going on. Our plan was working, and it still is. We started thinking, “What next?” We felt it was early, and we had so much gas left in the tank that we would have plenty of opportunities to sell the company. Companies like Playtika and Scientific Games have been active on the M&A front. But we were not interested in selling huge. We felt that it was too early and we had a massive opportunity in front of us. We were far from done with our vision. We ended up raising almost $ 50 million.
GamesBeat: Why does the company need that much money? Why do you need such a large team? You’re more than 300 people now.
Gauffin: The scale at which we operate has grown a lot. You can see that from AppAnnie. We’re doing more than $ 150 million in revenue this year, and we’re investing a lot in marketing. We did early stage/seed funding, and then we had A and B rounds. Before this round, though, we only raised $ 10 million all in all or so. We had all sorts of challenges because of that. We had to work with Facebook to get the credit lines up and deal with all those practical issues in scaling, because we didn’t have enough money in the bank. We needed more cash to increase our marketing scale. That’s a big part of the reason.
Second, we believe that in the long run, it’s all about bringing more product innovation to the market. Instead of being all in on Huuuge Casino, we’ve been actively building new games and doing our best to bring more innovation to the market. Part of the investment is going into new products that we were already working on. We wouldn’t have had sufficient marketing bandwidth to release those games when they become ready if we hadn’t raised the additional funding.
Above: Social casino games were a $ 1.16 billion market in the third quarter alone.
As far as team size, there are different approaches that different companies use to succeed in mobile gaming today. But in our case, at least—there’s the production team that builds the products and features for our games. We have a fairly large team powering that, doing business intelligence and all sorts of analysis regarding different experiments, from A/B tests to other things we do to continuously test. We’re very data-driven as a company. We’ve started to build our own BI and analytics platform. That’s grown into quite a large operation.
When you do this business globally, it adds up. For us, the 300 people have—if we only did Huuuge Casino, we wouldn’t need 300 people. But as we’re actively building new games and doing our best to bring more innovation to the market—even though we’ve hired a lot this year already, we still have several open positions we’re looking to fill.
As part of our strategy, when it comes to scaling our operational bandwidth to build games, we’ve opened several new studios this year. We’ve opened a studio in Krakow. We’ve opened another one in Wroclaw, another place in Poland. We’ve also opened an office in Berlin. The most recent office we opened is in Hong Kong. Hong Kong is still fairly fresh news. We don’t have many people there. But in all of these other locations, the teams have already grown quite a bit. We have 50 people in Berlin, 11 people in Krakow, and more than 10 people in Wroclaw.
We felt that in order to build more games, we had to open new studios, because otherwise there would have been a competition for resources on a local level. We believe that when you build games, the team needs to have ownership of the product. They need to be passionate about what they’re building. You can’t try to do too much in the same studio, or you begin to dilute their focus on the product. That’s not the only way to build games, but that’s our way. It adds up people-wise. You need to take good care of your people, regardless of your locations. You need more admin people, HR people.
From my side, a big part of why we raised the funding—we already talked about increasing marketing scale and allowing us to invest into new products. I also mentioned that I think distribution is the biggest headache for free-to-play companies. In practice that means that Huuuge has been actively investing in expanding our business into broader, mass-market casual games. There will be mass-market casual games coming from us fairly soon.
We’re not exclusively a social casino company. Many people in the industry have this perception of Huuuge as just a slots company, and I’ve always said we’re more than that. We do social games. When the new casual games hit the market, I think that will change the perception people have of Huuge. That’s exciting for us.
GamesBeat: Are your live operations also pretty demanding?
Gauffin: Yes, they are. We try to do live ops in multiple countries. Not all of them, but we have specific campaigns going on in specific parts of Asia-Pacific, like Hong Kong, that have been growing well for us. You need specific attention to do that. It helps if you have local cultural know-how. That’s why we expect the Asian part of our operation is going to grow significantly next year.
GamesBeat: How often do you do updates?
Anton: This year we’ve done less binary updates, but we’re doing daily events. When it comes to Huuuge Casino, our main app, every day there’s some sort of event or campaign going on. That takes a lot of effort from the team, to be able to run that type of 24/7 service. Also, the player base has grown. There’s been growth with our player services, VIP services, all the community stuff. We have some specific things going on in the game on a daily basis, and then binary updates bring in bigger feature updates. We try to keep up as high a pace as we can, keep the updates going to the market.
Our app has grown quite a bit size-wise. The product is more complex. Nowadays, developing features—we need to be sure a feature is going to help us improve our KPIs. If you add a new slot machine to Huuuge Casino, say, it’s not easy to figure out, “Okay, this feature is going to move the needle,” unless you do specific A/B tests. You have different groups that see a feature or don’t see it. That way you can figure out if what you’ve done improves the product matrix. It’s harder than you think to make that type of conclusion, because there’s so much going on in the game.
Above: Huuuge is No. 9 in social casino games.
GamesBeat: If you look at the Eilers and Krejcik market share, I think in the last quarter they had you guys at number nine in the world in social casino games. $ 150 million in revenue seems like a lot, but when you consider how many companies in the space are bigger than you, it must feel a little daunting.
Gauffin: Eilers also upgraded their market size forecast recently. They’re more optimistic about the growth of social casino for the next year. They’ve done the analysis and conclusion that even the DAUs playing social casino are no longer growing that much. The companies have become better at monetization. Many companies, like Playtika, haven’t been growing their DAUs, but they’re improving their conversions, how much people spend.
You’re right that we’ve grown a lot. $ 150 million is a significant amount of revenue. But we still have eight more companies ahead of us. It’s a pretty big niche category that we’re working to make more mass market. We’ve grown because we’ve approached the market from a new angle, offering a real time social experience, offering more cooperative gameplay, offering more active gameplay. We believe that if you look at the market a few years ahead—for us it feels obvious that the number one game in a few years’ time has to be this type of connected online game, rather than a single-player online experience, which many of the competing social casino products still are today.
