Israel’s TabTale has become a global leader in kids mobile games (interview)

TabTale is one of Israel’s success stories in mobile gaming. Founded in 2010 to make kids games and education apps, it now publishes a game every week on iOS, Google Play, Amazon, and Windows.

The company was started by Sagi Schliesser, Oran Kushnir, and Nir Bejerano. Now it has more than 230 employees and 350 games that have been downloaded more than 600 million times. It has raised $13.5 million in venture capital and acquired two companies, developer Level Bit in Serbia and Coco Play in China.

With its most recent acquisitions, TabTale is now expanding to make games and mobile apps for people over 13 under the Crazy Labs brand.

We caught up with Schliesser at the Game Developers Conference in San Francisco. Here’s an edited transcript of our conversation.

Above: TabTale makes games for kids.

Image Credit: TabTale

GamesBeat: What’s the latest update on Tab Tale? How big are you guys now?

Sagi Schliesser: We’re running about 350 games right now on all platforms, which is a big undertaking. To date we’re number one in kids, if you look at the download numbers, the revenue numbers, the monthly active users. We’re running about 600 million downloads to the kids portfolio, with a monthly rate of around 30 million downloads. We see the traction. Some patterns are changing. We have customers who are happy and sticking around, downloading one, five, ten games from Tab Tale.

If you look at what happened to the app store with super casual in 2014, a lot of utilities, Facebook and the others splitting their mobile portfolio in to multiple apps — if you look at the top charts, the ratio between games and non-games became different. We’re still, on a weekly basis, in the top 10 downloads in 50 countries with kids-directed games.

GamesBeat: How do you guys get noticed?

Schliesser: The primary way is cross-promotion. We have a lot of happy customers. They keep following the existing portfolio. When they open it, we suggest a new asset. If they want to check it out, fine. If not, we don’t show it to them again. That’s the way many users convert. We have a very high conversion rate, something like 350 to 500 percent better than the standard rate in the industry. The market standard is only one, one and a half percent, depending on the genre.

We’re also very adamant about going in on our Crazy Labs portfolio. We’ve acquired a few companies, including a company in Serbia with very skilled people — 15 years in gaming, seven years in Unity. We’ve built studios in Israel and other geographies.

GamesBeat: How many employees do you have?

Schliesser: Globally we have 230, located in Israel, Macedonia, Bulgaria, Ukraine, Serbia, China, Lithuania, and Croatia. There are super-talented people in eastern Europe. When it comes to VC, a lot of these companies aren’t getting recognition. We’re doing good work there. There’s a lot of potential. China has a lot of potential as well.

GamesBeat: With mobile you can expand anywhere in the world. Are there any particular places you want to go?

Schliesser: You can expand anywhere in the world, but there are certain skills you can only find in certain places. Some places you can find really good technical guys, really good artists. We need to structure the operation and take in the right capabilities from different locations. With the guidance from Israel, there’s no difficulty in taking over a company. We let them know what they need to do and we can structure the operation tightly to succeed.

Above: Baby Heroes

Image Credit: TabTale

GamesBeat: Do you want to move into Asia very much? Are you already there?

Schliesser: We built up our company in China starting from the view that Asia is super important to the business. We have a team there, an amazing team that helped us break some barriers in Korea, China, and Japan. They were 15 people when we bought them, but now they’re more than 30.

If you look at the charts, we used to hit around the top 150 in China, Japan, and Korea. Today we’re hitting the top 50. We see the progression there. With every new game we launch, we go higher up the charts in these geographies.

GamesBeat: How are your games translating from Europe and elsewhere to Asia?

Schliesser: Not everything translates. When we do Christmas content, obviously, that resonates less. But a lot of the content we do for kids, that works really well. It’s been interesting to work with our partners there. We’ve started localizing some things, and they’ve told us, “Don’t localize it. If it’s a simple game, leave it alone.” If we localize it all the way into Chinese, they don’t get the English language learning aspect of it, so on some things they’ve asked us not to localize. Some of our games have had educational value that way, like What You Do At Home. They like it better in English. It’s been part of the learning curve there.

Above: Airheads Jump from Crazy Labs is aimed at older mobile users.

Image Credit: TabTale

GamesBeat: What’s your competition like? I don’t know if Fingerprint Digital shows up in that respect, in the kids category.

Schliesser: Most of the developers in the kids category are focused in that area. You can find a lot of paid apps and branded apps there or streaming video content. The competition is high there, but the audience is relatively small compared to games.

One of the problems is that it’s a free economy. Kids vote with their hands. Certain age groups — very young, maybe up to the age of four — it’s very governed by the parents. You have brands like Dr. Panda that are doing amazing work. Parents download for their kids and they play and get a good experience. But when kids get older, they want to select things for themselves. Then the competition is much greater. It’s about structuring it the right way with fun gameplay and trying to work in the educational content.

Girls are a big part of our demographic. We’ve started doing a line with women entrepreneurs. We’ve seen a lot of campaigns along those lines in the U.S., like Run Like a Girl. We’re not just doing your pinkish type of apps, but letting girls have their own racing games or entrepreneur simulations. We’re trying, in our subtle way, to make the game fun and also get across what we believe is an important message.

Above: Care Bears

Image Credit: TabTale

GamesBeat: Are brands going to be important in your space? Are they already important?

Schliesser: Obviously brands are important. They drive you out of the normal linear LTV. We released Care Bears with American Greetings, Holly Hobby, and others. But we’re looking to find the right balance of brands that can work with us tightly and with some commitment. What we bring to the table, in the last four years we’ve built an extensive technology platform. It allows us not only to build good content, but also to keep that content running for an extended period of time. If you’re a parent and you pay $4.99, you don’t want it to break down when iOS 9 comes out. You need continuity.

We’re looking for brand value where we can work together with someone over that extended period of time to bring consistent value or even build a subscription program, something more long-term. We’re not just picking one and doing that. With Apple taking a cut, with the brand taking a cut, with needing to do some promotion and prepare the art, it needs to be economical.

In kids, there are no whales. The most we charge is $4.99 or $5.99 for all the content. You’re very limited. This is why a lot of kids’ gaming companies are losing money. It’s a tough economy. You have to break even doing what’s fair for kids. It’s a hard environment to be successful.

Above: TabTale targets youngsters with its mobile apps.

Image Credit: TabTale

GamesBeat: Do you see some advantage in being one of the earliest movers to get critical mass here?

Schliesser: Obviously, yes. It helps us with cross-promotion. If you look at free-to-play in kids, if they’re doing 10 cents in revenue per download, that’s huge. Translate that into what you can buy. Even if you buy incentivized downloads, it’s going to cost you at least 50 cents. There’s no economic viability in buying any kind of user acquisition. You need a good portfolio, good traction, and good relationships. Unless your releases resonate well with your users, you have no chance of building a business or sustaining that business with these economics.

If we get to two dollars per user, that means something’s wrong. It means that either we went too consumable or that parents are really paying a lot. That’s going to break down. There are limits up front when you’re working with kids in the free-to-play model. You need to be really smart to be successful.

It helps that we came very early and built the platform. Everything sits on the platform. When we update, it updates across all of our portfolio. When we update for iOS 8 or 64-bit, now all of the portfolio is updated. All these parents are getting the value that they paid for, even if they downloaded three years ago. We’ve built a maintenance team to make sure that all of our apps are complying with all the new technology.

GamesBeat: Are they at the point of doing live operations?

Schliesser: You can look at it in the same way. In a big game, you add content and do live operations all the time. We’ve cut our gameplay into series, into smaller pieces. Kids love downloading new stuff, experimenting with new stuff. But with live ops, we make sure all the content is working. We roll out new features with our platform. The portfolio management team can decide which games those apply to, so we can give more value to users. It’s just a different mindset. Instead of running and updating a big game, we have a huge amount of small games or scenes from a bigger game that we’re updating all the time.

GamesBeat: Is there an age where you think the kids’ area ends?

Schliesser: It depends. With boys, around six years old, they start playing all the arcade games, the super casual games. They play the runners. They play RPGs, even if they don’t understand all the concepts involved. They play Clash of Clans or whatever. With girls it changes a little bit. They start moving into super casual around six or seven, but we still have large demographics of girls around 10, 11, 13 years old. They still come back to the kind of activities we’re providing.

GamesBeat: I have an 11-year-old daughter. She plays the ones that go viral, like Flappy Bird or Trivia Crack. I wonder if there are some viral titles that come from the kids’ category.

Schliesser: The way the kids’ category is structured, you have three divisions — one to four, five to seven, and eight to 11. There’s not a lot of crossover, games going outside those areas. We’ve had a few examples, though. We had a game called My Newborn Baby that went a bit viral. It got 10 million downloads over about 10 months. At peak it had more than 300,000 downloads a day on Google Play. When a game like that gets up in the charts and converts well, people just keep downloading it. It can stay a longer period of time. But that doesn’t happen as often as it does with the super casual games.

GamesBeat: I suppose your titles can spread among parents in a more viral way. Could that be an opportunity?

Schliesser: Parents influence the very youngest ages. There it’s not viral so much as brands. Parents recognize those. I don’t think parents are so much into, “Hey, did you see that game?” They’re more proactive. They’re task-driven. “Do I need something for math? Do I need something for language skills? We have a five-hour road trip coming, so let’s find something to occupy the kids.”

Kids see other kids playing games and get a suggestion for what they can download. They want to check out new stuff all the time. They don’t like the long-lasting games. They won’t play Clash of Clans for a year. They’ll play for maybe a month, burn out, and continue with other things. This is how a certain age group of kids operates. Parents, though, operate on a different kind of reasoning. They tend to be opportunity-based. They’ll do more searching, looking at the top charts, going by brands. Virality with parents is a lot lower.

Above: This GDC display greeted attendees moving from registration down to the expo floor.

Image Credit: Gavin Greene/GamesBeat

GamesBeat: Do you think you’ve learned anything useful here at GDC?

Schliesser: It’s been interesting. We had a rule in the past when we started the company, that we needed to find a justification to go to events like this. Traveling is expensive. But if we can get one great message out of an event, that’s enough. Up to now, at every event we’ve gone to, we’ve found at least one thing that changed our perceptions about some major business thing.

Here at GDC we’ve had more opportunities. I’ve seen at least two interesting lectures that will change something about how we work, our strategic plans. There were also some very good meetups. We had some Google meetings and meetings with networks. We’ve found some other great companies operating in familiar spaces. We’re not doing one-off games. We’re more about mass production. Now there are more players like that. We have some really interesting thoughts about what we can do better in 2015 and 2016.

Sometimes, when you’re cut off from the day-to-day operations of the business and come here, you have time in the evening to talk about a lot of things and rebuild some business strategies. A very interesting process has occurred here for us. We’ll see how we do going forward. It’s been a good event for us so far.

GamesBeat: I wonder if virtual reality is an opportunity for you at some point. It’s a few years away, but is it something you’re thinking about?

Schliesser: I’ve seen VR and AR kids’ books and things like that. Right now, though, I can’t imagine — I don’t see it. Something needs to click. The technology is there. It has very interesting applications, obviously. But someone needs to be the genius that needs to find the right trick that says, “Hey, everyone can use this in a very easy way.”

On some fronts we’re very innovative, but VR is a front that will take massive amounts of development. We’re waiting for that to become more interesting first. We are big believers in the future of 3D printing, though. We already have a game taking advantage of that.

Above: TabTale makes a game based on the Winx brand.

Image Credit: TabTale