We're thrilled to announce the return of GamesBeat Next, hosted in San Francisco this October, where we will explore the theme of "Playing the Edge." Apply to speak here and learn more about sponsorship opportunities here. At the event, we will also announce 25 top game startups as the 2024 Game Changers. Apply or nominate today!
Robert Antokol, CEO of Playtika, believes we’re in the middle of the revolution. But when he describes what it is, it can sound like old news. Antokol believes mobile games and other types of games can benefit from strategies around retention, or keeping existing players happy.
Game companies can drive retention higher with live operations (live ops), such as tournaments or holiday events or other new content in existing games. Keeping your existing players happy is better than spending a lot of money on acquiring new players, who may or may not stick around and who may or may not spend money. Antokol said Playtika — which is valued at around $7 billion as a public company — never grew its business by spending a lot on user acquisition.
With Apple’s recent privacy changes, it’s harder to track users and so user acquisition spending isn’t as efficient. And so the time of retention has come to the forefront. Playtika’s games like Slotomania grow by retaining their users for years and then adding new users through community growth.
“This is our time to shine and grow,” Antokol said in an interview with me.
GamesBeat Next 2023
Join the GamesBeat community in San Francisco this October 24-25. You’ll hear from the brightest minds within the gaming industry on latest developments and their take on the future of gaming.
Playtika invested heavily in AI technology that can help it understand user behavior better and what details lead to better retention. And Playtika cooks new games for a long time, changing details through soft launches and eventually getting the user retention right.
That’s what it did with the recent launch of Switchcraft, developed by Playtika’s Wooga division, Antokol said. At the same time, Antokol has to convince game developers to stick with their existing games, rather than rolling over to new ones, by giving the developers the challenge of getting users to come back every day. I also asked Antokol about nonfungible tokens (NFTs) in games, and he had an interesting answer.
Here’s an edited transcript of our interview. (Antokol is going to be one of our speakers at our GamesBeat Summit 2022 event on April 26-27, 2022).
GamesBeat: You believe we’re at a point in a revolution right now. Can you talk about why you feel Playtika’s strategy around retention is important as a part of that?
Robert Antokol: Yes, I do believe we’re in the middle of a revolution, in the middle of something big happening that’s changing the world of games. If you look at the last 10 years, the growth of the game industry has come from mobile. This is the main source of growth. It started on Facebook. Playtika started running games on Facebook around 12 years ago, and we were one of the first companies that moved from Facebook to mobile. We did with our ability in live ops, our ability to retain our players.
If you look around the world at what’s happening with [Apple’s decision to prioritize privacy over targeted ads by making it easier for users to decline being tracked through the Identifier for Advertisers] IDFA right now, with higher CPIs (costs per install) and other issues around user acquisition, this isn’t a major change for companies like Playtika in growing their business. Playtika never grew its business through user acquisition activities. Playtika always grew the business by retaining players, by making players happy and staying with our games for 10 years. That was always our strength.
Now we have new platforms, new technologies, new stuff happening. This is the right opportunity for companies like Playtika. It’s going to take time, but I believe that the ground is shaking right now. The world of games is shaking, in a good way. Five years ago it was very easy to take a mobile game with a small company and in two weeks it could be in the top 50 grossing games in the U.S. Today that’s impossible. Today it’s just like the PC and console game markets. The price of user acquisition is too high. This leaves room for companies like Playtika that focus on retaining players. This is our time to shine and to grow. That’s why I’m so excited with what’s happening around the world. It’s going to be a difficult time, but for Playtika this is the opportunity I was waiting for.
GamesBeat: The core part of the business that a lot of other game companies don’t seem to have, then, is the ability to retain customers for that long period of time. That’s the foundation. It helps you make money now, and also keep an eye on the future. When you look at the future, what are you planning? What are you looking at on top of that core job of retaining existing customers?
Antokol: Playtika, when we launch something new, we never think about monetizing first. We want to make players feel comfortable, have fun, and build a community. We want players to make friends and maintain a presence in the game. The monetization will come later. That’s never been our focus from day one. That’s why players feel much more secure in staying in our games for 10 years. This is the main difference. Most other companies, if they’re not monetizing a player after one day, one week, two weeks, they don’t care about that player. They’re moving on to the next player.
They don’t want to retain that player, because the focus in the last few years has always been to simply grow through user acquisition. You put in the money, bring in more players, monetize those players. That was the mentality. Playtika was always different, because I’ve always believed that building a community around a game is the real asset. That’s why we’ve always focused on making the player happy all the time. We’re not just thinking about taking their money. We want the player to be happy, to stay in the game.
Our future, first, is not thinking about monetization. It’s about making sure players keep playing the game and bring their friends. That’s the main difference.
GamesBeat: The problem today, to repeat some of that, is that the strategy of using user acquisition money to find a lot of lot of new users and then sort through them to find people who will spend a lot money–that’s the strategy of the past, but now it’s harder to find those people who will spend money. That style of user acquisition doesn’t work so well when you have IDFA deprecation in place.
Antokol: Exactly. Think about the players, too. A few years ago, mobile games were something new, something exciting. Players were downloading and buying a lot of different games. Today, players look at games differently. They don’t want to download 20 games to their device. They think very carefully about how many apps they download. They’re more loyal to what they download and what they play. There’s a different approach to the market. Most companies don’t understand that. That’s why hypercasual games and all this industry around it that’s monetizing through advertising, it’s a short-term business. It’s not long-term.
We’ve always had a different approach. We’ve never wanted to rush into doing what’s popular right now. We’re always thinking about the future. The platform is changing and maturing. Players today are more mature than they were a few years ago. In the beginning they were very curious. What’s this? What’s that? Today, they think first. Even myself. Every time I look at an app, I think about it before I download. People are more suspicious.
If a player downloads my game now, that’s it. I want to treat them like the top player in the game. I don’t care if they’re not paying. I want them to keep playing the game, to stay in my ecosystem. The player is the biggest value. When we started in the business, CPIs were 50 cents. Today, if you want to bring in quality players, you might pay $20, $25, $30. You can’t survive on user acquisition if you don’t have the technology, the know-how. If you don’t understand live ops you’re going to fail. You won’t have a chance to succeed in this world. This is why I’m saying there’s a big opportunity for companies like Playtika.
GamesBeat: At the same time, how do you provide that extra growth? How do you deal with the innovator’s dilemma problem? It’s always easier to reinvest money into retaining players with an existing game, the tentpole franchise, than it is to launch something brand new. How do you balance that? Eventually those strong franchises can decline over time.
Antokol: We look at our players as a community that can move from one platform to another platform. It doesn’t matter which platform they’re playing on right now. The new technology, the new products–we’ll always invest in our current games, because we look at our games as a platform that can work with any other platform. The community can move to any platform. That’s why our games have run so well over the last 10 years. We’ve done a lot of innovation, built a lot of technology around that ability.
The secret sauce of Playtika is our ability to work with AI. We know exactly when a player is going to stop playing. We know exactly when they’re going to pay. We know how many times they come in each day. I can’t say we can predict with 100 percent accuracy, but we can predict, for most of our players, their activities in our games. That’s the real power behind the operations side. When you can predict this, you can find solutions to problems. If someone wants to move on from your game, to delete your app, you know how to handle that player. We sound the alarm. We know how to operate and make sure a player retains in the game.
If we want to move on to new innovation, new platforms, that’s no problem. That’s good for us. We know how to move players. We started making this investment four or five years ago with the first lab we opened in Israel. Then we opened labs in Ukraine and Belarus, and recently we opened a new lab in Switzerland, an amazing lab. We’ve been investing in AI for many years. I knew this was going to change the game.
I’m not a genius, but I knew that sometime there would come a day that user acquisition was going to be a problem. We needed to find ways to avoid that problem, and this is why we can keep growing the business. Otherwise we’d be stuck. AI, for me, it’s not only the future. It’s already the present. But again, I’m a big believer in AI and new technologies. This is how we can retain our players and bring in more entertainment in our current games.
GamesBeat: You’re still going to launch new games, then, but you’re not going to spend like crazy on user acquisition when you launch those games. Tell me about the process of launching a new game like Switchcraft.
Antokol: We’re going to spend like crazy on new games. But when that’s going to happen, this is how we spend it. Every game that we launch, we’re going to have very tough [key performance indicators] KPIs, and we’re not going to spend if we can’t get to those KPIs. We are very careful with our money, our revenue. It’s not that we’re not going to spend, but we’re not going to spend on a game we don’t believe can maintain and grow. That’s the difference.
Switchcraft is a good example of a game that’s working very well. It’s growing. Still, we’re not spending tons of money there yet. We’re not doing any crazy stuff there. We’re waiting and fixing the things we need to fix. This is where we’re a little bit different. Switchcraft is the first game we’ve launched in a few years. We’re using the experience at our Wooga studio, which I’m sure you know very well. We’re going to launch more games. In the end, I believe we’ll have a big success there. But we’re doing this very carefully.
GamesBeat: It sounds like you definitely keep your players happy. How do you also keep your game developers happy? One thing that usually happens is that developers create a game, and then they move on to making the next game, their new creative outlet. If developers need to pay attention to the existing game, maybe they’re not going to be so happy.
Antokol: This is the $100 million question. Today at Playtika–this is hard for me to say, but it’s the truth. If you’re working on a current game, you’re much prouder than if you’re working on a new game. There’s so much innovation in the current games that nobody feels they’re just doing the same thing. There’s so much stuff, so many new things happening, all the new technology that’s happening around the world in our current games.
In the beginning, 12 years ago, I had the idea that a few months after launching a game, we had to take the strongest guys from the development team and move them on to a new game. But if you do that, your current games will fall off. I had to change that mentality. Playtika developed a different mentality. We always grew through M&A, so we never had this issue where we had to move people to new games. Our vision isn’t just to develop games. Our vision is to maintain and entertain our players. I changed the mentality of how our employees are thinking. Today, when we have a game that we’ve built up, everyone’s proud to work on that game. Everyone’s excited.
When we acquire a new studio, like when we acquired Wooga–at Wooga the mentality was like a regular studio. Guys were always moving on to a new game. They were always growing through user acquisition. In the beginning I cut the UA budget and I taught them how to focus on how to grow their revenues. I gave them several challenges. “Grow the business to $100,000 a day.” This is the kind of challenge that made the developers happy to stay with their current game. That’s important. In other companies the best guys are always moving to another game, always climbing. This is the DNA of Playtika. We’re proud to work on our current games.
GamesBeat: It feels like what’s appealing about that to the game developer is that they’re not necessarily focused on monetizing those existing players. It’s more like they’re focused on creating and building the community. Once they do that, it’s something they’re attached to. They want to stay with it.
Antokol: This is why we’ve always been successful through M&A. If you look at our acquisitions over the last few years, we’ve always acquired a good product with a good community. It’s not necessarily just monetization or live ops. That’s how we’ve been looking for the right opportunities. It’s a strong product with a big community around it. Then we can bring in our AI and our platform, bringing all the know-how from Playtika. For the developers that have a few million players a day and they’re suddenly starting to make money, this is the challenge. It changes everything for them. I want to work with a game that’s making $100 million a year, not a game that’s making $5,000 a day. It changes the mentality. People want to work on a big project that can reach many different kinds of people.
You’re right that a big part of it is community. The mentality of developing games for many years was always to move on to the new challenge. We’ve changed this mentality. This is why our games are running so well. It was very hard.
GamesBeat: Talking about a revolution and how this is a special time, we also have the pandemic, which has had an effect on game-playing. We have a historic boom in game investment because of that. Games have done well and investors have paid attention to that. They’ve poured money into existing companies through public offerings, but also backed game startups with investment. What do you think about the competitive environment in the face of these historic changes?
Antokol: Everything started in Q1 and Q2 of 2020, when the pandemic started and all the game companies started to make money like crazy. Every developer started growing their business. The hype around startups in games became crazy. Everybody raised tons of money. In 2021, in the beginning of the year, the money that flowed into game startups–I can’t think of something even close to it.
But the issue is, all of these startups found themselves–after they raised all this money, they still found it hard to get to their goals. The money they raised still isn’t enough to get to the level of growth expected by their investors, because CPIs doubled. If you’re not working on live ops and you don’t understand how to retain your players, you’re going to have a problem. If you ask me, from my experience, next year is going to be a hard year for startups in this area. Prices are just going to get higher. Startups are going to suffer, because they don’t have the right tools to retain and monetize their players, because they’re built around growing through UA. You can’t grow through UA now. I’ll say this again and again. You can’t do it. Next year is not going to be an amazing year for startups, in my opinion.
To the second half of your question, yes, there’s still a lot of competition. There’s competition for employees, competition in the market, competition between games. But that’s made us a better company. When you have real competition, you’re thinking about how to retain your employees. You’re focusing much more than you did two years ago or 12 years ago. If you’re a company that knows how to make changes, this is the right time for you to grow.
GamesBeat: A lot of people are talking about what the next opportunities are. Blockchain and NFTs come up a lot. What’s your current thinking about those technologies? Are there other opportunities you see as the big ones in the future?
Antokol: We can’t avoid what’s happening around the world. We’re looking very carefully. Personally, I’m very interested in this world. We’re in the middle of a revolution, as I said. I believe something big is going to happen. But I still can’t tell you exactly what’s going to happen. We’re still very far from regulation. The barrier to entry for playing NFT games is still very high. You need to be half genius to play these games. It’s not an easy world. It’s a nice world to sell to investors with all these buzzwords, with the metaverse and blockchain making everybody crazy.
Playtika has always been a realistic company. We’re always focused on ourselves. If there’s going to be a new platform, a real platform, we’ll be a part of it. But it’s not something that’s going to happen tomorrow.
This is a time for companies, and not only in the games business, that have the DNA of focusing on their users and players. Focus on maintaining them. This is the time for that kind of company. The next few years are going to get harder. The companies with an advantage in technology, in understanding the players and users, are going to win on this journey. Playtika is in a good place for this race.
GamesBeat's creed when covering the game industry is "where passion meets business." What does this mean? We want to tell you how the news matters to you -- not just as a decision-maker at a game studio, but also as a fan of games. Whether you read our articles, listen to our podcasts, or watch our videos, GamesBeat will help you learn about the industry and enjoy engaging with it. Discover our Briefings.