The recent acquisition of thousands of digital jigsaw puzzles signals a new turn for MobilityWare as it diversifies revenue streams beyond traditional card games.
The strategy crafted by Chief Executive Jeff Erle is a departure from a long-held ad-supported business model that came with such hits as “Solitaire,” its spinoff “FreeCell,” and “Blackjack”—a mix of products that put the Irvine-based company on the app map.
Its December buy of San Diego-based Critical Hit added more than 10,000 puzzles to its growing portfolio, plus the ColorArt app, which taps into the trend of adult coloring books that may have peaked last year.
“Our new games have this fabulous artwork to them,” said Erle, a longtime software consultant and Tech Coast Angel who’s racked up executive stints at Irvine-based storage products maker Western Digital Corp., Anaheim circuit board maker Multi-Fineline Electronix Inc. and ADP.
“The beauty of their artwork is what makes a game fun. It makes it sell,” he said. “This is really key to where we’re going and who we are. And it’s all about the main strategy of diversification.”
“Jigsaw Puzzle” and “ColorArt” are free to play and drive some revenue from advertising, a necessity, given that the combined offerings have more than 20 million players. Jigsaw also draws revenue from in-app purchases, while the coloring app has subscription pricing for premium content and features.
“All the new games are in-app purchases,” Erle said. “Our business has been so based on Solitaire and our revenue.”
And with good reason.
The suite of Solitaire games, which includes “Tripeaks,” “Pyramid,” and “Spider,” has attracted more than 200 million downloads. Its other titles, such as “Hot Streak Slots,” have drawn another 100 million.
Add it up, and MobilityWare is generating nearly $100 million in annual revenue, placing it among the top tier of app game makers that compete in a hotly contested, fickle market peppered with millions of options.
Some games, like the “CandyCrush” franchise and “Pokémon Go,” go viral, but can fade just as quickly.
It helped that MobilityWare co-founders Dave Yonamine and John Libby, both engineers, had a slew of titles at the ready when Apple’s app store launched in July 2008, pivoting the company from a software maker that integrated mainframe computer systems into a card game software maker for mobile devices, which ushered in the digital age.
“We’ve been fortunate because we’ve been there from day one,” Erle said.
Steady growth and a hiring round of software engineers and digital artists prompted the company to relocate headquarters in April to a 32,000-square-foot office near Tustin Market Place, then take 19,000 square feet on the first floor of an adjacent property.
MobilityWare now employs more than 150 locally, placing it among the 13th largest software makers in OC by employment.
Its headquarters reflects the casual SoCal vibe that helps attract millennials and keeps veterans fresh. Pods of 10 staffers each are designated to work on specific games in a collaborative atmosphere filled with cubicles dressed up with game characters, toys, personal trinkets, big cardboard cut-outs and playful decorative art.
“We make sure we have a balance of work and life, because we are not curing cancer. We are creating fun, we are creating entertainment,” Erle said.
The company takes every employee and one guest each on an annual trip. This year it was Las Vegas. Last year it was Kona on the Big Island of Hawaii to celebrate its 25th anniversary. Movies on a big screen, poker parties, and board game nights helped MobilityWare earn a nod last year as one of the Business Journal’s best places to work.
Pivot for Profit
Part of the company’s success is steeped in data analytics and an expanding team of researchers and retail and psychology experts that receive game play feedback around the clock. Imbedded tools in the games track consumer behavior and trends worldwide. MobilityWare games are played in more than 170 countries, including recently added markets, such as Africa, India and Pakistan, where smartphone adoption is on the rise and in some cases the only portal to the outside world.
Envious daily average user rates in the millions for some of its games make generating actionable data easier, whether it’s deciphering spending thresholds through various pricing mechanisms or behavioral changes prompted by font sizes and colors.
“Since we came out in late 2013, we have increased daily revenue five-fold,” Erle said.
An annual Valentine’s Day promotion a few years ago led to record in-game purchases that eclipsed $10,000, an impressive total, considering that 95% of gamers never spend money during play. It’s virtually all profit for MobilityWare when they do; its margins typically are well above 50%.
The company’s median target market may be surprising: 35-year-old women are a coveted demographic that generates about $3 trillion dollars in global spending annually.
MobilityWare is debt free and doesn’t have private or institutional investors.
“We don’t have to take advice from board members,” Erle said. “That gives us creative freedom and strategic freedom.”
