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Trade Me founder invests in gaming

Published: 7:28AM Monday May 16, 2011 Source: ONE News

  • SmallWorlds game (Source: Supplied)
    SmallWorlds game - Source: Supplied

Trade Me founder Sam Morgan has led a $2.5 million investment into a social gaming company based in Auckland.

The company SmallWorlds was launched in 2008 by entrepreneurs Mitch Olson and Darren Green, and is New Zealand's largest social gaming company with 6.5 million registered players.

The game is based on a virtual world where players can create their own worlds, and share experiences with other online friends like watching YouTube videos, listening to music and browsing through photo galleries.

The investment round is aimed to fuel SmallWorlds' expansion in the billion-dollar social gaming sector, with the company aiming to be a $100m export earner by 2013.

Gaming is the fastest growing entertainment sector globally, and has already overtaken both the music and film industry in revenues.

Morgan says SmallWorlds is well positioned for further growth.

"Online businesses like this are hugely scalable and can grow incredibly quickly while maintaining high margins. SmallWorlds has already proven its audience appeal, technology and management capability.

"Gaming is a huge export opportunity for New Zealand, occupying the sweet spot between technology and creativity. It's easy to draw parallels with an internationally recognised company like Weta Digital, who also successfully combine these two elements," he said.

Games on social networks earned over $US1 billion last year, and are expected to be a $US5 billion industry by 2015.

"Our next wave of multi-million dollar exporters may well be trading virtual goods, which is a real and significant global market," Morgan said.

SmallWorlds players can choose to buy "virtual goods" to personalise their character and spaces.

This business model of selling "virtual goods" for "micro-transactions" to a large online audience is increasingly popular, and the practice has been adopted by companies such as Disney, Nickelodeon, Sony and Microsoft.

"The game is free to play but the scale we can achieve with social networking audiences means that only a small percentage of players need to purchase premium content and virtual goods in order to create significant revenues," says co-founder Olson.

SmallWorlds currently employs 35 staff and plans to create 20 new jobs this year.

Morgan, Jade Software CEO Craig Richardson and US technology investor Payman Pouladdej have recently been appointed to SmallWorlds' board.

The site's audience is already growing by about 200,000 players each month, predominately made up of teenagers, as well as females in their 40s.

Eighty percent of players are coming from the US. SmallWorlds expansion plans include moving into non-English speaking markets, and better integration with gaming platforms and social networks like Facebook.

More than 300 million people play games on Facebook alone each month.