Amazon founder Jeff Bezos has invested $3 million into user-generated casual gaming site Kongregate through Bezos Expeditions, his personal investment vehicle. Kongregate CEO calls it a “super angel round,” although technically it is a B1 round (the startup raised $5 million in a round led by Greylock). Bezos Expeditions won’t be taking a board seat. Greer says:
If we had done another venture round, we would have had to raise $12 million to $15 million [to satisfy
currentthe target equity stake that would be required by new VC investors]. We don’t need that to get to profitability. We still have $6 million in the bank of what we’ve raised so far, including Bezos’ money.
He really didn’t need the money, but when Jeff Bezos wants to invest in your a startup on good terms, you’d be crazy to say no. (LinkedIn founder Reid Hoffman, also an investor in Kongregate, made the introduction to Bezos). Greer says the process was very efficient. He flew up to Seattle and had one meeting with Bezos and his investment team. Greer explains why he thinks Bezos invested:
He looked at it the way he looks at the Amazon seller business. Amazon is a better place to sell your stuff than on your own site, and Kongregate is a better place to host your games. Community is really important. He said you should really consider developers your customers to the same extent that you consider players your customers. That was his big emphasis.
Kongregate lets anyone create their own Flash video games and splits revenues with game creators, starting at 25 percent of any associated advertising, up to 50 percent. ComScore shows 1.7 million global unique visitors in March (see chart below), with the average user spending 82 minutes per month on the site. (The company claims 3 million worldwide uniques and 349,000 registered hardcore users). The video above is one we shot of Greer at the Crunchies awards earlier this year, explaining what Kongregate does. (The figures he cites at the end of video of 2800 games and 1.5 million visitors are outdated, and now would be 4,200 and 3 million respectively, on an apples-to-apples basis. And only 63 million games have been played in total, not the half a billion he states in the video).
Greer also has a Facebook strategy up his sleeve which he plans to unveil next month. Kongregate will start launching the most popular games as standalone Facebook apps, starting with Dolphin Olympics, Jump Cat, Super Crazy Guitar Maniac, Ragdoll Avalanche, M.A.D, and Filler. (See exclusive screen shots below).
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Props to Kongregate, a shining example of a Rails + Engine Yard company. Also, I think this confirms my suspicion that Bezos is a Rails fan, with their 37Signals investment + this.
how did they make this video?
What is the meaning of kongregate (& which language is it?) … Sorry if that sounds silly.. !!
kongregate is an online flash game site. it is english, based on the word congregate, with the c replaced by a k. i am a member. it is completely free, and it is a friendly site where every1 can have their own profile, like facebook and myspace. there are different chatrooms that people can join in anytime they want. generally, its a good place to go to if you are bored
TechCrunch made the video. We are going to be making more like it. Stay tuned.
Jeff still has a good nose and I don’t think it has anything to do with him beeing a rails fan. I am sure if there is good business to be made he doesn’t give a heck what technology / language it’s build in. Remember, you can always re-build on your ‘dream platform’ once you are successful - but you don’t have to if you’re a lemon.
Thanks Erick! One clarification, when I said that a VC round would have had to be $12MM-$15MM, I meant to satisfy the target % for a VC firm (not an issue for our current investors).
Cool site with a nice business model. Revenue sharing with the game developers makes sense. Bezos is completely right to emphasize that the developers are customers as much as the game players. Kongregate’s a two-sided market and the players won’t be there if the games aren’t good.
What’s the revenue model? Advertising?
Since when does anyone click on ads while playing video games… especially while playing them within the context of Facebook - where we already know people don’t click on ads.
Maybe I’m missing something?
Kongrats Jim! I can’t wait to see what they’re doing on FB
@Jim Great site. I’m guessing advertisements is going to be your source of dough. But, given your youngish audience, it might be hard to get a high CPM. I don’t think you need to adopt the youtube revenue model. Unlike youtube, you can hook up with sponsors and help them make games to promote their brand. I would hate to see advertisement in videos but I don’t think i would mind shooting pepsi labeled ballons or a game about managing a macdonald (lame example, i know). Again, great site and congrats!
Mogilny, have we got a game for you! http://www.kongregate.com/game.....-videogame
Of course it’s not exactly sponsored by McDonald’s — rather the opposite — but a fun game nevertheless.
And actually our click-through rates are pretty good, particularly for when the ads are targeted to young males, our core audience. Most of the games on Kongregate are fairly casual, with lots of level breaks and pauses built in. It’s not an immersive experience the way console games are — think TV, not movies.
@Emily
I’m sure you have great CTR, especially with the full video ad of a girl stripping for the new Bic razor commercial.
Kongregate is very cool stuff! Great news for Jim and the team.
For those of you who want an opportunity to hear Jim and others in the gaming space speak, I’d encourage you to come to the Social Gaming Summit (http://www.socialgamingsummit.com).
@3, Vinay, real word is ‘congregate’ meaning to assemble togather…you see, with so many website names not available in English, startups now have started taking german versions of the spellings
http://www.konsulted.com
Here’s a screen shot of the ad appearing on the homepage. (No Nudity)
http://img80.imageshack.us/img.....re1ut0.png
@Emily A missed opportunity?
Anyways, I’m glad the traditional ads are working out for you. I stand corrected.
@molleindustria if you are reading this blog post (prolly not), sry i trashed your idea.
@Gamer the ad is a bit racy… but compare to the crap that advertisers throw at young males these days. I’d say this ad is fair game.
I love Kongregate, but they are not really a Youtube of games. They are missing the instant publication part that makes Youtube so gratifying. Multigames is a closer example of the Youtube concept for games.
http://www.multigames.com
Did Jeff Bezos fund ChaCha ?
HOW was the video made, not just who! some cool filter gave this a charles schwab tv commercial look
@Mogilny
Fair game or not, the ad is going to excite any young male and have a monstrous CTR, especially since you have to click on the ad to watch the end of the video and see what happens.
@Erfa
I don’t think instant publication makes YouTube what it is. I think having a development area to see what your game is like prior to publishing it is actually an advantage and something Kong has done a good job on.
Congrats Kongregate!
They are great people and deserve the success. This is just another sign of how strong the casual gaming market is and the growth potential it has.
@Gamer R u giving props to the advertisers for their great work? I am missing the issue here.
@Erfa, @Gamer I agree that kongregate isn’t the youtube of games.. but not because of lacking instant publication. Youtube’s content is generate buy a huge part of their users while kongregate games aren’t user generated (maybe some games are but they pay people to make games, i think). This is a big difference.
Congrats!
And if you haven’t had a chance to play our new game Sonny, make sure to go check it out on the front page of Kongregate. It’s in their current card challenge!
@Mogilny Kongregate is sponsoring some of the games, but they haven’t paid to get them developed (with a few exeptions). But sure, there is a difference in filming your friends with your mobile phone and developing a flash game. There will never be 100.000 new flash games created each day
Emily & Jim,
Congrats, not just on the money, but on making a service that so many people love. Count me in that group. My Wii and 360 often sit dormant because the Kongregate experience is so great and convenient!
Kongregate is going to be a big, BIG win for all involved. Mark my words.
@1 Henry: Bezos cares about a great product and great customer service. Who cares what framework a website is built with? Maybe it confirms my suspicion that Bezos likes the letter A: Amazon, 37Signals, Kongregate all have an A in their names… I bet he owns Apple stock.
Congrats to Emily and Jim……… their community is a glimpse into the future of main stream youth culture 5 years from now.
I like that Kongregate’s fine crafted flash games will be weaved into the Facebook platform.
Congratulations to Jim, emily and team, much deserved Kongregate is a great concept with really nice people and some really cool games there.
oh and Erik, I’m jealous we didn’t get a pop video like that for erepublik ;o)
@28 Larry: Stating that a thing is possible is not equivalent to stating that a thing is probable.
Rails, for better or worse, helps certain people get results. People have invested more on far less relevant metrics than “choice of a functional tool.” Why all the negativity?
As for “The ‘A’ Hypothese”, see here: http://digitaldaily.allthingsd.....n-audible/
P.S. And yes, I work for Engine Yard.
Love Kongregate and have been touting it’s praises since it launched. It’s one of those ‘OOOH! why didn’t I think of that sites” Which is outstanding.
Love to do biz with such a standout crew.
Love the way they set standards for games that make you yant to fight your way to meet the standards. if your playing flash games on any other site your wasting your time.
http://www.kongregate.com?referrer=squiremarcus