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Ngmoco Acquires iPhone Dev Freeverse, Completes $25M Funding Round

Ngmoco Acquires iPhone Dev Freeverse, Completes $25M Funding Round Exclusive

February 22, 2010 | By Chris Remo

February 22, 2010 | By Chris Remo
More: Console/PC, Exclusive

Prominent iPhone publisher Ngmoco has acquired multiplatform developer Freeverse (Skee-Ball, NBA Hotshot) and just closed a round of funding worth $25 million, which CEO Neil Young tells Gamasutra will help the company "scale as quickly as possible" to its exclusively free-to-play business model.

The series C round closed at the end of last year, and was led by Institutional Venture Partners. IVP general partner Sandy Miller will be joining Ngmoco's board of directors. Previous Ngmoco investors Kleiner Perkins Caufield & Byers, Norwest Venture Partners, and Maples Investment also participated.

"We've been thinking about how to accelerate our strategic growth though acquisitions of companies and intellectual property, and Freeverse was really at the top of our list," Young told Gamasutra in advance of the formal announcement.

The feeling is mutual: Freeverse was the first developer to adopt Ngmoco's "Plus+" social network into its games, and Freeverse VP Colin Lynch Smith told Gamasutra the relationship between the two companies has been "like the perfect dating situation."

Ngmoco recently said it is abandoning the traditional paid application model entirely, in favor of games that are freely downloadable but which include the option for players to buy additional paid content.

The funding and acquisition are "really about trying to get to scale as quickly as possible with the 'freemium' strategy," Young explained, "and one way is to acquire the companies we think have the right blend of talent and DNA and intellectual property we think will work well in the freemium space."

Brooklyn, New York-based Freeverse began its life as a developer of Mac software, but has recently become much better known for its iPhone applications, many of which have been chart-topping hits on Apple's App Store. The company now employs about 20 developers -- twice as many as it employed a few years ago.

Ngmoco "had to make the case to us for free-to-play," said Smith. After all, Freeverse recently announced it has passed 5 million units of paid iPhone app sales. But "Neil and the guys at Ngmoco made a really strong case," he acknowledged.

"Neil's vision for where the industry is going, and where the market is going, was pretty compelling, and we're on board with that," he added. "There are still some opportunities on the paid side, but the real opportunities are on the free-to-play side."

Young told Gamasutra that Ngmoco made the decision to pursue free-to-play exclusively last summer, around when it bought Epic Pet Wars developer Miraphonic (the acquisition was announced last November).

"We've been going full steam ahead on free-to-play since then," he said, adding that the company "learned a lot" from its free-to-play games Touch Pets and Eliminate -- "by far the biggest of our games by download," with 9 million downloads between them.

Ngmoco also maintains its Plus+ network, a suite of social features that can be integrated into its own games as well as externally-developed titles. Young said that since the system was made available to select partners last September, some 20 million Plus+-equipped games have been installed to iPhone and iPod Touch devices, approximately 12 to 13 million of which were developed by Ngmoco.

This year, Ngmoco plans to release around 20 free-to-play games -- and it expects Freeverse will be able to contribute nearly as many on top of that. It has one game in certification with Apple now, and another submitting this week.

And in the coming weeks, Ngmoco plans to expand the features of its Plus+ SDK, and allow approved developers to integrate it more autonomously.

"We've built up a lot of operating expertise around free-to-play -- goods management, message management, storefronts, virtual currencies -- all the things you need to run these games in a way that actually makes money," Young said of Ngmoco's work on Plus+.

And although Young made frequent reference to "these types of devices" in conversation with Gamasutra, when asked, he indicated the company plans to stick with Apple in the foreseeable future.

"For now, the iPhone OS -- between the iPhone, the iPod Touch, and the iPad -- is a pretty potent force in the market," he said. "Both Android and the Windows 7 Phone are going to be interesting, but clearly there's a big lead Apple has."

"We'll keep continuing to watch the progress of other devices," he continued, "but what Apple has been able to do with a unique blend of hardware and software and application environment is non-trivial to replicate. There's quite a way the competition has to go."

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