There are a few ways for a messenger app to make money. One is to convince Mark Zuckerberg that your app will eat his lunch, and he’ll offer you billions of dollars to buy your company (Instagram, Whatsapp).
A more logical approach is to distribute games. Kaokao, Line, and Wechat have successfully taken this approach to being kingmakers in getting games to the top of Google Play and Android marketplaces in Asia. With its Global Game Fund, Tango is taking a third approach — becoming a publisher.
Tango has announced the formation of a $25 million publishing fund to distribute and market games both on and off its messenger platform and the hiring of Jim Ying, former VP of Publishing for GREE in the US.
There are a lot of mobile game publishers out there, which makes sense given the fact that the biggest challenges facing mobile game developers are discovery and the high cost of marketing.
What makes Tango interesting is the messenger piece. When developers integrate Tango’s API’s (leaderboard, gifting, game invites) to distribute their games to Tango’s 200 million registered users, they are providing Tango with data on what games are successful in their microscopic world.
In theory, this should make it easier for Tango to pick the winning horse to bet their $25 millon publishing fund on, versus other publishers. All it takes is one big hit to change the fortune of a company overnight (see, King and Candy Crush, Glu and Kim Kardashian: Hollywood) so by combining $25 million with internal data, Tango could have a big advantage picking hits as a publishing partner.
The flipside is that Tango has been distributing games via its messenger app for over a year, and no games (aside from Road Riot,with a decent 500,000 DAUs/month) has lit the games world on fire. Though Kaokao, Line, and WeChat are huge in Asia, the jury is still out how big an impact they will have in the North American games market (Disney Tsum Tsum will be a good test).
To be distributed on Tango, a developer has to share an additional 10 – 20% of the revenue in addition to the 30% to the distributor, so Tango needs to add a lot of value to make it worth it. $25 million and its messenger platform helps mitigate the risk, but Tango’s success as a publisher will succeed based on its ability to find hit games to publish. In that regard, they are just like every other would-be mobile publisher.
Interestingly, Tango is not just looking for puzzle games which seem to be a sure fit with their messenger platform, but also RPGs and mid-core titles.
When I asked Jim Ying about this, he responded that Tango wants innovative games that take advantage of Tango’s API’s and network. As an example, a RPG developer could tie into Tango’s API’s to create clan-to-clan messaging, warrior engagement, and clan-based leaderboards.