How Trade Nations developer Z2Live is deploying venture capital funding

Jun 17, 2011

As more venture capital flows into the app sector, game developers like Seattle-based Z2Live can afford to take a longer view and not “rush a title out the door to keep the lights on.” Z2Life, founded in 2009 with early funding from Madrona Venture Group, earlier this year raised $2.5 million from Silicon Valley-based Draper […]

As more venture capital flows into the app sector, game developers like Seattle-based Z2Live can afford to take a longer view and not “rush a title out the door to keep the lights on.”

Z2Life, founded in 2009 with early funding from Madrona Venture Group, earlier this year raised $2.5 million from Silicon Valley-based Draper Fisher Jurvetson. The opportunistic and multi-genre game developer is the creator of the uber-popular social game Trade Nations.

In this edition of Game Theory, Z2Live chief operating officer Lou Fasulo talks about why the profitable company decided to take on additional funding, how Apple’s CPI ban is hurting high-quality developers, and why in his opinion the Android “ecosystem is just not there yet.”

Appolicious: Z2Live secured funding from Silicon Valley venture capital firm Draper Fisher Jurvetson after launching in 2009 in part with funding from Seattle-based Madrona Venture Group. What was the company’s biggest milestone between funding events?

Lou Fasulo: Z2Live was originally founded to create an Xbox Live style game community.  When Apple announced Game Center, we decided we needed to reinvent the company as a publisher building free-to-play games with lite-mmo elements.  We re-tooled our company quickly and were able to launch Trade Nations, our first title, eight months later.  In parallel, MetalStorm was approaching feature complete at the time we were talking to Draper Fisher Jurvetson, so they could really see that we were executing on a number of fronts at a very high velocity.

APPO: Your first game, Trade Nations, is one of the most successful social titles of all time and helped Z2Live achieve profitability. So why raise the extra bucks?

LF: Two reasons, really. First, we saw some opportunities to invest in the future that might not immediately provide the same returns we were seeing on iOS, but were important to the long term opportunity in mobile gaming. Secondly, regardless of how smart you think you are, things never go according to plan.  Not everything will stick and we felt the need to increase our working capital so that we never needed to rush a title out the door to keep the lights on.

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APPO: Earlier this year, you came out with your second title, MetalStorm: Online. From virtual farming, to combat-oriented flight simulation to whatever comes next, how do you decide which genres to attack?

LF: Great question. There’s certainly no science (yet) to that, but we’re looking for opportunities to really raise the bar on gameplay experiences and that means we look closely at what’s happening in the market. Sometimes that means paying more attention to what fails. The make-up of our team is constructed to find a good match of talent, passion and business opportunity.

APPO: What is next on the horizon?

LH: We’re a few weeks shy of reaching feature complete on our first casual-pvp title.  It will involve, as you can imagine, trading and fighting.  That’s all I can really say right now, though its our most ambitious title yet.

APPO: Explain what is keeping Z2Live from embracing Android at the current time.

LH: We’re expecting Android to eventually be an important part of our business.  However, there are a wide variety of issues that make supporting the platform very challenging from device fragmentation to the lack of good billing options for consumers. This dramatically increases the cost of development, QA and marketing.  These problems will eventually be solved or reduced in their severity so that high quality, consistent experiences can be delivered allowing publishers to make money while delighting their customers. The ecosystem is just not there yet.

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APPO: What are the most notable changes in iOS 5 that will impact your work?

LH: It’s still too early to know, but the new Game Center features are most likely to take front and center in our titles.  The Notification Center will probably also be important given the role use push notifications play in keeping players up-to date on events in their games.  Personally, I’m excited that I’ll never have to connect my iPad to my laptop again to sync.

APPO: As a key player in a fast-growing game development firm, what are the three things about the mobile space that keep you up at night?

LH: If there’s anyone at a game developer or publisher that’s not concerned with discovery, I’d love to talk to them. The CPI ban by Apple introduces some new challenges for the entire free-to-play space.  Rewarded installs are commonly compared with “empty calories”, but this is only the case for low quality games and apps.

Great games can leverage CPI to grow profitably without the need for chart manipulation.  I’ve yet to see any alternative advertising channels that are cost-competitive and have the scale to reach multiple millions of users. The net result is that many publishers will invest less and reskin more; ultimately reducing the quality level of the freemium play experience.

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Brad Spirrison

Brad Spirrison is the managing editor of appoLearning and Appolicious Inc. In this capacity, he has sampled and evaluated thousands of iOS and Android applications. He also holds an M.A. in Education and Media Ecology from New York University.

Spirrison worked in concert with appoLearning Expert and Instructional Technology Specialist Leslie Morris while curating and evaluating educational applications.

A longtime media and technology commentator and executive, Spirrison is also a regular contributor to ABC News, The Huffington Post, TechCrunch, Bloomberg West and The Christopher Gabriel Program.

Spirrison is married and lives with his wife and young son in Chicago. As his son was born just weeks before the debut of the iPad, Spirrison takes his work home with him and regularly samples and enjoys a variety of educational applications for young children.

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