In the startup world, the word ‘pivot’ is often a nice way of describing a reaction to a misstep or product that just didn’t work. It’s a second-guess, a mulligan, a do-over whose success will hopefully erase the memory of the initial gaff.
MAG Interactive, creator of 3 year-old hit puzzle game app, Ruzzle, is one good example of a winning pivot. The Stockholm, Sweden-based company started out in the music business and, in the face of powerful competition, backed away from that industry and quickly pumped out an addictive mobile game that boasts 10 million active users and has lived in the Top 20 iPhone word games in the U.S since December 2012 (iPad versions entered the top charts a year later). Western European nations have also been hot on the app.
The company was acquired by AirClic in 2001 and the team tried to partner with mobile phone firms that might want to install the product but fate had other plans. “We had the hope of getting this tech built into all the Erickson Motorola phones but the dotcom bubble came and they had other stuff to think about.”
Hasselberg and Nygren broke out and formed MAG Interactive in 2003, alongside co-founders Roger Skagerwall , Johan Persson, Anders Larsson and Fredrik Stenh. The group focused on an e-commerce platform enabling sales of downloadable DRM protected music.
Distribution was difficult, though, because of the restrictions on music files. “It was controlled by the big five record labels at the time,” Hasselberg remembers. Users were forced to pay for every download in those days before streaming. Then those users had to manually move their music to their mobile devices. “It was one step too many.” Still, the technology was used by some 50 different e-commerce music sellers, largely in the Nordic and Baltic regions.
Ultimately, the music distribution issue was solved in 2010—by fellow Stockholm techie Spotify and its licensed streaming model. “That meant that competition was really tough for us and we realized that our time was probably up,” says Hasselberg.
Recognizing it couldn’t compete, the team began contemplating a new product that could be distributed to smartphones by a platform like
What it came up with was Ruzzle, a Scrabble-esque word game that challenged players to come up with as many different words with a random group of letters as possible, with points awarded for the use of different letters and the length of the words created. Gamers play alone or against one another, and revenue is generated through between-game ads and, more recently, from a premium version (which less than 5% of players use). MAG did app consulting work to fund development of the game and launched it in March of 2012. It now operates on iOS and Android, as well as Windows Phone 8, and the company claims to have pulled in $10 million in EBITDA in its 2012-2013 fiscal year. About 80% of which came from in-game ads.
One of the smart moves MAG made early was localizing the gaming experience to different countries. As a word game, it simply had to operate in several languages. The effect was viral, says Hasselberg. “In nine days after the release we were number one on the Swedish App Store and in three weeks we had reached one million downloads without having any kind of support.”
It’s since attracted some support—$6 million from
Ruzzle Facts from MAG Interactive:
• 20 billion rounds of Ruzzle have been played since the game launched three years ago.
• 28 billion meters of words, the distance of 38 round trips to the moon, have been played in Ruzzle.
• Of the first 800 users, 10% are still playing regularly.
