Auckland IT scene: Virtual game, real world success

In the ultra-modern Ironbank building in Karangahape Road, business partners Mitch Olson and Darren Green are busy managing a virtual world.

Olson and Green’s (pictured above, left to right) company Outsmart launched online virtual reality gaming site SmallWorlds three years ago. The company’s growth has been exceptional. Disney came onboard as an investor but Green and Olson would not disclose to Computerworld in what capacity. Staff numbers have grown from two to 30.

SmallWorlds has signed up 6.5 million users, with around 500,000 active users every month. SmallWorlds has been growing steadily since the start and is now profitable and “making good revenue”, says Green. He is reluctant to go into further detail.

SmallWorlds’ users are 65 percent female, Olson says. They are predominantly teens, followed by “soccer mums”, says Olson.

Women tend to dominate social and casual gaming, Green says, with the average casual or social gamer being a 43-year-old female. Eighty percent of SmallWorlds players are in the US, 10 percent in the UK and the rest scattered over other mainly English speaking countries. The company plans to move into the non-English speaking market.

They are also moving into the mobile and social gaming space, with the release of new products just around the corner, Green says.

So what attracts users to SmallWorlds? Olson thinks it is a combination of the social aspect of the world and the self-expression via the avatars. Players can personalise their avatars, create a home for themselves and also engage in art and missions to further define and express themselves.

Community is a key part, with lots of social interaction, says Olson. And there are many opportunities for creativity – crafting, creating art and trading. “We have a vibrant art community in Smallworlds,” says Green. “They create and sell art to each other.”

The game is free to play but users can purchase virtual goods and currency from SmallWorlds. There is also a subscription model where users pay to be part of a ‘VIP’ club. VIP members receive “cool stuff” that allows them to tweak their avatar in different ways.

Collecting is another strong theme within the world, says Olson. SmallWorlds releases rare collectables every month – they are only released once and hence become very sought-after items. The most exceptional one originally cost $5, but is now selling for the equivalent of US$3000. The item? A snow fox suit which glows in white and blue.

Players can also create missions and quests in the virtual world. “The big difference with SmallWorlds is that we enable our players to create these missions themselves,” says Olson. “It is a model whereby the citizens of the community are creating experiences, which they can share with their fellow players.”

Users are given the tools to create things and they are constantly surprised at what the users invent, they say.

There is no shortage of games in this online world; there are paintball-type games, pool, chess and Pictionary. There are also shops, mostly selling clothing and furniture, but there is also a gardening shop where you can buy plants. Like in any community, there are entrepreneurial users who are trading and earning virtual cash.

The company claims the site is growing by about 50,000 users a week. “We plan to be a $100 million turnover company by 2013,” says Green.

They have been approached by a number of larger companies wanting to buy the technology off them, but so far, Green and Olson have turned the offers down. In addition to the 30 staff in Auckland, another 30 people across the (real) world work part-time on SmallWorlds, and about 70 work in the virtual world and are paid in virtual currency.

“SmallWorlds is like a small country so they are almost like our … I don’t want to say police force, but they are there to help and resolve issues and disputes,” says Green, himself a hardcore gamer.

These online helpers get to wear a highly-coveted cape, he adds.

Outsmart started as an outsourcing firm, building software for US start-ups. This allowed Green and Olson to self-fund the beta of SmallWorlds and, in the long run, retain control of the business.

A technology development grant from the Ministry of Science and Innovation was also helpful to the company, says Green.

They employed a business development manager in San Francisco a couple of years back, but soon decided to pull the plug on that project. “It was too early for us,” says Green. “But we are now getting to the size where we are looking at opening an office there again. We are in the right phase to do business there now.”

* This article is part of a series about Auckland IT start-ups. Tomorrow Computerworld talks to the cofounder of mobile photo-sharing app Snapr.