Staying Ahead of the Game

Israeli companies are breaking into the lucrative online gaming industry

Maya Epstein
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Maya Epstein

Israel's high-tech industry is famed mainly in telecom, software, microchips and biotechnology, with Internet ventures also drawing investments the past few years. When it comes to gaming, however, the spotlight is still focused on the U.S. and Europe while Israel is mostly associated with online gambling thanks to companies like 888 and Playtech. Israel, thought to lack the cultural savvy needed for producing games played on mobile devices or through social media, was long considered backward in this field – but no longer.

Companies like Plarium and Dragonplay have gained heavy exposure in the past year but these aren't the only ones. The gaming industry is blossoming in Israel, often relying on self-financing, with companies of various sizes managing to achieve profitability and the collaboration of the world's largest Internet concerns.

Funtomic: Rescuing baby chicks for $10 million a year

Most developers in the field say the key to success isn't actually the hit game they produced but the ability to generate a broad base of users once the game was released. Tel Aviv-based Funtomic made its way from the opposite direction, starting out as a web portal for hosting games that accumulated an audience numbering 20 million in Australia, Canada, Britain, Brazil and Argentina. The company then decided to utilize its platform to develop its own games and distribute those of other developers.

Noam Makavy, who serves as CEO, and Ilya Agron, Ehud Rosenberg and Gal Goldstein, the company's other founders, all served in the Israel Defense Force's Mamram computer unit and started the company in 2008 under the name Played Online. Two years ago it upgraded and relaunched the portal which was renamed Kizi. The site offered hundreds of games, almost all acquired through licensing except for several developed by the company featuring a character called Kizi, a one-eyed green creature. Last year Funtomic set up an autonomous division to develop games for smartphones and tablet computers.

Next quarter the company plans to release Super Chicken Boy, the first game it has developed for the IPad, where the protagonist rescues baby chicks from the clutches of predators and monsters. A free game, the business model is based on the marketing of virtual accessories. The company has 24 employees, most in Israel but with two in Romania and Croatia, and brings in $10 million in revenue a year. At its outset a modest sum of seed money was raised from private investors.

Deemedya: From distributing games to developing motorcycle races

Deemedya is a Tel Aviv company that develops games for IPhones, IPads and Android devices and has kept a low profile until now. Founded in 2010 by Maya Gurevich and Doron Kagan, it has managed from the start without any investment money and so far has developed 11 game applications boasting 65 million downloads.

Deemedya's most popular games are a series called Trial Xtreme where players compete in motorbike races and can buy custom clothing for their biker and vehicle enhancements in exchange for money or points. In another game, CATch, players control a sausage-stealing cat fleeing from a furious grandma.

Deemedya has a staff of eight in Israel engaged in marketing, distribution and quality assurance, as well as a dozen employees in Russia where all the development and design is done. The company occasionally also hires outside developers from various countries when needed. Some games are based on ideas developed by other studios with Deemedya serving as publisher. Several of the Deemedya games incorporate advertising, but the company's business model is mostly based on profits from in-game purchases of items that can often be downloaded for free as well.

Touch Apps: Games for girls from Migdal Ha'emek

Israel's Internet companies are usually thought to be confined to the eight miles or so stretching from Tel Aviv's Rothschild Boulevard to Herzliya Pituah, but some – like Touch Apps in Migdal Ha'emek – are far outside this perimeter. The company, founded by Eyal Bahavod and Orel Ohana, develops games geared toward young girls centering on dressing up, makeup and design of doll-like characters. Touch Apps has developed 10 games for IPhone and Android devices, including five for Windows Phone.

Touch Apps has achieved 25 million downloads of its games and its business model is based on purchases within the applications. "I was amazed how a small company can put up a fight against huge global companies," says Bahavod. "It forces us to be creative and unique since we don't have any technological advantage."

Diwip: Hand-in hand with Facebook

Tel Aviv-based Diwip is mainly involved in slot machine games but has lately also begun developing casual games. "The gambling game niche generates lots of money so we aren't abandoning this field," says CEO Yaniv Gamzo. "But our vision is to become a gaming company offering a variety of games."

Diwip has strong ties with Facebook and is presented as one of the most successful companies in its field at the social network's gaming conventions. Diwip doesn't disclose its income but it is said to have been profitable from early on. The business model is based on in-game purchases: Players can advance for free initially but need to buy game tokens to reach the higher levels.

The company has six casino games it developed that are offered through Facebook in a package called Best Casino. Another casino game developed over the past five months will be launched on Facebook within two weeks.

The diwip game Bubble World has recently gone up on Facebook. This is the social media version of the well-known blockbuster game and to compete against Facebook friends for the title of best bubble buster. The game seems to signal the company's desire to extend beyond the field of gambling into the more general field of social media games. Income from Bubble World is based on the in-game buying of extra turns and performance-enhancing aids.

Two of the firm's games are also available on Iphones, Ipads and Android handsets. Diwip has 16 million registered users through Facebook. These include 2.5 million regular players across 250 countries – Greenland and the Vatican too – according to Gamzo, with the U.S. and Western Europe constituting its main markets. The company, which also boasts 2.5 million smartphone downloads of its mobile apps, was founded in 2010 by Gamzo and Udi Kantzuker and has 33 employees.

In contrast with other companies Diwip develops all its games in-house, including design, graphics and animation. The software systems too, like the analytics system monitoring player traffic and expenditures, are developed within the company. "We believe that it would be a shame to be dependent on others," says Gamzo.

Today's real challenge for casual game companies, according to Gamzo, is switching from desktop to mobile. "With mobile, much more can be squeezed from each player because it's possible to play on the road or in the dentist's waiting room," he explains. "On the other hand, competition for users is much fiercer, and companies need to expend plenty of effort in marketing and expanding their user base."

A screenshot of Funtomic's gaming portal Kizi.Credit: Courtesy
Deemedya founders Maya Gurevich and Doron KaganCredit: Ofer Vaknin
an animator at the Israeli company TouchappsCredit: Avisag Shar Yeshuv

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