The Kiwi gaming industry's best-kept secret: SmallWorlds

Would you be surprised to learn that New Zealand is behind an amazingly successful online social game?

On Auckland’s iconic Karangahape “K” Rd, there’s an office building featuring walls of green and blue glass. Inside are rooms inspired by shipping containers. Several floors up, there’s an office that houses an equally colourful game development company.

It’s not a particularly large office, but SmallWorlds creates and supports its eponymous flagship SmallWorlds out of the designer building.

Hardcore gamers have probably heard of the creators of Shatter and Rugby Challenge, Sidhe, and maybe even the Auckland branch of the massive mobile gaming company Gameloft, which primarily makes mobile versions of already popular games. But most won’t have a lot of experience with SmallWorlds, if any.

SmallWorlds in a nutshell

Smallworlds is a social, browser-based casual simulator, like a Flash-based, cartoony, MMO version of The Sims, with a whole lot of extra games and other entertainment services packed in. You - along with your on-screen avatar - can watch videos on YouTube, listen to music on SoundCloud, or play classic Arcade games.

You can customise your own home and hang out in mansions. You can draw, create, and socialise with others.

It won’t be hard to find a friend - this little Kiwi game boasts over seven million users.

While SmallWorlds the company was founded in New Zealand, SmallWorlds the game has been primarily marketed in the US. That’s not to say the game doesn’t have roots here - SmallWorlds has in the past raised money to save the kakapo and for Christchurch earthquake victim support.

Behind the game

The legal entity behind SmallWorlds is called Outsmart, and it got its start by building Web 2.0 applications for web entrepreneurs.

“We always wanted to develop our own IP, develop our own product,” SmallWorlds co-founder Mitch Olson said as PC World sat down to chat in one of the board rooms in his company’s office. Olson has a shaved head, an earring, and a general air of casual cool about him. He leans back in his chair frequently as he speaks, resting his arms alternately behind his head or forward on the table.

“So we were watching the trends in the marketplace, and there were a lot of these trends going around 2006 there was the emergence of social networks and the continuation of what we call ‘digital self-expression’.”

Digital self-expression, he goes on to explain, is when people use the internet to express themselves through blogs and social networks. But just creating a game that catered to digital self-expression wasn’t enough - the company was also keeping an eye on the shift in the entertainment industry from television to online.

“We thought right in the middle of those was a virtual world and at the beginning of 2007 we started recruiting a team to basically start working on that product,” Olson says.

The company started recruiting, and was then approached by both Viacom and Disney. A finance deal was made with Disney, and by the end of 2008 SmallWorlds was launched. Four years, seven million sign-ups, and many man-hours later, the company is preparing to market to the UK as well as, for the first time, entering a market that doesn’t speak English.

It might seem simple enough to alter a product for a Brazilian audience - just translate the language, right? - but it’s a big task. The technology has to cater for multiple languages, and because SmallWorlds offers support 24 hours a day, seven days a week, the support has to be there for Portugese speakers.

“Then there’s also the content, we’ll have to look at the content we produce for them. It’ll be slightly different,” Olson says.

“We’ll have to look at producing some things which are specifically Brazilian. And tying into specific Brazilian-type events like Mardi Gras.”

The value of freemium content

The virtual goods are important, because SmallWorlds works with a free-to-play, or ‘freemium’, business model. Users can sign up for free and start playing, and never have to pay a cent if they don’t want to. It’s a model that has become extremely common with Facebook and mobile games, as well as MMOs.

“One of the key attributes is that you want your product to be as successful as possible, so you don’t want a really steep onramp to your product, you want a really shallow one,” Olson says.

“Typically what you do in metaphorical terms is you have people step into the middle of a game experience and you ring the experience with toll gates, really. And so for us, our toll gates are things like our virtual goods.”

There are two currencies - an ‘attention’ currency, awarded for simply spending time completing tasks in the game, and a premium currency, which is worth real-world money.

The company also has a subscription system. Users to pay a subscription are ‘VIPs’ and gain access to elements of the game that users who don’t pay can’t touch, like new areas.

“Some people, for instance, have both and they’ll also pay for gold on top of that as well.”

Olson lowers his voice and whispers, “We love those people.”

What’s interesting about SmallWorlds is that there’s a third way of getting the cool in-game stuff - something Olson refers to as an offer platform. Users are rewarded with the premium currency, called Gold, for completing surveys or trialing services, and the companies running the surveys and services pay SmallWorlds for the privilege.

Free-to-play games monetise three to five percent of their audience, Olson says, and 1.5 percent of SmallWorlds’ users earn Gold through the offer system as well.

It’s safe to say that SmallWorlds is a successful local company.

Browser-based futures

Several times during our interview, Olson refers to the way that Apple has changed the gaming industry, business models and digital distribution. SmallWorlds, like most browser-based games, is created using Flash. These days, Apple is making a push to standardise HTML5 as the new platform for rich web applications, games included, and doing so by disallowing Flash on its mobile devices. But don’t expect to see SmallWorlds rebuilt in HTML5 anytime soon.

“Currently there isn’t really a viable alternative to Flash in terms of being able to produce a rich experience, other than something like [game engine] Unity. But the problem with Unity is the penetration,” Olson says.

Some 96% of PC users have Flash, on the other hand, making it not just rich, but popular.

“We increasingly see our players wanting to have access to the game experience on a mobile phone, for instance, and any flash-based apps on a mobile phone just suck, really.”

The technology of HTML5, and the tools used to create games, aren’t yet mature enough to create the kind of experience that Olson wants to produce.

Despite the fact that the number of Kiwi SmallWorlds users amounts to less than one percent of the company’s audience, Olson doesn’t mind working out of New Zealand. Some deals need to be made face-to-face, he says, but otherwise digital distribution has made developing and publishing from our corner of the world rather easy.

“It doesn’t really matter where you are. You can be anywhere in the world with an online product and market from wherever you are,” he says.

“That’s why New Zealand’s a great place to build a games industry from, because we’ve got smart, well-educated and creative people here and the cost of developing products here is lower than the cost of developing products in the US.”

With mobile platforms making everyone and their Mum capable of developing apps, and the games industry growing 46 percent year-on-year, it seems many Kiwis agree.

“Anyone can potentially become a millionaire,” Olsons says.

“Sure, in a crowded market it’s difficult to stand above the crowd, but it’s certainly not impossible. And I guess we’re proof of the ability to be able to build a significant userbase from anywhere in the world.”

SmallWorlds Experience

So what is it that’s made SmallWorlds so popular? Olson puts it down to the breadth of experiences available to users, the urge people have to express themselves online, and the social elements of the game.

“One of the things that we know is that games which you can play with your friends and play with other people and have that sharing experience tend to be a stickier, more engaging sort of experience,” he says.

“You have relationships – in fact, my brother met a woman from ... somewhere in Eastern Europe and formed a relationship with her and went over and met her and they became boyfriend and girlfriend.”

But there’s so much to SmallWorlds that Olson reckons if you asked ten people what they liked about it, you’d get ten different answers.

“We’ve got kind of a sandbox environment where you’ve got your traditional environment which is your sandpit. The sandpit provided infinite opportunities, with a bit of imagination, to play lots of lots of games,” he says.

SmallWorlds is like the modern, digital version of the sandpit.”

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