A Turkish Startup Is the Sultan of Social Gaming

Image It’s probably fair to say that few American have heard of Peak Games, the Istanbul-based startup that recently became the world’s No. 3 social-gaming company in terms of daily active users (DAU). That’s because Peak develops and publishes online games that are culturally targeted at Turkish, Middle Eastern, and North African markets. All but one of the games are available only in Turkish and Arabic.

The company, which creates Facebook (FB), mobile, and browser-based games, announced last week that it has over 9.4 million daily users. Zynga (ZNGA) and King.com, the world’s No. 1 and No. 2 companies, have 57.3 million and 12.3 million, respectively, according to online data provider AppData. (Note: Peak’s number is based on a combination of developed and published games, while AppData provides these numbers separately. Also, these numbers have shifted since last week but Peak remains in the No. 3 spot.)

Peak Games has experienced rapid growth since late 2010, when the company’s three founders set up shop in the small storage room of an air conditioning store owned by one co-founder’s father. At the time, Peak’s goal was to create culturally specific games for the Turkish market, starting with an online adaption of the traditional Turkish tile-based board game, Okey. “Back then, Turkey was the fourth-largest country on Facebook and there was no local player or even global player who was providing relevant content or relevant services to the region,” says Rina Onur, the company’s co-founder and chief strategy officer, who graduated from Harvard in 2008 with a B.A. in economics and briefly worked at Morgan Stanley (MS) as an analyst. She explains that most big social-gaming companies simply translate Western games into Turkish.

When Okey took off (the game now has 18 million users), Peak’s team moved to more comfortable office space. In 2011, they secured funding to expand into the Middle East and North Africa (MENA), regions that Onur says have “similar cultures, a similar history, similar user habits … and Internet and Facebook penetration that is growing really, really fast.”

The company’s first release in MENA was a game with a name that translates as Happy Farm. That game has since become the world’s No. 2 farm game, after Farmville. It includes characters, buildings, and animals that are specific to Peak’s targeted regions. “In the Turkish version, the farmer is not covered, while in our Arabic version there is a Saudi man with a cultural outfit,” says Onur. “We don’t have cowboys or American horses.”

In February, Peak acquired Saudi Arabia’s largest gaming company, Kammelna, creator of a popular online version of the beloved local card game, Baloot. Saudi Arabia is now Peak’s second-largest market, after Turkey. It’s a good market to have cornered, says Onur. “There’s high levels of disposable income but not a lot of liberty in terms of going out and socializing, so people use these games as a platform to meet each other, express themselves, and interact,” she explains. “They’re like online coffee shops.”

Since last year, Peak’s revenues have skyrocketed by 600 percent, according to Onur. The company now has about 200 employees in Turkey, Saudi Arabia, and Jordan, as well as in offices in Berlin and Barcelona. Peak has also secured over $20 million in funding from investors in Belgium, Germany, and the Middle East.

Peak has no plans to make its locally targeted games available in English, as they don’t hold the same relevance for Western cultures. But Onur says the team may eventually expand its offerings of “global themed” games such as its latest release, Lost Bubble. Peak created the “bubble shooter, arcade-style game” for a dozen languages because it isn’t culturally specific, and it picked up a million daily users in two weeks. “To our surprise, without pushing the product in Western markets, we got a huge number of organic users, especially in Europe,” says Onur. “It proved to us that the developing capabilities we have built over the past year and a half … are comparable to those of our global peers.”

Regardless of Lost Bubble‘s success, Peak’s primary focus remains servicing and creating content for Turkey and MENA. It’s a market that the company has locked down, according to Onur. ”Global players with money and resources are not focusing on these games,” she says. “And the local players in our regions are too small to compete.”

The company’s next goal is to expand slowly and sustainably into such new emerging markets as Indonesia, Thailand, and Malaysia, bringing more local games online. According to Wedbush Securities analyst Michael Pachter, it’s a solid strategy. “They’re obviously doing something right, and what’s interesting is that they’re focused on such a narrow market,” he says—noting he hasn’t played Peak’s games because they aren’t translated. “If their games work in that market, they’ll work anywhere. They just need to localize them and get the language right.”

By Caroline Winter. Winter is a reporter for Bloomberg Businessweek in New York. (Businessweek.com) 
Last modified onSaturday, 06 May 2017 10:07