After a 3-year stint at a merchandising company in their native Latvia, Martins Bratuskins, Reinis Skorovs, and Andris Merkulovs found a glaring issue in the $60 million gaming market: the difficulty of monetization.
Their solution manifested in the startup Monetizr, a blockchain-based game reward engine that enhances gamers’ experiences by rewarding them with Monetizr tokens, and helps gaming companies increase engagement, retention, and profits.
After two accelerator stints upon their arrival to the U.S., including Techstars Atlanta, the team pivoted the company from a monetization platform into its current iteration as a gaming data company. “We are not just selling the merchandise inside the game, we are the data company. We are collecting [information on] how gamers are playing the game, what are the triggers, what helps the gamers to make these purchases,” says Merkulovs.
In late February, the team processed its first cryptocurrency payment using their game reward engine; that milestone was quickly followed by being named the Technology Association of Georgia’s Top 10 Innovative Technology Companies.
With 25+ game studios on the platform and a two million audience reach, they’re gearing up for a security token offering in Q2 2018.
Here, CEO Merkulovs shares more on how they tapped into this highly-fractured market, learned to cater to their customers, and why they picked Atlanta as their headquarters.
What triggered the idea for Monetizr?
We tried to monetize our own mobile apps through advertising, but we didn’t succeed, even though the product was good and customers loved it. All three of us met at a merchandising company. We were working on our own ideas during weekends, evenings, doing Friday night hackathons.
We learned from our time at that company that merchandising is an amazing way to convert a digital process into a real product. We decided to build our own business to solve this problem of mobile apps and monetization, particularly in the gaming community. This is how the Monetizr idea was born.
How did you validate your idea following this realization?
We placed our idea on a beta list to see if there was any traction with game developers interested in what we were doing. We were surprised with the demand that we had from game studios. We didn’t have anything at that point, it was only a website at best with maybe a valid proposition, and some GIFs showing how the products could look.
We saw real interest at that point so we decided to quit our jobs and move to the United States to launch the company here. We were trying to go where the customers are.
Once you got to the U.S., how did you start putting this product together to cater to video game companies?
We invested our own money, as much as we could and we applied to Cincinnati’s UpTech accelerator. They helped us to put all the fundamentals of the business. That’s how we learned about our potential customers; we didn’t even build the product for the first three or four months.
There are three main problems that game developers are trying to solve: acquisition of customers, retention, and monetization.
How did you make your way to Atlanta?
After we built our product, we went out there in the market to test it out. We saw major interest from a lot of game studios. At that point, we were invited to participate in Techstars Atlanta, but we didn’t know much about Atlanta. We thought it was a great airport city, but nothing more. Once we moved to Atlanta, we were so surprised.
Within the first two weeks, we met ten amazing, influential executives from the Atlanta area, everyday, for ten days in a row. You’re meeting 100 people total, and by the end of those two weeks, you are basically plugged into the ecosystem. After those two weeks, we had all the possible connections, from largest consumer goods and brands to agencies and influencers in the Atlanta area. All of them helped the company to grow or us to speak with more and more smart people.
Through this Mentor Madness program, we also had the opportunity to talk with Zenga, EA, and Activision. By talking with those game studios, we got advisors from those studios.
As you finished your stint at Techstars Atlanta in 2017, what prompted you to refocus your product and your mission?
At that point, we realized that we are actually not solving monetization only; we’re also helping with customer acquisition and retention — solving all three game developer problems.
From there, we tried to listen again to the larger game studios, talking to the customers and understanding their needs and moving on to product development. Now Monetizr is the world engine that rewards gamers for their time and skill. Every hour of game play is rewarded with Monetizer tokens.
What’s your revenue model at this time?
We make money two ways. First, from game developers — we put this kit inside games, motivating gamers to play more. As the gamer earns Monetizer tokens, he’s able to exchange that for game-related physical goods — merchandise is the simplest way. The gamer can buy or exchange tokens into products, or convert to cryptocurrency. Monetizer takes a commission off of that and we split this commission with the game studio 50/50.
The other way is while the gamer is playing, we’re asking them to opt-in and mine cryptocurrency. We are using access power of the mobile device, so while he is playing he is mining a small cache of cryptocurrencies, like Monero. He knows that he is playing; we’re not using a lot of battery life. The gamer is rewarded for every hour of gameplay and every achievement. He earns these tokens and then is able to exchange them. Again, we are splitting the earnings with the game studios 50/50.
How does Monetizr manage the merchandising and rewards part of the business?
We take games’ digital assets — like Super Mario or any type of superhero — and we put this superhero on a product like t-shirt. We can add the gamers high score, game time, or number — if it’s a limited edition. Once we have the design in bulk, the gamers pay for the merchandise and only then we send the t-shirt order to our manufacturing partners. We don’t risk any business or procurement on our side.
What’s next on the pipeline for your team?
The security token offering is the next activity that will happen — we are following all the security regulations and FCC recommendations. There are many scams out there. Accredited investors can participate in our offering. We will be tokenizing roughly one-third of the company’s equity in tokens.
We are very actively working on customer acquisition, and there are more game studios waiting in the pipeline for our solution. Today we have 25 game studios; our goal is to increase it by four times by the end of the year.
All photos provided by Monetizr