Big Viking Games: Pillaging for Growth Custom Case Solution & Analysis

1. Evidence Brief

Financial Metrics

• Total funding raised: 21.75 million dollars in 2016 through debt and equity.
• Primary revenue source: In-game purchases (microtransactions) and advertising.
• Profitability status: Profitable since inception.
• Acquisition history: Purchased YoWorld from Zynga in 2014; game remained a primary revenue driver years later.
• Market context: Global mobile gaming market valued at approximately 46 billion dollars in 2017.

Operational Facts

• Locations: Dual-office structure in London, Ontario and Toronto, Ontario.
• Technology focus: Early adopter and specialist in HTML5 gaming, specifically designed for browser-based and messenger-based play.
• Product Portfolio: YoWorld, FishWorld, and various Messenger-based titles.
• Headcount: Approximately 100 employees at the time of the 2016 funding round.
• Platform dependency: Significant reliance on Facebook and mobile messenger platforms for distribution.

Stakeholder Positions

• Albert Lai (CEO): Advocates for aggressive growth and the potential of HTML5 to bypass traditional app store fees.
• Greg Thomson (CSO): Co-founder focused on the technical feasibility and long-term sustainability of the gaming engine.
• Investors: Expect high-velocity growth following the 21.75 million dollar Series C investment.
• YoWorld Community: Highly vocal, loyal player base that saved the game from shutdown.

Information Gaps

• Specific Customer Acquisition Cost (CAC) vs. Lifetime Value (LTV) for the Messenger games.
• Detailed breakdown of the 21.75 million dollar capital allocation between R and D and marketing.
• Current retention rates for legacy titles compared to new HTML5 titles.
• Full debt-to-equity ratio following the 2016 financing round.

2. Strategic Analysis

Core Strategic Question

• How can Big Viking Games achieve sustainable scale in a market where user acquisition costs are rising and platform owners control distribution?
• Should the firm prioritize original IP development or the acquisition and optimization of legacy titles?

Structural Analysis (Porter's Five Forces)

• Buyer Power: High. Players have zero switching costs and thousands of free-to-play alternatives.
• Supplier Power: High. Facebook and Apple control the gates to the audience and take a 30 percent revenue cut.
• Competitive Rivalry: Extreme. BVG competes with multi-billion dollar entities like Tencent and Activision Blizzard.
• Threat of Substitutes: High. Social media, streaming services, and other forms of digital entertainment compete for the same user attention.

Strategic Options

Option 1: The Consolidator Model (Live Ops Focus)

• Rationale: Acquire distressed but beloved legacy titles (like YoWorld) and apply superior live operations to maximize cash flow.
• Trade-offs: Limits the potential for a breakout hit but provides predictable, high-margin revenue.
• Resource Requirements: Dedicated M&A team and specialized community management staff.

Option 2: The Platform Pioneer (HTML5/Messenger Focus)

• Rationale: Capitalize on early-mover advantage in Facebook Instant Games to capture users before the market saturates.
• Trade-offs: High dependency on Facebook's technical roadmap and monetization policies.
• Resource Requirements: Significant engineering investment in the proprietary HTML5 engine.

Option 3: The Hit-Maker (Original IP)

• Rationale: Develop new, high-quality mobile games to build a brand independent of legacy titles.
• Trade-offs: Extremely high failure rate and massive marketing spend required for visibility.
• Resource Requirements: Creative talent and a large marketing budget for user acquisition.

Preliminary Recommendation

BVG should pursue Option 1. The company has demonstrated a unique capability in managing Live Ops for legacy games. The acquisition of YoWorld proves that BVG can generate significant cash flow from assets that larger studios consider obsolete. This provides the capital necessary to fund smaller, experimental HTML5 projects without risking the company's solvency.

3. Implementation Planning

Critical Path

• Month 1-3: Establish an M&A scouting framework to identify titles with high community engagement but poor monetization.
• Month 3-6: Standardize the Live Ops Playbook, documenting the exact steps used to revitalize YoWorld for application to new acquisitions.
• Month 6-12: Execute the acquisition of one mid-sized legacy title and integrate it into the BVG engine.
• Ongoing: Allocate 20 percent of free cash flow to R and D for Instant Games to maintain technical edge.

Key Constraints

• Talent Scarcity: Finding product managers who excel at long-term retention rather than just new game launches.
• Capital Availability: M&A requires significant upfront liquidity; the 21.75 million dollars must be deployed efficiently to avoid further dilution.
• Platform Volatility: Sudden changes in Facebook's algorithm or revenue sharing can invalidate the unit economics of Messenger games.

Risk-Adjusted Implementation Strategy

The strategy focuses on a low-risk core (Live Ops) supporting high-risk experiments (Instant Games). To mitigate platform risk, BVG must ensure that its proprietary engine allows for rapid porting of games between different browser-based environments. Contingency plans include a phased hiring approach, only expanding the Toronto office once the first new acquisition reaches a specific profitability milestone.

4. Executive Review and BLUF

BLUF

Big Viking Games must pivot from a speculative game developer to a specialized Live Ops consolidator. The path to growth lies in acquiring undervalued legacy assets and applying the YoWorld optimization model. While the allure of a breakout HTML5 hit is strong, the current market dynamics favor firms that control profitable, high-retention niches. BVG should use its capital to build a portfolio of cash-generating legacy titles while maintaining a lean R and D presence in the Instant Games space. This strategy ensures survival in a high-CAC environment.

Dangerous Assumption

The most consequential unchallenged premise is that the YoWorld success is repeatable. The loyalty of the YoWorld community was a black swan event driven by a specific historical context. Assuming other legacy titles possess similar community resilience could lead to overpayment for terminal assets.

Unaddressed Risks

Unconsidered Alternative

The team did not evaluate a pivot into a B2B service model. BVG could license its high-performance HTML5 engine to other studios struggling with the transition away from native apps. This would provide high-margin, recurring revenue without the volatility of consumer gaming hits.

Verdict

APPROVED FOR LEADERSHIP REVIEW