Deal focus: MetaApp’s supply-demand solution

“You check TikTok in the lift, browse Taobao while drinking your coffee, and listen to QQ music on the subway – these apps become part of your life, but less than one-tenth of the most downloaded apps are games,” says Sen Hu, founder of the MetaApp, a Chinese mobile gaming platform.

The problem, he maintains, is that costs tied to promotion and accessing online traffic are too high, so games can’t connect with appropriate players and fail to achieve critical mass. It is a classic supply-demand mismatch. Hu recalls recommending a game to his mother, who now plays it daily while having a foot spa.

MetaApp was conceived in 2016 to address this mismatch. The company closed a $100 million Series C round this month led by SIG and featuring existing investors China Creation Ventures (CCV) and Sky9 Capital. CCV is the largest external shareholder, having led the MetaApp’s Series A in 2018 and re-upped in the next two rounds.

“We knew we’d found the team we had been looking for within a half-hour of meeting them,” says Wei Zhou, founder of CCV. “We spent the next three hours persuading them to take our money as a means of accelerating growth.”

MetaApp’s emergence coincides with the rise of multi-player experience games globally. Unlike traditional online offerings characterized by challenging battles, well-equipped players, and long-term perseverance, experience games tend to be unstructured with no-linear development lines. The user either builds his own world, imitates the lifestyle of an animal, or plays traditional party games like “The Werewolves of Millers Hollow.”

According to Hu, multiplayer games account for 60-70% of the market. Their appeal is best illustrated by the success of game platform Roblox, which listed in the US earlier this month and has a market capitalization of $39 billion. There are no lengthy introductions or heavy spending on traffic. Existing users invite their friends to participate and show them how to play.

“Games are nodes of social interaction, but traditional challenge games create barriers to interaction,” says Hu. “High-level players don’t want to spend time with friends who are beginners and can’t keep pace with them. In addition, they often need to purchase in-game equipment to overcome challenges and this profit-making model also shortens the lifecycle of these games because some players will simply give up.”

MetaApp’s monetization model is more akin to that of social software, including the collection of membership fees. The company is also determined not to compromise on product quality. While some platforms are paid to promote games, MetaApp will only recommend things it thinks users would want to play. Maximizing the social element is key.

“MetaApp’s games are very sociable,” adds Zhou. “Every player can interact with their environment and influence the results of other players.” This philosophy is even embedded into the company’s infrastructure. MetaApp can support multiple games on a single app and facilitate real-time voice communication between players.

The next step is introducing basic game design tools and related cloud services. The company is collaborating with hundreds of game developers with a view to making it cheaper and easier to create content for its platform. In this respect, MetaApp is pursuing the same goal as Reworld, a VC-backed platform that offers training and tools for game design.

Hu observes that MetaApp and Reworld sit at either end of the same spectrum, which means they could work together. “Good game platforms have four elements: traffic on the consumer side, traffic on the developer side, a recommendation algorithm to match players and games, and game design tools,” he says.

These elements could do more than serve gaming communities. CCV’s Zhou believes that MetaApp has created a powerful online entertainment-plus-social platform model, which could be used to develop many interactive products. “This model can serve digital citizens around the world - the scope for imagination is limitless," he says.

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• Topics
• Greater China
• Expansion
• Technology
• Consumer
• China
• TMT
• Growth capital
• China Creation Ventures
• Sky9 Capital
• SIG