- “Moshi Monsters” maker Mind Candy was once one of London’s top startups but recently avoided bankruptcy with a £1.2 million funding round
- The company is launching “Moshi Monsters Egg Hunt” on mobile next month and the beta has around 500,000 downloads, according to CEO Ian Chambers
- Chambers said the company has sold 40,000 books from new franchise Petlandia at £19.99 each, bringing in around £800,000 in sales
Mind Candy was once one of London’s most successful startups. It created hit game “Moshi Monsters,” and was reportedly valued at £125 million in 2011.
During the early 2000s, Mind Candy was cited as an appealing British success story. Its colourful founder, Michael Acton Smith, was often characterised in the press as a Willy Wonka-type figure, like in this April 2014 article from The Telegraph. In that profile, Acton Smith likened himself to Walt Disney and said he wanted to build “the greatest entertainment company in the world.”
It seemed like it could be possible. Mind Candy went on the Disney-like path of licensing deals, physical merchandise, and there was even a movie.
But within months of that Telegraph profile, the company’s public image shifted.
Acton Smith stepped down as CEO in July 2014 to take a more creative role in the business. The Financial Times noted that sales had slowed, and that Mind Candy was late to bring “Moshi Monsters” to mobile.
Later that year, Acton Smith spoke at TechCrunch Disrupt to reveal just how bad it was. He revealed that 2013 had been a tough year, and that the company’s staff had halved to 100. Revenues in 2013 were “not good,” he said.
It turns out “Moshi Monsters” was successful on desktop, and had 80 million registered users in 2013. But Mind Candy only released “Moshi Monster” apps in early 2014. As a comparison, Rovio’s hit mobile game “Angry Birds” came out in 2009. And as Acton Smith subsequently admitted: “The mobile games haven’t taken off successfully.”
It looked like “Moshi Monsters” wasn’t going to be as successful on mobile as it was on desktop, and Mind Candy would need to come up with new games and new strategies to kickstart its growth again.
At the time, Acton Smith teased a new game called “World of Warriors,” a mobile fantasy game that would potentially appeal to a broader market than just young children.
Two years later, in an interview with Business Insider, Acton Smith said “World of Warriors” “didn’t resonate.”
“It’s going,” he said. “But it’s not a huge cash generator.”
That’s probably a good description for Mind Candy as it is now.
Mind Candy’s current CEO, Ian Chambers, joined the company in February 2016 to turn the company’s fortunes around. He’s a gaming veteran who previously worked at EA and Ubisoft.
Chambers said Mind Candy could be massive once again, and said Moshi Monsters could undergo similar revivals to franchises like Pokémon with “Pokémon Go” and “Teenage Mutant Ninja Turtles” with its 2014 cinematic reboot, which was critically panned but financially successful.
“I love a challenge,” he told Business Insider at Mind Candy’s colourful offices in East London.
That’s just as well, because Mind Candy warned in October that it might go bust. Last month, the company raised £1.2 million from its existing backers Accel and LocalGlobe, and renegotiated a crucial loan agreement with lenders TriplePoint Capital.
Mind Candy wants to make money from lots of different ideas
Mind Candy had several problems — “Moshi Monsters” was its only smash hit, and it was slow on the uptake to smartphones.
It also relied on subscriptions to make money.
According to IHS Markit analyst Jack Kent, that model “hasn’t yet translated to mobile games — which are usually monetised by in-app purchases or advertising.”
And while Mind Candy could build games with in-app purchases, Kent pointed to “negative publicity” for other games where children racked up huge bills from in-game purchases, like one child who spent $6,000 (£4,600) on “Jurassic World” purchases.
Chambers’ solution to these problems is to create a kind of ideas factory.
This is how Mind Candy’s creative team now works: the company comes up with a brand new, imaginary world like “Moshi Monsters,” and creates a map. They then think about how that world will spin off into digital and physical products, and content.
You can see the maps dotted around Mind Candy’s offices.
“We put this ecosystem in place,” said Chambers. “All the IP we create, I want to flow through this ecosystem.”
The first new idea to come from this is Petlandia, which turns your real-life pet into an online avatar. The product spin-off is a personalised storybook which stars your pet, and costs £19.99. According to Bloomberg, Mind Candy has received 40,000 book orders, equating to about £800,000 in revenue.
Mind Candy is seeing its first year on year revenue growth since 2013, Chambers added, driven by Petlandia’s success over Christmas.
As for “World of Warriors,” Chambers doesn’t share Acton Smith’s pessimism. He said: “I wouldn’t [describe] anything that has almost 10 million downloads, millions in revenue, as ‘not working’.
“But … it didn’t meet the very high expectations that were set on day one … there’s still a wonderful IP there that I’ll work with and build.”
‘Moshi Monsters’ has relaunched for younger kids
“Moshi Monsters” is also relaunching on mobile as “Moshi Monsters Egg Hunt,” and is targeted at younger users. A beta version is already out on iOS and Android, and Chambers said there’s been 500,000 downloads. A full version will launch in May. Like Petlandia, players can create their own personalised monster, and books and physical merchandise will follow from there. That means Mind Candy won’t have to rely on that in-game subscription model so heavily.
Why does Mind Candy think it can do better with this version of “Moshi Monsters”? Pure ego, according to Chambers.
“The core difference between ‘Moshi Monsters’ web and ‘Moshi Monsters Egg Hunt’ is this character you’ve invested time into making yourself,” Chambers said.
Half a million downloads doesn’t sound like much, but then the game may not need massive numbers to bring in revenue. “Mind Candy doesn’t need a mass market mobile games hit to achieve a successful result on mobile,” said Kent. “At the peak of its success it reported £47 million annual revenues — the top mobile games can generate over $1 billion per year so even a modest performance would help its current position.”
But, he added, casual gaming is hugely competitive.
Both Chambers and Bruce Golden, the Accel partner who invested in Mind Candy, made the comparison between “Moshi Monsters” and Pokémon. “There’s a lot of similarities, in the sense of being a collectible, character-based world,” said Chambers.
Golden added that Mind Candy could be bigger than it ever was. “There have been lots of examples of IP that have gone down, then been resurrected and came back in a bigger way. Our own thesis is if we can get the formula to work at scale, we can drive new bodies of IP.”
Mind Candy’s trial by fire
When Business Insider spoke to Acton Smith earlier this year, he appeared to regret not selling Mind Candy at its peak, describing the kids’ entertainment market as “fickle.” He’s still involved creatively with Mind Candy.
But Accel’s Golden said the company shouldn’t be dismissed. “It’s easy to say, ‘That thing, that was interesting five years ago, why is it interesting now?'” he said. “It’s often the right decision to back teams that have gone through trial by fire, and helped build the business even if it wasn’t straight up from the beginning.”
Chambers said the team’s stability was another positive sign. Chief creative officer Steve Cleverley, who co-created “Moshi Monsters” with Acton Smith, is still at the company, and the board has mostly remained stable. Former CFO Divinia Knowles left in 2015.
He also said there had been no further redundancies and that other investors were interested in Mind Candy after its most recent £1.2 million round. “I’m going to evaluate that,” said Chambers. “We’ll assess our capital needs.” For now, he said, that round was all the company needed.
Chambers knows what a trouble business looks like — he was appointed chief digital officer of Game after it went into administration, then helped take the company public. “I believe in Mind Candy,” he said.