⚡️Levelling Up⚡️

Every time I open LinkedIn or scroll through Facebook, I’m confronted with the sobering news of another studio closure or mass layoff affecting friends and peers in the gaming industry. The turbulence in our industry is undeniable, driven by a confluence of factors: interest rate hikes, public market volatility, shifting investor interests, and significant platform changes like Apple’s IDFA privacy updates. Add to this the fierce competition and the post-pandemic market correction, and it’s clear why the gaming industry is reeling.

At Kano, now nearing our seventeenth year, these stories hit close to home. Over the years, we’ve forged relationships with many talented individuals impacted by these shifts. It’s a stark reminder of the industry’s volatility, prompting us to reassess our own strategies. How do we ensure that Kano not only survives but thrives in this evolving landscape? How do we remain aligned with our long-term vision?

No Longer the New Kid on the Block
This isn’t our first encounter with industry-wide challenges. We founded Kano in 2008, amidst the Global Financial Crisis. While today’s challenges are different—marked by a more mature industry and a plethora of distractions for online entertainment—there are striking parallels.

Our entry into the gaming world was through Facebook social gaming, a domain dismissed by many purists at the time as “not real game development.” Yet, it was this space that brought Free-to-Play (F2P) into the mainstream and paved the way for mobile gaming’s explosive growth.

That shift, however, brought immense hardship to early social game developers, including us. Surviving that era wasn’t easy, and reflecting on those times, I recall some of the most sombre Game Developer Conferences (GDC) we’ve ever attended.

A Brief History of Kano
We bootstrapped Kano in 2008, creating F2P social games on Facebook’s nascent platform. Our growth was driven by necessity rather than choice, with zero ad spend budget and viral marketing as our only tool. Without VC backing, every player was precious, making retention and engagement paramount. Our commitment to social interaction, long-term retention, world-class player support, and continuous improvement—now known as “LiveOps”—helped us build trust and longevity within our gaming communities.

Over the years, we’ve achieved over 30 million downloads across seven successful games, growing our revenue from zero to eight figures annually. But our journey was never about overnight success; it was about building something sustainable.

Goonies Never Say Die!
We’ve always been outsiders in the gaming industry. Developers of F2P “spreadsheet” games. Independent versus venture-backed. Focused on profitable growth rather than growth at all costs. Based in Victoria, BC, not San Francisco, CA. Even among indie studios, we were seen as “corporate” because we prioritised the business side of gaming over creating experiences solely for our own enjoyment.

This approach has served us well. We’ve grown profitably and never missed payroll. Our focus on Games as a Service (GaaS) and creating long-lasting experiences has provided consistent, recurring revenue when others struggled.

But there were challenges too. We were late to mobile, and without deep pockets for user acquisition, we couldn’t achieve the massive growth seen by others. However, as the saying goes, “No one ever went broke making a profit.” While we haven’t seen the explosive growth of some competitors, we’ve built a solid business that continues to grow.

The Secret Sauce
What keeps us going? Purpose, values, culture, and people. Timing and luck help, but our values sustain us. Our culture thrives on individuals who care about more than just a paycheck—they’re driven, humble, and committed to growth. They don’t need a push to do the right thing, and working with them is inspiring.

We align incentives by budgeting against recurring revenue, avoiding boom-and-bust cycles. Transparency is key: uncapped profit sharing and open communication about the company’s health foster trust and shared success. When everyone has skin in the game, it builds commitment. Our goal is to empower every team member to drive impact and understand the full business strategy behind successful gaming.

Changes in 2024?
Looking back at the last couple of years, we became enamoured with growth and overextended ourselves. That ultimately culminated with us ending FY2023 in the red. Significant, because it was only the second time in our sixteen years that we weren’t profitable! Since then, we’ve turned things around, are back in the black, and are posting a nearly 300% increase in net profit for FY2024. More importantly, we’re back to focusing on building profitability and preparing for new game launches in 2025 and beyond.

Outlook
As Ayrton Senna famously said, “You can’t overtake 15 cars in sunny weather... but you can when it’s raining.” The gaming industry is undoubtedly facing a storm, but at Kano, we’re used to driving in the rain. We’ve built a business that can navigate these challenges, and we’re confident in our ability to continue growing and succeeding, no matter what the weather brings. Let’s say we’ve got a few Shells and Fire Flowers up our sleeves!

What It Takes
Running a bootstrapped game studio is tough. While big companies use resources to solve problems, we rely on people going above and beyond. Our team enjoys both stability and the chance to make a real impact, sharing in profits. It’s stressful but deeply rewarding. We’re taking on giants our way, and we love the challenge. As we grow, we remain true to our values, focused on sustainable, profitable growth. With advancements in AI, small teams like ours will soon compete at a AAA level.

Wrapping Up: Key Takeaways for the Road Ahead
Reflecting on Kano’s journey and the gaming industry’s challenges, these lessons stand out:

• Maintain a Growth Mindset: The gaming industry is volatile, but continuous improvement and adaptability have kept us strong.

• Focus on Sustainability, Not Just Growth: Long-term stability beats rapid, unsustainable growth.

• Prioritise People and Culture: Our transparent, accountable, and purpose-driven culture is our biggest asset.

• Embrace Change, But Stay True to Your Purpose: Innovate, but don’t stray from your long-term vision. We stayed focused on meaningful games when trends pushed in other directions.

• Small Fixes Matter: Big swings aren't always the answer. Often, improving user experience and fixing small issues yields the best results. Retaining engaged players is easier than acquiring new ones.

Thanks for reading and keep grinding!

Tim Teh
Founder & CEO, Kano