Deal Radar 2008: Challenge Games

This story was written by Sramana Mitra.
Challenge Games creates short, online games for both serious and casual gamers that are exciting and easy to play. These games are browser-based and can be played from any computer. Most of the games are multiplayer, and take only 3-10 minutes per game. They provide instant entertainment, unlike other popular games such as World of Warcraft or Lord of the Rings. All the games developed by Challenge are free

The first game the company released was Duels, which is a fantasy game with level advancement, development of the characters, collectability and trading. Duels was the first game available on Facebook as an application. Players can pay a small subscription fee and sign up for VIP membership or can play the free version of the game.

The company's second game, Baseball Boss, is a combination of fantasy sports and baseball card collecting. Both games are designed with the aim of making players trade virtual goods like better swords or better equipment to improve their game. Such collectibles can be purchased with real currency. Although free, the games generate revenue by selling virtual goods to users.

Challenge Games was founded in 2006 by Andrew Busey, who is now the CEO. He most recently co-founded Pluck, a platform which powers social media on sites like Reuters, USA Today and The Economist, among others. Author of one of the first online gaming books, Secrets of the MUD Wizards, he also created several Multi-User Domain (MUD) games which were available before games like Everquest and World of Warcraft. Busey is also the creator of the IM application iChat, used by Apple.

In July 2008, Sequoia Capital invested $4.5 million in the company along with a group of angel investors including Ron Conway. A few months later, in September 2008, Challenge raised a $10 million Series B round led by Globespan. Previous investor Sequoia also participated in this round. The company is based in Austin, Texas.

Duels has approximately 250,000 registered users. In June 2008 Duels held a tournament with $5,000 in cash and other prizes that drew over 1,600 players.

Although most players seem to enjoy the games, some TechCrunch readers found them boring and repetitive. and feel that it takes a long time to reach the higher levels where they can actually use the collectibles they purchase.

In the last few years, we have seen the emergence of a new business model of offering free games and virtual worlds, while making money in "merchandise". For this business model to be successful, it is critical that the games and virtual worlds are extremely addictive, sticky, and immersive. The problem I see with Challenge Games is that their games don't seem to have those properties, thus putting them in a neither here nor there position.

In contrast, PlayFirst, another casual game publisher has hit, simple but addictive games like DinerDash that people pay to play. And of course, there is the hopelessly addictive Tetris, which too drew a great following, with people having no problem paying to play. It is also a simple game, repetitive, but addictive.

Investors, obviously, have invested in the company with the hope that Challenge Games would match the success of Tetris. Andrew Busy has work to do!

Related Readings:
MMOGs The Parallel Universe
Deal Radar 2008: Turbine
PC Games Where We've Been, Where We're Going

By Sramana Mitra