Scopely aims to build new kind of mobile game business

Scopely's office
Source: Scopley

While Zynga has fallen off a cliff, with a revolving door of executives, and mobile game maker King was acquired by Activision Blizzard, one start-up has quietly built a new kind of mobile game business.

Scopely is tackling the $25 billion worldwide mobile game market with a unique approach. Instead of creating brands in-house, like Zynga and King do, Scopely acts as a game producer and distributor, focusing on free games.

The Los Angeles-based company takes a page from Hollywood studios. It partners with developers who have their own games, or plays matchmaker between developers and big media brands. The company draws on a wealth of data to tweak games to help them expand revenue from digital add-ons, and to better market and distribute the games.

Scopely told CNBC on Tuesday it has a $200 million annual run rate, with a 600 percent growth rate over the last 10 months. The company also announced a new partnership with WWE to launch a free mobile game, "WWE Champions." This comes after a string of best-sellers: Last year Scopely released a "Walking Dead" game "Road to Survival," which hit more than 4 million downloads in its first week, 10 million downloads in its first 90 days.

"Scopely sees itself as an interactive entertainment network: Building a central platform to build interactive experiences and build them into larger businesses," said CEO Walter Driver. "We've built a central business and technology infrastructure to turn beloved brands into IP again and again."

And "Road to Survival" is the start-up's sixth consecutive No. 1 selling game. In April of last year Scopely teamed up with Hasbro to release "Yahtzee with Buddies," which is still a top-40 grossing game. Driver projects that the game will generate $650 million in revenue over five years, noting that Scopely is the only game company with two different genre games in the top-grossing charts. The company has eight more games in development, four that are expected to launch this year.

"We're able to have success in many different genres because we're able to work with game studios that have expertise in different genres," said Driver, who says this gives the company the advantage of diversified revenue streams. "We have so much data that it enables us to know which genres are going to be good businesses, and good businesses for a long period of time. We can leverage the data we have — the attributes of users that are most relevant for the game — to figure out how we can market products so they can outperform."

The company's last funding round was a $35 million Series A in 2014, led by Evolution Media Partners, a joint venture with TPG Growth, Participant Media, Highland Capital Partners and talent agency Creative Artists Agency. The round drew other big names: The Chernin Group, Kobe Bryant and SurveyMonkey CEO Zander Lurie.

Digital gaming sales hit record $61 billion in 2015: Report
Virtual reality for gaming & beyond

Sources say that Scopely has attracted the investment interest of a range of types of companies: Console makers looking to build up their mobile game business, traditional media companies looking to bring their brands to mobile devices, as well as Asian giants, looking to expand their presence in the U.S.

With the mobile game market expected to grow to $45 billion by 2020, Driver said he sees massive opportunity. "Scopely is taking advantage of a new mainstream-ificiation of interactive entertainment," he said. "Most brands don't have interactive experiences. We have a sustainable publishing platform to systematically bring mainstream IP (intellectual property) to the audiences that care about them."

CORRECTION: Scopely is a game producer and distributor. The company's name was misspelled in an earlier version of this article.