Cute-casual publisher HyperBeard has almost gone out of business twice, firstly by its own hand and later after battling an extraordinary multi-million dollar FTC fine.
“It’s been quite a ride,” says CEO Alex Kozachenko as we wrap-up our interview. He’s not wrong.
Today, happily, the company’s on solid ground. Appmagic data suggests all of Hyperbeard’s games combined now total almost 165m downloads to date, with $14.7m in IAP revenue earned plus a good chunk of in-game ad revenue. But it wasn’t always this way.
In 2015, before it stumbled upon cute-casual, Hyperbeard had bet big on pixel art platformer The Balloons, and got a publishing deal with Noodlecake.
“We thought we were going to be very successful,” says Kozachenko. “The game came out and it was just terrible in terms of metrics. We had no idea what we were doing. The studio had about three months left of runway and we had just gone through a round of layoffs, three or four people.”
The last roll of the dice for HyperBeard was Kleptocats, which was greenlit “both because there was something addictive about it, but also because we had three months and really no time to build anything else,” says Kozachenko.
Fortunately, Kleptocats performed well in soft launch and went on to make somewhere between $500k to $1m in its first year, saving the studio from closure and inspiring HyperBeard to concentrate on replicating its cute-casual look.
It followed up Kleptocats with Clawbert, a game made with Chilean studio Bow3 with a similar kawaii aesthetic. It was another success, and further secured the studio’s future, for a while at least.
HyperBeard moved into publishing, first with a premium puzzler Dr. Meep – “it’s actually my favourite game in the portfolio – it did terribly,” says Kozachenko – and then published Monkeynauts and Suki’s Adventure – both strong performers.
By the end of 2018, HyperBeard had several hit games and an art style and genre mix that worked. It had also grown to over 30 people.
Then came 2019, HyperBeard’s “lost year”, as Kozachenko puts it. The US consumer protection agency, the FTC, investigated HyperBeard and decided that the company was targeting its games at minors (it contends that it wasn’t). In the FTC’s view, HyperBeard was breaking the law and sought millions of dollars in penalties.
“We didn’t have the millions they were demanding. Not even close. The company hadn’t even made that much in revenue at this point,” says Kozachenko. “We spent almost half a million on lawyers just trying to settle. So we came back to them said, hey, look, we don’t have this money. You have our bank statements. You have my bank statements. We’re not hiding anything.”
During several months of negotiations with the FTC, HyperBeard was close to not being able to make payroll. So Kozachenko had no option but to lay everyone off and hope that future earnings from its live games would cover any penalties. The company was effectively dead.
“This was right before Christmas,” he tells us. “It was a really hard time – I had to lay off 35 people.”
Here’s a bleak punchline: after the layoffs, the FTC and HyperBeard settled the investigation for just $150k; more money than HyperBeard had or would have for months, but a reprieve from the death penalty it had been facing.
After the matter settled in January of 2020, HyperBeard had to start all over again.
Fortunately, amid all that FTC drama, it had lined up Adorable Home. A cosy home decoration game with HyperBeard’s signature aesthetic, it launched at just the right time.
“It was very organically successful,” says Kozachenko. “I think it probably rode a little bit of the COVID experience because it was a very heartwarming, very family-centric game. Everyone was staying at home and they wanted those good feels.”
Adorable Home was popular globally, but particularly huge in Southeast Asia. “At one point we had about 5% of the population of Vietnam playing our game,” says Kozachenko.
“We’d like to think of that as good karma for having dealt with this FTC situation,” he continues. “We hired everyone back, and everyone was very happy to come back.”
Adorable Home spiked again in June 2021, when a Pride-focused content update got huge attention on TikTok. It got another healthy bump through the same social network in January 2022, when an update allowed players to have a baby with their in-game partner and decorate the child’s room.
Pocket Love followed, a conscious effort to replicate the wholesomeness of Adorable Home, and then came Kuma Sushi Bar, a culinary spin on the formula.
After all of its many ups and downs, the HyperBeard of today has carved out an audience for itself – and having come through so much, it isn’t letting it go.
“We can kind of roll people from one game to the next, and multiple games at the same time,” says Kozachenko. “That’s our strategy, to get people in and move them around the portfolio.”
HyperBeard now has around 60 staff, most of whom work in its Mexican office, and continues to grow, with several more titles coming up which all riff on the cute-casual niche.
“We’ve always said that our games were quasi-games targeting quasi-gamers,” adds Kozachenko. “Rather than competing with midcore and hardcore titles where it’s extremely crowded and you’re very reliant on paid growth, this is our audience – and our goal is to grow with the audience, because we do feel like we have a strong hold on them.”