UK mobile game company Tripledot just levelled up.
After its $800m deal for 10 AppLovin studios was officially announced last night, Tripledot is suddenly one of the biggest independent mobile game companies in the world.
And as the ink dried on that transformative deal this morning, we spoke to Tripledot cofounder and CEO Lior Shiff about how the deal happened and what’s next for the company.
He told us:
- The $800m deal has unlocked a potential IPO
- Tripledot is still looking to acquire more studios
- Layoffs are unlikely: “We’re not going to create a load of value by firing lots of people”
- Tripledot will remain focused on mobile; PC and console are not in its plans
- Despite its 20% stake in Tripledot, AppLovin will not have a board seat
- AppLovin will not have any say in Tripledot strategy or operations either
Once the AppLovin deal is approved, the London-based outfit says it will now operate 12 studios across 23 cities, employing 2,500 staff. Its combined portfolio will now boast 25m DAU and generate nearly $2bn in gross annual revenue.
Our conversation with Shiff follows below. It has been edited for clarity and readability.
AppLovin has been trying to sell those studios for years – can you talk us through how this deal happened?
They decided to start the more formal process, I would say, end of last year. I think the reason this followed the way it did is because AppLovin – and they’ve been public about it – realized that there’s lots of value to unlock with its studios, because they were really never a games company at heart.
We think that we can really unlock a lot of value, and this is how the deal ended up being 50/50 with cash and equity. Because they believe – and we believe – that we can just do a better job and support those studios and help them get to the next level of success. And we [both] want to enjoy this upside.
It took roughly six months until we signed it just yesterday.
What does the 20% equity mean for Tripledot? What kind of say will AppLovin have in your business and is it now the biggest minority stakeholder?
They will be definitely one of biggest minority shareholders but basically operationally, they will not be involved in the running of the business. We don’t have any commercial obligations to them, and they will not take a board seat, so they will not have any operational or strategic say in the business.
We don’t get any preferential treatment because of this acquisition – the relationship will be on normal commercial terms, similar to the terms we had before.
The second thing i’ll say is that the studios, although they were big part of AppLovin, they did not actually rely on AppLovin technology. The reason they started acquiring games studios was really to have first party data to train their AI algorithms. And what happened is they started to become successful enough and large enough that they didn’t need to own the studios anymore to train the algorithms.
They have 20% of [Tripledot] because they felt we will have a lot of upside ahead of us, so they decided to take equity instead of cash.
$800m seems like a bargain for 10 studios, is that how you’re looking at this?
I do think it’s a win-win deal, because I think for them it allows them to focus on their core offering. That’s what they wanted and they have a much cleaner story for the market and operationally. Also, they believe that there’s a lot of upside in the equity part of the deal.
And for us it’s a great deal because it’s moving us from being a high-performing challenger in mobile games to one of the global leaders.
How long will it take you to figure out studio integration? Will there be layoffs?
We think the next year will be focused on just trying to integrate the studios and working together. Obviously, we’ve spent time with the studios already and we’ve been very impressed with the talent, and we think we can add value to many of them.
It’s not a cost-cutting deal. We’re not going to create a load of value by firing lots of people. In the last few years, [AppLovin] closed lots of studios – they used to have 20 studios, and now they were down to 10, because they actually closed the 10 lower-performing ones.
So we are left with the better performing ones and they already did some significant cost cutting. I think Machine Zone is a great example. The studios we are getting are very, very lean so our focus is actually not on cost-cutting, it is on where we can unlock value in those studios, help them grow more and perform better. We’re probably more in hiring mode than firing mode.
You told me in 2022 that it was important for mobile games to have a “poster child” public company…has this deal accelerated the idea of Tripledot going public?
I still stand behind that quote especially since Zynga has been bought out. Putting Tripledot aside, I think it would be really good for the ecosystem to have a really large, successful ‘face’ for the market.
I would say this deal gives us optionality to consider an IPO. Now, an IPO is not the end of road, it’s also a milestone but I would say that when the time is right, I think we’ll sit with our board, we’ll evaluate all options.
Before we didn’t have the scale to do it but now have the scale to do it. But we need to see if we think that’s the right path for us.
It unlocks optionality, but I think we’re more focused on building a great company, and we always believe if we build a great company, we have great games, eventually also we can lead into good outcome for shareholders – if it’s an IPO or something else. But yes, this unlocks the optionality for IPO.
If you’re going for an IPO do you think you’ll need to rebrand or merge some of your studios to tell a cleaner story to the markets?
Whatever is good for us operationally is what we’ll do…we will figure out the storytelling. Our plan is to keep the studios independent, because they build quite different games and they have the infrastructure to do that. And we think that there’s something very healthy about having this collection of studios.
We want to support all studios in their ways of working. But I will say that we’re very focused on mobile games. We think we know mobile games very well so we don’t envision ourselves going into PC or console.
How does the US App Store ruling change your thinking about the future of the market?
We think that giving the consumers a choice of where to pay and how to pay is a good thing for the players. It’s a good thing for the ecosystem, and generally, this is a good event for mobile games.
I will say that in my previous life, before Tripledot, I used to be at Product Madness, which is a 100% in-app purchase company. And actually, a lot of our leadership team used to work at Product Madness, so although Tripledot is mostly an in-app ads company, the team is very, very experienced in both ads and in-app purchase.
After this transaction closes we will actually be very, very diversified, roughly 50% ads, 50% in-app purchase. And we like the fact that we’ll have both tools in our arsenal.
Will you be buying up any more studios as you head for that potential IPO?
I do envision us doing more M&A down the line. Obviously it has to be the right opportunity and the right team, and we need to have strong alignment.
We think the best way is a mix of organic growth – and we’re still building lots of new games – and inorganic growth. But it has to be the right opportunity – we think this specific one is a great one, and we hope we’ll have similar opportunities down the line.
What gaps in your portfolio are you looking to fill next?
I guess one that pops into mind is more like sport and action games, for example. It’s an interesting part of the market…racing is another.
And even if it’s a similar studio that’s just great at executing, building…it’s less about the game genres, it’s more about if we share the same values and culture – if we think that there’s an opportunity for one plus one to equal three.
