Dream Games
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Dream Games raises $155M at a $1B valuation as its Royal Match puzzle game hits a royal flush
Istanbul in Turkey continues to prove itself as very fertile ground for casual gaming startups, which appear to be growing from small seedlings into sizable trees. In the latest development, Dream Games — a developer of mobile puzzle games — has raised $155 million in funding, a Series B that values the startup at $1 billion.
This is a massive leap for the company, which raised $50 million (the largest Series A in Turkey’s startup history) only 3.5 months ago. This latest round is being co-led by Index Ventures and Makers Fund, with Balderton Capital, IVP and Kora also participating. It also comes in the wake of a bigger set of deals in the world of gaming and developers in Turkey, the most prominent of which saw Zynga acquire Peak Games for $1.8 billion, amid other acquisitions. Dream is one of several startups in the region founded by alums from Peak.
The focus of the funding, and currently of Dream Games itself, is Royal Match, a puzzle game (iOS, Android) that launched globally in March.
The game has been a huge hit for Dream, with 6 million monthly active users and $20 million/month in revenues from in-game purchases (not ads), according to figures from AppAnnie. (A source close to the company confirmed the figures are accurate, but Dream did not disclose its revenue numbers or revenues directly.) This has catapulted it into the top-20 grossing games categories in the U.S., U.K., and Germany, the same echelon as much older and bigger titles like Candy Crush and Homescapes.
“The funding will be used for heavy user acquisition in every channel and every geography,” Soner Aydemir, co-founder and CEO, Dream Games, told me in an interview. He said Asia would be a focus in that, specifically Japan, South Korea and China. “Our main target is to scale the game so that it becomes one of the biggest games in the global market.”
The world of mobile gaming has in many respects been a very cyclical and fickle one: today’s hot title becomes tomorrow’s has-been, while for developers, they can go through dozens of development processes and launches (and related costs) before they find a hit, if they find a hit. The role of app-install ads and other marketing tools to juice numbers has also been a problematic lever for growth: take away the costs of running those and often the house of cards falls apart.
Aydemir agrees, and while the company will be investing in those aforementioned in-game ads to encourage more downloads of Royal Match, he also said that this strategy can work, but only if the fundamentals of the game are solid, as is the case here.
“If you don’t have good enough metrics, even with all the money in the world it’s impossible to scale,” he said. “But our LTV [lifetime value] is high, and so we think it can be scaled in a sustainable way because of the quality of the game. It always depends on the product.”
In addition to its huge growth, Dream has taken a very focused approach with Royal Match, working on it for years before finally releasing it.
“We spent so much time on tiny details, so many tests over several years to create the dynamics of the game,” he said. “But we also have a feel for it,” he added, referring to the team’s previous lives at Peak Games. “Our users really appreciate this approach.”
For now, too, the focus will just one the one game, he said. Why not two, I asked?
“We believe in Pixar’s approach,” Aydemir said. “When Pixar started, it was very low frequency, a movie every 2-3 years but eventually the rate increased. And it will be similar for us. This year we need to focus on Royal Match but if we can find a way to create other games, we will.”
He added that the challenge — one that many startups know all too well — is that building a new product, in this case a new game, can take the focus away when you are a small team and also working on sustaining and maintaining a current game. “That is the most difficult and challenging part. If we can manage it we will be successful; otherwise we will fail because our business model is basically creating new IP.” He added that it’s likely that another game will be released out into the world at the beginning of next year.
The focus, in any case, was one of the selling points for its investors. “The Dream Games team’s deep genre insight, laser-focus on detail and team chemistry has helped create the early success of Royal Match,” said Michael Cheung, General Partner at Makers Fund, in a statement. “We’re excited to be on the journey with them as they grow Royal Match globally.”
In terms of monetization, Dream Games is pretty firmly in the camp of “no ads, just in-app purchases,” he said. “It’s really bad for user experience and we only care about user experience, so if you put ads in, it conflicts with that.”
Some of the struggles of building new while improving old product will of course get solved with this cash, and the subsequent hiring that Dream Games can do (and it’s doing a lot of that, judging by the careers section of its website). As more startups emerge out of the country — not just in gaming but also areas like e-commerce, where startups like Getir are for example making big waves in instant grocery delivery — it will be interesting to see how that bigger talent pool evolves.
“Since its launch in early March, Royal Match has become one of the top casual puzzle titles globally, driven by once in a decade retention metrics. It speaks to the sheer quality of the title that the Dream Games team has built and the flawless polish and execution across the board,” commented Stephane Kurgan, venture partner at Index Ventures and former COO of King. Index is also the backer of Roblox, Discord, King and Supercell, in a statement.
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Istanbul’s Dream Games snaps up $50M and launches its first game, the puzzle-based Royal Match
On the back of Zynga acquiring Turkey’s Peak Games for $1.8 billion last year and then following it up with another gaming acquisition in the country, Turkey has been making a name for itself as a hub for mobile gaming startups, and specifically those building casual puzzle games, the wildly popular and very sticky format that takes players through successive graphic challenges that test their logic, memory and ability to think under time pressure.
Today, one of the more promising of those startups, Istanbul-based, Peak alum-founded Dream Games, is announcing the GA launch of its first title, Royal Match (on both iOS and Android), along with $50 million in funding to double down on the opportunity ahead — the largest Series A raised by a startup in Turkey to date.
While Dream Games will focus for the moment on building out the audience for puzzle games with more innovative ideas, it also has its sights set on a bigger goal.
“We’re building this as an entertainment company,” CEO Soner Aydemir said in an interview, where he described Pixar as a key inspiration not just for size but for quality in its category. “What they did for animated movies, we want to do for mobile gaming. We are focusing on casual puzzle games first because everyone plays these, but we will also move forward with other genres. We want to be a huge interactive entertainment company that builds high-quality games.”
The Series A is being led by Index Ventures, with participation also from Balderton Capital and Makers Fund. The latter two backed Dream Games previously, in a $7.5 million seed round in 2019. Index, meanwhile, is a notable VC to have on board: Other successful gaming startups it has backed include Discord, King, Roblox and Supercell.
Interestingly, this is not Index’s first investment in a gaming startup founded by Peak Games alums: In December it led a $6 million round for another Istanbul mobile casual puzzle gaming startup founded by ex-Peak employees: Bigger Games.
Dream Games is not disclosing its valuation with this round.
Dream Games raising $57.5 million ahead of launching any games — or proving whether they get any traction — may sound like a risky bet, but there is some context to the story that sets up the odds in this startup’s favor.
The founding team all come from Peak Games, the Istanbul gaming startup that was so nice, Zynga bought it twice — first, in the form of one small acquisition of some specific titles, and then the whole company some years later.
CEO Soner Aydemir is Peak’s former director of product who built the company’s two biggest hits, Toy Blast and Toon Blast. Ikbal Namli and Hakan Saglam were Peak’s former engineering leads. And Peak product manager Eren Sengul and an ex-Peak 3D artist Serdar Yilmaz round out the rest of the founding team.
(Aydemir notes that the team left and formed Dream Games in 2019, about a year before Zynga’s full acquisition.)
The other indicators that Dream Games is on to something are its metrics for its limited test run of Royal Match.
Royal Match — in which players are tasked with helping King Robert restore his royal castle “to its former glory” by rebuilding it through a series of match-3 levels and obstacles, with new rooms, royal chambers and gardens making up the different levels of the game — was launched first as a limited test on iOS and Android in the U.K. and Canada in July leading up to this launch. In that time, Aydemir said it saw one million downloads and 200,000 daily average users.
“We think the numbers are very promising compared to previous experiences,” he said.
While Aydemir likes to describe Dream as an “entertainment” company, there is a lot of technology going into the product, from the graphics and the mechanics of the puzzles themselves through to the data science behind them.
“If you want to create an iconic game, you need to combine engineering, art and data science together with high-quality user acquisition and a strong marketing approach,” he said.
He believes that when you focus on these it will inevitably lead to quality, which means you no longer have to focus on simply trying to find a hit.
“We don’t like that approach,” he said. “We don’t want to find a hit.”
That was also the mix that Index also wanted to back.
“Building iconic titles requires a harmonious mix of craft, science and flawless execution,” said Index Ventures partner Stephane Kurgan, who led the round together with Index’s Sofia Dolfe. “The Dream Games team has perfected this mix over many years of working together, and has put it on full display in Royal Match. We could not be more excited to work with them in their journey to build the next global casual champion.”
While Dream Games’ long-term ambition is to build out interactive experiences around different audiences and genres, Aydemir said that casual games, and puzzles in particular, have proven to be a huge hit with consumers.
The strength of that trend has up to now meant that puzzle games generally have proven to have more staying power than other genres in mobile games, which have soared in popularity but also somewhat fizzled out.
“Every year we see the bigger market of users growing by 20%,” he said. “It will remain for decades.”
Interestingly, the focus on casual gaming startups in Turkey seems like a perfect storm of sorts. Undeniably, the proven success of Peak has brought in more punters, but it has also shown the way to developers: You can build a successful and global consumer tech startup out of Turkey, and perhaps puzzles — which focus on shapes — are especially good at transcending different language barriers. Alongside that, Aydemir pointed out that the country is strong on engineers and developers but slim on opportunities with bigger tech companies.
“Mobile gaming is a younger industry, so that presents an opportunity,” he said.
Updated to correct that Index is not an investor in Rovio, and that the limited test had 200,000, not 200, DAUs.
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