On Mobile Gaming Sensation, Skillz

Mobile games are fun for players, and profitable for the makers. However, once in a while, a game comes along and makes it not just fun for players, but can be financially rewarding as well - and Skillz is one of such.

Founded in 2012 by Andrew Paradise and Casey Chafkin, Skillz is an online mobile multiplayer video game competition platform integrated into several iOS and Android games. Players use it to feature in competitions against other players across the world.

With over 18 million registered users, about half of which are women, Skillz runs about 2 million tournaments daily for games like Dominoes and Solitaire. Since its launch, it has hosted over 800 million tournaments. Players are matched with one another based on their skills, and can record and broadcast all its games as the platform makes it possible to generate clips and highlights.

A few gaming companies have seen as much growth and player engagement rates as Skillz, three years after its launch, the company has put out 550 games. By December 2017, the company grew at an astronomical rate of 50,000 percent. Its conversion rate is also terrific and doesn't seem to be slowing down. In 2020, the company reported a figure of 2.6 million, for monthly active users(MAUs), of which 324,000 were paying users - this represents a payer conversion ratio of 12.6 percent. In the fourth quarter of 2020, this number climbed to 16.3 percent.

This is a lot more than the average player engagement rates for mobile games, which is around 2-3 percent, with about a half of users never opening a game more than once.

 According to Andrew Uerkwitz, a Jeffries analyst, these are some of the highest payer conversion rates seen on mobile. He said, “We see Skillz's conversion metrics as evidence that its unique competition model is sound and importantly scalable as it spends to bring new players into the top of the funnel.”

He believes Skillz has the potential to be the next big thing in the mobile gaming universe.

“In social gaming, it started with Farmville. Candy Crush came along and showed that gamers came in sorts of stripes and flavors. Supercell built a mobile empire of competitive battlers. We believe Skillz is next in line."

Funding

In November 2012, Skillz raised $1.3 million in seed funding from investors including Mark Jung. A year later, the gamers raised about $8.7 million in Series A funding. In 2014 and 2015, it raised $6 million and $15 million respectively. The NFL also invested an undisclosed amount in the company in 2019, through 32 Equity. According to the VP of 32 Equity, Kevin LaForce, “We invested in Skillz because we believe the platform is driving the future of mobile entertainment, which is an area the NFL believes is critical to engage our fans in an increasingly connected world.

Stock Market Activity

In December 2020, Skillz (SKLZ) began trading on the NYSE at $17.89 after a merger with SPAC. Unlike other companies which go public through IPOs or direct listing, Skillz was acquired by Flying Eagle Acquisition Corporation, a special purpose acquisition company.

On Monday, shares of the company went up 16.5 percent, after CEO Andrew Paradise disclosed that investment management firm, ARK Invest, purchased over 1.2 million shares of the gaming company last week, bringing Skillz's total shares to over 7million. 

The Skillz stock price fell by 5.95 percent on Tuesday, from $21.16 to $19.90. During the day the stock fluctuated 12.27 percent from a day low at $19.32 to a day high of $21.69. Volume fell on the last day along with the stock, which is a good sign as volume should follow the stock. Yesterday, the trading volume fell by 10 million shares. In total, 43 million shares were traded for approximately $847.55 million. As of the 28th, the shares are opening at $20.30.

How To Earn On Skillz

For each tournament entered, gamers are mandated to pay a fee that varies depending on the tournament. All tournaments have predetermined prizes, ranging from a dollar to thousands of dollars. 

To play, all you have to do is tap on the Store icon on the main menu and enter your credit card/ PayPal details. You can withdraw your earnings at any time. 

The company generates 35 cents per player in revenue per day on an average, according to the CEO. 

"We get about 35 percent of every day's traffic in a given game to come in and try the tournament system. The most hardcore players are playing multiple hours per day on their mobile devices. And the average on the system right now is about 38 minutes per day per tournament player," Paradise said.