It’s no accident that DLD Tel Aviv Festival, Israel’s hottest digital conference, will this year host what Facebook expects to be the largest platform developers’ event it has ever organized on non-U.S. soil. While Facebook developer events attract 250 people in cities like London and Paris, more than double that number are expected to show up on October 15th for FbStart, a satellite event taking place during the festival. Chalk it up to the start-up nation’s strong talent pool and growing enthusiasm among developers to create social games and mobile-only apps.
“Everyone knows there are amazing developers, engineers and designers here. They are all looking for global reach — they want to be big everywhere and they know that if developers in Israel build a web or a mobile app on Facebook Platform they can rapidly reach 1.2 billion users,” says Julien Codorniou, Facebook’s Director of Platform Partnerships, EMEA, a scheduled speaker at the event.
Five out of the 10 top grossing gaming developers on Facebook in the EMEA region are Israeli gaming companies (see the table for details). “It’s really exceptional to see such concentration,” Codorniou says.
What’s more, at the same time that Facebook has started to prioritize mobile, Israeli developers are increasingly concentrating their efforts on creating all kinds of apps on the go. The sale earlier this year of Israeli start-up Waze, a mobile-only navigation app, to Google for over $1 billion is fueling the frenzy. “All of the Israeli developers want to get a piece of the mobile market right now,” he says.
That’s great news for Facebook. In less than a year, mobile has gone from being zero percent of the giant’s advertising revenues to almost 40%, making it an important play for the company and its ecosystem.
In recognition of Facebook’s momentum with Israeli mobile developers, Nicola Mendelsohn, the new head of Facebook EMEA, is making her first official trip outside the UK to attend the Tel Aviv developers’ event. Also present will be Sean Ryan, Facebook’s global head of gaming, and Ilya Sukhar, the CEO of Parse.
Facebook acquired Parse, a Silicon Valley back-end-as-a-service start-up, last April as part of a big push to become more relevant to mobile developers. It is a new revenue stream for Facebook as the company is keeping Parse’s freemium revenue model.
“Parse is a very strong pillar of our new platform strategy, to help developers build, grow and promote their apps,” says Codorniou. “The build part is based on Parse — its tools mean developers of a mobile-only application don’t need to manage the back-end stuff and only have to focus on the client app. All of that is managed by Parse.”
Since Facebook doesn’t own its own mobile operating system like Apple or Google and it doesn’t make its own devices, it needs to appeal to mobile developers in other ways. Parse’s technology makes it easier and faster to launch mobile apps; Facebook integration can make apps stickier when users add friends; and the company’s Mobile App Install Ads helps developers reach and acquire new users at scale.
Israeli developers such as GetTaxi, an app that helps people connect with car services; Lightricks, the company behind Facetune, an app that allows people to easily touch up photos; and gaming companies Playtika and Deemedya, will speak on a panel at the Tel Aviv event about their success on the Facebook platform.
Lightricks says Facebook has been key to its rocket rise on iOS. “I wouldn’t say that Facebook is just about directing advertising,” says scheduled speaker Itai Tsiddon, Co-Founder and Director of Business Development at the Jerusalem-based start-up. “It is really deeper than that. Targeting is the headline, but once you break it down it is offering the right things for the right consumers, which is basically what Facebook lets you do. We really try to find people who are interested in buying our product and with Facebook, because of all their social graphs, you can really identify consumers who might be interested. For example, in our case people in the fashion and photography worlds. Facebook’s exchange between seller and buyer and amount of data lets you get to the right people and not waste time bothering people who don’t want what you are selling.”
Lightricks was founded in January by four computer science PhD students and Tsiddon, a lawyer clerking in the Israeli Supreme Court. When the company launched Facetune in March, Apple featured it as one of the best new apps, driving traction.
“When revenues started coming in we toyed around with ways to gain exposure,” says Tsiddon. “We saw that Facebook mobile app install ads were the most effective. We were able to climb very high: on the iPhone at one point we were the number one paid app in 44 countries and number two in the U.S. and the UK.” For photo and video apps, Facetune was number one in 109 countries.
The wealth of data Facebook has drives growth, says Tsiddon. “You can see, on a day-by-day basis, how it is going. You can optimize various content and shift around, optimize across geographical sectors. It has been a very useful partnership for us.”
Some of Israel’s biggest gaming developers say partnering with Facebook has also played a key role in powering their success. Israelis have proved to be quite adept at cross-platform development and building massively multiplayer games that involve solving very complicated problems. That is because Israel has several generations of experts with the specific skills needed to succeed in online gaming including analytics, personalized customer relations management, and real-time management of games, says Gigi Levy-Weiss, formerly CEO of 888 Holdings, an online gaming company that has done very well on the Facebook platform. He is now an investor in Tel Aviv-based gaming success Plarium, another top grossing game on the Facebook platform. (For more about Plarium see Israel’s Top 25 hottest start-ups on pages 10 and 11). Levy-Weiss also invested in Playtika, another of the top five highest-grossing games in the EMEA region. Playtika was sold to Caesars Interactive Entertainment (CIE) in 2011 and is one of several companies that are/will be owned by Caesars Acquisition Company.
According to a recent S1 filing for an initial public offering in the U.S. CIE’s revenues have been “highly reliant on” Playtika and as much as $750 million of the value of this share offering could come from the Israeli start-up. “I believe that Playtika is the company which has inspired all the local gaming guys to start building games and apps on Facebook and on mobile,” says Codorniou.
Levy-Weiss gives credit to the Facebook games team and specifically Codorniou and Ryan for helping develop the ecosystem in Israel. “At the very early stages of the development of the industry the team recognized the potential in Israel and invested significantly in helping Israeli companies on all fronts. They had — and still have — a major role in the creation of the great ecosystem that was built here,” he says.
Deemedya, which helps studios and independent developers maximize the performance of their games across mobile and social networks, is another Tel Aviv-based company that has worked closely with Facebook. It says it now has more than 75 million downloads on mobile and 4.5 million users on Facebook; six games were featured by Google and Apple and two games were in Google’s Editor choice.
“Facebook appointed a great team of experts, who are based in London, but visit Israel frequently and take us step by step on the route to success,” says Doron Kagan, head of business development for Deemedya and a scheduled speaker at the DLD Tel Aviv Facebook event. “The social networks as well as the mobile platforms let the non-technical entrepreneurs utilize this amazing global platform to execute their start-up dreams.”
“In the last year we have seen a fast consolidation process and you have seen Disney, EA (Electronic Arts), and others spend tens of millions on marketing their games,” says Kagan. “The independent developers don’t have the resources to do that. Like in all industries, the big guys take a long time to get into the game, but once they arrive they throw a lot of money at it. So now the independent games developers don’t stand a chance to compete with that and that is why they come to us.”
Deemedya helps smaller games developers compete with the major studios’ deep pockets by offering insight, including what social features to include in the game, and ultimately publishing and marketing the game on Facebook. Deemedya was focused on mobile — but not Facebook — until earlier this year when a Facebook event in Israel and direct conversations with one of the social network’s EMEA executives convinced the company to change its plans and adapt existing games for Facebook rather than just make more generic mobile games.
The first game Deemedya helped transition to Facebook, Trial Xtreme 3, took several months to adapt and in the half year since launch has chalked up five million new users. That success was facilitated by the fact that Trial Xtreme already had 15 million mobile downloads before it made its Facebook debut. The mobile presence helped the game climb the Facebook charts, which in turn helped it get new users, who then looked for the game on mobile, creating a virtuous circle.
That’s the kind of story that Facebook hopes will resonate with the 500-plus developers gathered in Tel Aviv on October 15th. “We want developers to figure out their mobile strategy and ride that wave with us,” says Codorniou.
—Jennifer L. Schenker contributed reporting to this story.