Tapulous tries cross-promotion in Disney games

By Ryan Nakashima
AP Business Writer / December 20, 2010

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LOS ANGELES—When The Walt Disney Co. bought mobile game maker Tapulous Inc. in July, Disney wanted the startup's cofounders to build upon the popular "Tap Tap Revenge" franchise of music apps for iPhones and other gadgets and set the strategy for its fledgling mobile games division.

This month, the efforts of Tapulous co-founders Bart Decrem and Andrew Lacy are giving shape to Disney's plan for mobile and social games to reverse hundreds of millions of dollars in annual losses at its interactive unit.

Early Monday, the Disney interactive unit released the fourth version of "Tap Tap Revenge" in time for the rush of downloads expected by people who get iPhones and iPads for Christmas. Last year, Tapulous sold 800,000 games on Christmas Day and it's aiming for a million this year.

In "Tap Tap Revenge," which works on the iPhone, iPod Touch and iPad from Apple Inc., players tap the screen in time to the music to score points. Each version includes a different set of songs, and players can pay to add even more.

Disney also just released "Tron: Legacy," a game that will test Decrem and Lacy's first major strategy decision at Disney to promote new mobile apps within existing games. "Tron: Legacy," based on the recent movie of the same name, literally taps into 40 million Tapulous games that have already been downloaded. Disney apps, meanwhile, have been downloaded just under 20 million times.

Tap Tap players can get points for playing Tron songs, while Tron promotes Tap Tap titles with in-game advertising.

The Tapulous founders say such cross-promotion is a way to stand out from the 200,000 other apps available on Apple Inc.'s app store.

"If you're not in the Top 100, if you're not featured by Apple, users don't know about you," Decrem said in an interview. "The only way to find out about an app is if they've heard of it, if they see it promoted, or if it's being promoted from one app to the other app. So building these networks of apps is really the strategy that we're all running towards."

To spur sales, Decrem and Lacy also convinced Disney to reduce the cost of the Tron game to 99 cents from $4.99.

Tapulous, a Palo Alto, Calif.-based startup that launched with around $3 million in capital in July 2008, has been profitable since June of last year. It was folded into the segment of Disney that runs its websites and video games, which lost $234 million in the year to Oct. 2 on $761 million in revenue.

Disney is betting big on social and mobile games to turn the interactive division around. In July, after acquiring Tapulous for an undisclosed sum, it also bought social game maker Playdom for $563 million. It will pay another $200 million if Playdom does well.

Meanwhile, it has been adding staff at Tapulous. The staff in Palo Alto doubled to about 50, and in all there are nearly 150 employees in locations including Glendale, Calif., and Prague.

The Disney unit is targeting a global market for apps that Juniper Research estimates will hit $32 billion in 2015 from $10 billion in 2009. The estimate includes revenue from paid apps, subscriptions and advertising.

Tapulous is also planning to expand Disney's selection of mobile apps to include other properties, from Pixar's animated "Cars" movie to the virtual world for kids, Club Penguin.

"Over a very short period of time this has grown from nothing into a market that is going to be very big," Lacy said.