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L.A.-based Exploding Kittens and founder Elan Lee add a big dose of "fun" into "fundamentally changing a business model"
Turning a crowdfunded project into a full-fledged media company is no simple feat, but Exploding Kittens is now entering its second decade in operation with a robust system to launch and develop new games, to the tune of dozens annually.
But that's not all of the paradigms they're, well, "blowing up." The company has rapidly expanded to include a Netflix series and merchandise, allowing the spry Mid City outfit to surpass larger competitors even as the founders try to stay true to their roots as game developers.
EK will launch 19 games this year to add to an existing library of nearly 70 titles that have debuted since launching its namesake "Exploding Kittens" game through a Kickstarter campaign in 2015.
"We now run the entire pipeline in-house from the warehouses and distribution to the marketing, sales, production pipeline, relationships with vendors, product testing, artwork, updates, web and digital apps," said Elan Lee, chief executive and co-founder of Exploding Kittens. "It's taken us 10 years to build that kind of capacity - to have an art team and distribution network that can find a home for all of those games."
Exploding Kittens was launched as a collaboration between special effects designer Lee and cartoonist Matt Inman, founder of the pioneering webcomic "The Oatmeal." The pair relied on their unique backgrounds to create and illustrate their first game launched through the crowdfunding platform. They originally hoped to sell a couple hundred copies, but the campaign generated an astounding $8.8 million in 30 days, leaving the pair scrambling to fulfill orders that exceeded their wildest expectations.
In total, the campaign was supported by more than 220,000 people and is widely considered one of the most successful crowdfunding projects ever launched on the platform.
Now, its games are sold at major retailers nationwide, both in-store and online, and the company launched an international division to translate and distribute them overseas. Although much of the game production has been brought in-house, sales requires collaboration with mass retailers, which requires building relationships with very large companies that have different and ever-changing needs.
"I love the creation part. What I don't love is the moving target because requirements and infrastructure change every single year. It makes it hard to be successful and can be frustrating," said Lee.
Inman had prior experience with Kickstarter campaigns and thought it was a good way to test the market. Their other options were trying to get their game published by an established game company, which would have been extremely difficult for a startup without a track record, or to self-publish, which could have significant upfront costs.
"Traditional investors aren't going to invest in a card game," said Inman, who acknowledged that he still thinks crowdfunding is a good way for game developers to test new products. However, he doesn't think that the success of Exploding Kittens could be replicated now because of changes in the way that consumers connect with products and companies. Inman was also able to promote the campaign to an existing large audience that followed his self-published webcomic.
"We couldn't do it again. Our audience was the Oatmeal audience, and if you had a large following online, they would support your links," said Inman. He noted that social media engagement is much more difficult now due to changes in the social media platforms that emphasize short-form videos to generate interest. Email lists have become much more valuable to connect directly with an audience but are much harder to build and maintain a following.
Lee's background was in video games. He was the chief design officer at Xbox Entertainment. However, he decided to resign from this prestigious job at Microsoft to make something physical after an encounter with his niece and nephew.
"I remember going to my brother's house, and he has two young kids who I love dearly. I walked in the door, excited to see them, and they were playing a video game," said Lee. "They wouldn't look up to say 'hi' and, to add insult to injury, they were playing a game that I had designed."
Lee soon departed to pursue projects to help kids move away from screens.
His interest in board games started as a teenager. He started a collection of classic games of all types that now numbers in the hundreds, if not thousands. He studied many of them, their strategies and gameplay to determine what makes them great - and also what can make them terrible - to play.
"I wanted to do something that's going to put parents with their children or put friends with their friends around a table, enjoying each other and celebrating and laughing and playing. It was a huge departure from what I'd been doing for the previous two decades," said Lee.
The project was immediately the most well-funded venture in which Lee had ever participated. He stopped pursuing other opportunities to focus solely on Exploding Kittens. The first game led to a second a year later, also launched on Kickstarter, and then additional games were added to the franchise. Lee used his wide creative background as an SFX and game designer early on to generate attention in the crowded games space - for example, an 8-foot-tall, hairy, vaguely cat-shaped vending machine at an otherwise staid gaming trade show that dispensed a wide range of unique, personalized gifts in lieu of a traditional display. (The secret? A team of humans working diligently inside to help create the items on the spot.)
Investors eventually recognized the brand's growth, and Peter Chernin's TCG Capital invested $30 million in 2019. The company continued expanding and eventually outgrew Lee's humble garage headquarters. The company is now on its fourth office as it expanded to accommodate its growing workforce, which is up to 70 employees, mainly at its Los Angeles headquarters across the street from the historic Farmer's Market. Many job functions that were originally outsourced out of necessity for the startup have been brought in-house.
The games themselves have evolved over the past five years, explained Inman. He said that they have shifted from being character-driven to focusing more on the social aspect of play. They need to be easy to understand and fun - and they can't take eight hours, like some classic board games. Plus, they need to have elements of skill that involve more than the luck of rolling dice or choosing a card. Some Exploding Kittens games are designed to be played in as little as 90 seconds. Many games are designed for the adult audience and have been redesigned to appeal to a younger, Gen-Z crowd.
"The games business is not an expensive business to enter into and execute against on the product side. You're not focused on complicated product development. There are limited electronics and big features," said Jeremy Padawer, a veteran Los Angeles toy company executive and chief brand officer of Jazwares, a Berkshire Hathaway company. "It's more of an intellectual pursuit. The quality of the game matters more than the manufacturing."
One of the biggest challenges for a toy and game company is marketing, especially to those who are younger. Exploding Kittens has hosted game nights for adults at bars, where it sends games and pays for food and drinks to develop some organic viral marketing. On a larger scale, it recently shipped thousands of games to New York for an outdoor game night event in Central Park in August, which created a large-scale, social-media-ready event that provided more buzz than any TV or web advertising spot ever could. This, said Lee, is the major part of EK's marketing strategy, to create excitement - and experiences - that are too irresistible not to share across platforms.
An additional way to promote itself is through donations to summer camps. Lee keeps a list of summer camps across the country and sends games for free so that kids can play together. They don't include promotional materials and don't ask for anything in return but have received positive feedback from counselors who played the games with campers, which in turn allows the company some organic R&D.
The U.S. toy and game market generated an estimated $42 billion in revenue last year, according to data from the U.S. Toy Association and Circana, a retail tracking service. Board and card games and puzzles account for about 12% of the sector, which also includes action figures, dolls and plush toys. Looking at the 10 top-selling games in the world, Exploding Kittens games occupy between four and eight of those spots at any given time.
"Board games represent that unique category that brings family members together, gets kids and parents off screens, facilitates conversation and familiar engagement, and instills lifelong memories for both demos," said Russell Binder, founding partner of Striker Entertainment, an independent and boutique entertainment licensing and merchandising company that previously worked with Exploding Kittens. "Kids are craving social experiences in person and off devices, and board games are the 'Trojan Horse' for families to schedule time to be together, to bond and ideally create a generational habit that continues to be passed on."
For Lee, bonding with his children over games has taken on a new level. When his daughter turned four years old, he started playing games with her, but she didn't enjoy the typical children's games. She started tinkering with games with the help of her father and, in turn, created a dozen games. Four of those actually made it into production at Exploding Kittens, where she got credit as a game designer. One of them, "Hurry Up Chicken Butt," has become a bestseller.
"My four-year-old designed a game that's outselling 80% of the games that I've made. It's so awesome, and her name's right there on the box," said Lee.