Financial Times article on Perplexcity
SECTION: BUSINESS LIFE; Pg. 12
Treasure hunt is the clue to a new marketing tool
PUZZLE PIONEERS: Perplex City is one of the 'alternate reality games' that will provide a new channel for promotion and advertising, says Paul Tyrrell
If you are in London this Saturday, do not be alarmed if you see some strange things going on. Young people will squeeze into phone boxes en masse; others may ask you for directions to specific buildings and monuments; all will be leafing anxiously through big, colourful playing cards and scratching their heads.
These are the players of Perplex City, an "alternate reality game" (ARG) in which the real world collides with a fictional one via the internet, mobile phone messages and other media.
Around 240 people will be tearing through the Holborn area, performing challenges in return for clues, as part of a global treasure hunt. Their ultimate goal is to locate an object called the Receda Cube. The first person to find the burial site of this lump of precious metal (reportedly the size and weight of a bowling ball) will win Pounds 100,000.
This may sound like a niche interest but the company behind the game, Mind Candy, is backed by a consortium of business angels and venture capitalists to the tune of Pounds 2m. The backers believe they have invested in the pioneer of a lucrative new marketing channel.
ARGs are heavily influenced by the role-playing games of the 1970s and 1980s such as Dungeons & Dragons, and by today's "massively multiplayer" online role-playing games. However, they typically interact with players on many more levels, from e-mails at work to phone calls in the middle of the night.
More significantly, they require players to co-operate in order to make breakthroughs, since vital clues can appear at any time, anywhere in the world.
The creators of Perplex City say its strong community spirit - fostered by a network of official and un¬official websites - has been crucial in attracting about 17,000 registered players with virtually no marketing.
Only a handful of ARGs have achieved this kind of prominence, and most were designed to market specific brands. For example, Nokia¬game, which has run periodically since 1999, is a promotional vehicle for the eponymous mobile phone manufacturer. Similarly, The Beast was developed in 2001 by a small team at Microsoft to promote the Steven Spielberg film AI.
Today, Perplex City is leading a new breed of ARGs with multiple-price entry-points and revenue streams. It has generated most ofits sales so far from collectable trading cards, eachcon¬taining a clue-yielding ¬puzzle, sold across Europe and the US. Packs of six cards retail for Pounds 2.50 or Dollars 5, and Mind Candy says it has sold around 200,000 packs over the past six months alone.
"Traditionally, ARGs have been very time intensive and only attracted a niche, hardcore audience that is internet-savvy," says Michael Smith, managing director. "We felt it was crucial to tap into a casual audience."
Although the cards command big margins (with rare ones trading for high prices on Ebay), Mr Smith has bigger ambitions. "The puzzle space has got a major amount of growth to come," he says. "Just look at Sudoku - it spread quickly because it started conversations. We think we can use the same principle to build the world's first global puzzle brand."
Mr Smith is the co-founder of Firebox.com, the online gadget and games retailer, whose sales have leapt to about Pounds 7m in the past few years. While running that business, he conceived Perplex City as a modern version of Masquerade, the 1979 book by Kit Williams whose illustrations contained clues leading to a gold, bejewelled hare, buried somewherein the English countryside.
In 2003, Mr Smith stepped back from Firebox (while remaining a non-executive director) to found Mind Candy, and spent the next year raising Pounds 500,000 from business angels.
Among the first to invest was John Hegarty, co-founder of Bartle Bogle Hegarty, the advertising agency. He describes what Mr Smith is doing as cutting-edge "seed branding". "If you develop a brand from the ground up like this then you encourage the customers to be evangelists," he says. "Any such game is going to succeed first among the real enthusiasts, but as you move into other media you can draw in many more people."
Ultimately, ARGs will become product-placement vehicles for consumer goods and even commercial venues. For now, Mind Candy is focusing on plans to launch magazines, merchandise and feature films based on Perplex City and its characters. It currently has 14 staff based in London and two abroad, and is recruiting fast following an additional investment of Pounds 1.5m, provided by Index Ventures, a venture capital firm, in October 2005.