Online messaging hasn’t changed much since it was introduced more than a decade ago. But German start-up Cooee, based in Kaiserlautern, is seeking to liven up the chat experience with elements from computer gaming and social networking.
The challenge was to go beyond instant messaging by creating a virtual space for chats – not with random others as in Second Life but with one’s real friends. Users who download the free Club Cooee software create their own world of virtual 3D chat rooms – a cool bar in Berlin, perhaps, or an idyllic offshore island – create an avatar and invite their friends to hang out and chat. With “Cooee Cash” members can buy outfits for their avatars and furnishings for their chat rooms. Club Cooee members can also connect with their friends from Facebook and other messaging programs.
“The company has combined the immersion and engagement of virtual worlds alongside the instant messaging market,” says Nic Mitham, founder of KZero, a research and consultancy firm in Cambridge, UK, focusing on virtual worlds, virtual goods and social gaming. “It is extremely innovative.”
Cooee is one of two German companies chosen to participate in Microsoft’s global BizSpark One programme, which gives selected start-ups technical and business support as well as access to Microsoft software and development tools. “Club Cooee has the potential to scale, especially to the US and Asian markets where chat is highly popular,” says Stephan Jacquemot, head of Microsoft’s emerging business team in Germany.
Besides Cooee’s website, the chat software is available via Microsoft’s Live Messenger service in Germany, and Cooee is looking to offer its application with Live Messenger in other countries too. The application will soon be available on Microsoft’s Windows 7 for tablet PCs.
Cooee managing director Stefan Lemper (centre) with company founders, Ingo Frick (left) and Alexander Jorias.
Cooee’s business model is based on members’ willingness to pay for virtual goods – from a few units of Cooee Cash for a pair of angel’s wings to 50 Cooee dollars for that island. “We are monetising chat,” says Cooee managing director Stefan Lemper, formerly of Aurelia Private Equity, a Frankfurt-based venture capital company that provided seed funding in 2007.
The virtual goods market is a big one, with annual worldwide revenues of $5 billion, according to KZero. Although Lemper will say only that he expects revenues to be in the “medium seven digits” in 2012, he claims Club Cooee will show a profit this year. He also says the ten-person company is looking to hire developers, marketers and community managers in Germany.
To help fund that expansion, the company raised $3.5 million in October 2010 from Innoven Partenaires and Generis Capital Partners in France, and from Aurelia, ISB (the investing arm of the German state of North Rhine-Westphalia) and business angels.
Cooee’s founders, Ingo Frick and Alexander Jorias, worked in the computer games industry, where they helped develop Archimedean Dynasty, AquaNox and AquaMark. In 1999 they sold their company, Massive Development. By then, social networking was catching fire.
“We recognised that people were going to prefer social games over traditional games,” says Jorias. The pair set out to create a desktop environment that would offer the kind of sophisticated graphics that gamers were accustomed to, but featured a less data-intensive design – the program is only 3 MB.
Since its launch in 2009, Club Cooee has garnered nearly one million users, the founders say. But it isn’t alone in this space. The social gaming and entertainment site IMVU attracts 60 million users, according to market research by KZero. Other competitors include virtual worlds such as Habbo Hotel and Second Life. Cooee’s founders say its application differs in several ways. For one, it brings one’s own friends right to the desktop through the avatars and virtual rooms – and doesn’t involve meeting random guests.
A hit with Indonesians
Cooee also claims its application is much less taxing to run than those of data-heavy competitors, which may require users to exit them if they want to do something else on the PC. That particularly appeals to people in developing countries who don’t have much processing power. For example, Indonesians make up 25 per cent of Club Cooee’s user base.
Lastly, Lemper says, Club Cooee is more conscientious than its rivals about monitoring the site to keep interactions clean. That aside, there are no specific rules of engagement. What happens is up to users, who have been known to build palaces out of chopsticks and robots out of chairs.
“There are no limits on your creativity”, says René Bartz, a 37-year-old Berlin resident. “The atmosphere in chat is so cool. You get to talk to people of every age and nationality.” (The application is available in six languages, but users can speak any language they like, with English as the usual compromise.) He adds: “You hardly want to leave.”
Indeed, many don’t. The company says that while the average Facebook user logs an average of four hours a month on the site, Club Cooee members spend some 24 hours a month in the chat rooms. For Cooee’s founders, that’s the best confirmation that a business model built around digital banter and fantasy works.
This article was originally published in Futures Magazine. Click here to view or download the full issue.