Robot Cache ‘will give publishers a whole secondary revenue stream that doesn’t exist’
As Robot Cache is about to enter early access, we chat to CEO Lee Jacobson about the new digital storefront, which will give a higher margin to publishers while allowing gamers to re-sell their digital games
By: MARIE DEALESSANDRIOCT 12, 2018
Since its creation in January 2018, Robot Cache has not been idle, recently securing $3m in funding from investor Millenium Blockchain and spreading the word on the new digital games storefront.
Robot Cache needs as much good press as possible as the digital distribution and resale platform relies on a technology which is over exposed at best and actively despised at worst: blockchain. As on top of being a normal store, Robot Cache also give users the ability to mine cryptocurrency via its launcher.
When we meet Robot Cache CEO Lee Jacobson, one of the first things he does is showing us the mining interface.
“You see that this counter is counting up in real time,” he starts explaining, showing us a number going up at the top right corner. “So what we’re basically allowing gamers to do is to opt in – it’s not going to be turned on by default. And the idea is to mine Ethereum or whatever is the most profitable coin – Cardano, Dash, there’s 200 or something at this point. And we will convert it all on the back end into Iron [Robot Cache’s currency], and then they’ll be able to apply either all of it or a portion of it to simply get free games.”
He continues: “This is simply an opt in and opt out system. As Ethereum, which is kind of low right now, goes up in price or as it fluctuates, the number of free games or Iron that they’re going to get is also going to go up. It’s market-based.”
Jacobson even expects some users to set up accounts to just let the miner on until they have enough Iron to afford a couple of games. But just doing that would not be taking advantage of Robot Cache’s other qualities. The platform has a lot to offer, both from a consumer point of view and a publisher or developer‘s perspective.
A dozen publishers are already onboard, with the likes of 505 Games, Maximum Games, Paradox Interactive, THQ Nordic and Versus Evil having signed up from the start. And there’s a reason for that: publishers will get a much bigger margin on Robot Cache than they usually do on other digital storefronts.
“Brian [Fargo, Robot Cache’s co-founder] and I have been in the business a long time. I used to run global business development for Midway Games and Atari and I also ran Atari Publishing for four years through 2009 and 2012,” Jacobson starts explaining. “So I realized what it was like to give away 30 percent of your game revenues to somebody who had no vested interest in your game. We met with some early investors in LA, pioneers in the blockchain and the conversation started like: ‘How can we really disrupt the business space of games?’ And the idea was that, given technology today, you don’t need 30 percent to run a distribution business if you have scale. You just don’t. So we went to all the publishers and we said: ‘Hey guys, what do you think about a business model that will only take five percent?’.”
Not only will publishers take 95 per cent on all new game sales, but Robot Cache also introduces the ability for gamers to sell titles they don’t want anymore. And this second-hand digital market will benefit publishers too.
The price for such ‘second-hand’ sales will match that of the current publisher-set price, so it won’t undercut new sales.
“That’s the big trick and how we got all these games to begin with: publishers don’t want to race to the bottom [on price]. If gamers decide to list a game and sell it, it’s for that same price. So the publisher still makes their 70 per cent but the gamer now gets 25.”
Notably it’s the same publisher cut per sale as if it had sold a ‘new’ game on Steam for instance.
“Rarely do you get a chance to have publishers and gamers both win. This is the first time that that could happen. And that’s the biggest win that we’re excited about,” Jacobson says.
Publishers will also be able to set a time period during which their games can’t be resold: “Publishers may say: ‘I’ll take 70 per cent day one because I want gamers to have the 25 per cent’, which is fine. Or Ubisoft for instance may say: ‘I want to have 90 days for Assassin’s Creed and I don’t want anybody to be able to resell’. We’ll tell the gamer that before they purchase it,” Jacobson details.
And the benefits for both players and publishers don’t stop there, Jacobson continues.
“Imagine if you’re a gamer and you’re level 125 and it took you months to get to that point. Maybe instead of selling that game at $39.99, you’ll sell it at $199.99 [to] someone who wants to immediately be level 125.
“For the first time, imagine a game being sold with all the grind that went into it and the gamer gets 25 per cent of it and the publisher makes 70 per cent. We think it will give publishers a whole secondary revenue stream that doesn’t exist. And we see some college kids making a living off of this stuff. This is something that can be really revolutionary.”
Jacobson acknowledges that it’s unlikely a lot of people will be onboard to pay $200 on “levelled up content” but “there will be some,” he believes, which will generate “incremental revenue” for the publishers.
The Genie in a Bottle
When a new digital store is about to launch, it’s almost inevitable to discuss Steam at some point. And as Jacobson shows us the shop and mentions the fact that each section will be curated, it’s too good an opportunity and we start chatting about Steam’s controversies regarding curation.
Jacobson is very straight to the point when it comes to discussing Robot Cache’s policy on curation, taunting Steam in the process.
“Basically we’re not going to allow any school shooting simulations. We’re not going to allow any pornography,” he says. “We’re not going to accept a crappy game that gets a 1 out of 10 and we’re not going to get a game that some kid uploads with some assets he licensed on the Unity store and sells for $1.99. We’re not going to have that. I would say that the lowest price we’re probably going to sell a game would be $9.99. We’re a five per cent margin business. So I’m not going to make a lot of money if…” he doesn’t finish his sentence and starts laughing. But the message is clear: not only Robot Cache will be curated of inappropriate content, but it seems like there will also be a quality bar to reach – and a price.
Between the re-selling and the mining aspects, it also seems like Robot Cache has a specific audience in mind.
“We see a lot of levers to pull with that and we think there’s a lot of gamers that aren’t steeped in the Steam culture yet, maybe 13, 14 or 15 years old, and they like the idea of selling their game so they can buy more and mining and getting sort of compensated for that.”
We ask whether or not that means the target audience is young gamers then.
“No, not necessarily,” Jacobson starts, before pausing to think. “You know we’re not naive. We know Steam, I’ve known Gabe for many many years and we’re not naive to think that we’re going to go take them out. Diehard Steamers are probably not going to do this because they’re so established. But every year there’s going to be that younger audience that may see this as a an alternative and this is just what it is: it’s an alternative to Steam. What I’m trying to do is provide an alternate place where people can buy triple-A and great indie games and then resell them and build that ecosystem for gamers and publishers.”
Jacobson see digital reselling as the future, and it could be applied to many other products, he continues.
“It unlocks an enormous amount of stored value. Whether it’s just games or other digital forms of content, it’ll be very hard to put the genie back in the bottle.”
That doesn’t mean that Robot Cache will expand into those other forms of content, though: “We’re focusing on games because that’s where we come from, that’s where our relationships are, but certainly never say never,” Jacobson smiles.
“We think there’s an enormous amount of opportunity here. For example, college books can cost $200 to $300. Imagine if I can take that and get a certain percentage back off my digital college book by selling it to somebody else. That alone is a huge opportunity.”
But before getting there, Robot Cache needs to get off the ground, with early access starting this October.
“Rarely do you get a chance to have publishers and gamers both win.”
“We want to build the community up,” Jacobson says. “There are so many dials and levers that we can pull. Some publishers may say: ‘Instead of giving 25 per cent back to gamers, our game is so good, we think you’ll never want to sell it so I’m going to give you a 60 percent commission and I’ll only take 40’.
“I think our userbase will organically grow as we sort of figure those dials out. And I think to a certain age group maybe more than others it’ll be very compelling. [Though] I’m not saying it’s not going to be for all demographics.
“We have internal ideas of where we’d like to be. The first tranche we raised was $11m, our second tranche is another $19m. So we’re not in this for a quick hit. Publishers have entrusted us. We know them very well and they’re not going to give us the keys to their kingdom if we’re just going to be a flash in the pan. That’s not our goal, I think they see the vision. We’re in it for the long haul.”