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3i, one of the most successful Internet startups ever in the state of Minnesota, has launched Recharge Studios, which is both a mobile app launch fund for game developers and an app publishing business — and also the first product of that unit, a social game for the the Apple iOS platform called “Dolphin Play.” The announcement was recently covered by several sites, including Inside Social Games, 148Apps, and Pocket Gamer. (More below on what it all means for Minnesota developers, in the words of W3i’s Rob Weber.)
The St. Cloud, MN-based W3i, founded in the late 1990s by the three Weber brothers — Ryan, Rob, and Aaron 
(the latter has since left to launch another startup) — now has some 70 employees, boasts 33 consecutive quarters of profitability, and is on an annual revenue run-rate in excess of $30 million. CEO Andy Johnson added big-company experience when he joined the company a few years ago, having run the Internet business of Fingerhut, before that company was acquired in 1999 for $1.7 billion by Federated Department Stores.
W3i’s business is all about helping app developers increase their user base — read: get more downloads. Until recently, that primarily meant Windows desktop apps (more than 400 million app installs to date). But, in the summer of 2010, W3i made a significant entry into the mobile app distribution business (iOS initially, natch) with the launch of its Apperang business. (Minnov8 coverage here.)
In parallel with kicking off Recharge Studios, W3i announced that Dolphin Play, its first mobile social game, is now available in the App Store. It’s based on “the Internet’s most downloaded screensaver, Living 3D Dolphins.” The company said it launched its all-new, free-to-play simulation game to be “just in time for the holidays.” (And I gotta say, I’m loving Santa in scuba gear today!) The company knows what it’s talking about when it comes to screensavers, because its original name was Freeze.com, which is still a thriving site it runs where consumers can get free screensavers and other downloads for Windows machines. In its latest announcement, W3i said the Living 3D Dolphins screensaver “provides a visually stunning backdrop for Recharge Studios’ debut game.”
Here’s how the company describes its first “freemium” social game app:
“Dolphin Play showcases the highly intelligent and playful nature of dolphins with breathtaking artwork and animation. Immerse yourself in a simulated world under the sea. Choose from 55 different creatures including five dolphin species and 50 fish. Interact with your new underwater friends by buying, selling, feeding, and playing to earn coins or Experience Points (XP). Dolphin Play also features a special mini-game where you can train your dolphin, teaching her tricks and increasing her skill level.”
The announcement positions the company’s new initiative this way: “Recharge Studios, a wholly-owned subsidiary of W3i and a division of W3i Mobile Solutions, aspires to be a leading publisher of free-to-play quality mobile games.”
What’s been the reaction to the new app so far? The company told me that, in the first eight hours of the app being live, downloads were well over 25,000. By December 21, Dolphin Play was ranked the 48th most popular free app in the U.S. App Store, and was “climbing fast,” it said. It’s now hovering around the top 25 free apps. That is a remarkable achievement, and the company hadn’t even yet cranked up its holiday promotion, which starts today. (Think all those new devices people are getting for Christmas.)
As the first game to be funded by W3i’s Recharge Studios subsidiary, Dolphin Play is also the first game to featuring W3i’s new “ad-funded payment platform.” What’s that all about? Here’s how Rob Weber, EVP of business development, describes it: “To see our new ad-funded payment platform, while in Dolphin Play, click over to the ‘Dolphin Bucks’ icon and click on ‘Free’. In addition to the ‘offer wall’ user interface, freemium games using W3i’s ad-funded payment platform will provide a ‘featured app’ promotion from time-to-time, where we will advertise a specific app and users will receive virtual currency in exchange for installing that featured app.”
Weber went on: “In addition to Dolphin Play, we launched two other games this week that include our ad-funded payment platform, so this is just the beginning. We also have dozens of other freemium iOS games slated to go live in Q1 with this payment platform.” With the new Recharge Studios initiative, he said, “we’ll be funding other developers — development costs and/or marketing costs. We have a small internal team managing Recharge Studios. We just hired a former THQ Wireless guy, who is local. We’re also doing some iOS dev internally now, but only on our core systems.”
I asked Weber what it means for our local mobile app developer community: “I think the big story from a Minnesota perspective is that social gaming businesses are among the most profitable, cash-flow-positive businesses the world has ever seen. This is the perfect business to get into for the kind of bootstrapping culture we have in Minnesota. Zynga was profitable from pretty much day one. The few guys that are in mobile social gaming on the iOS are also profitable. This isn’t a ‘bubble’ industry.”
Facebook made social gaming a big thing, as we all know, and many developers rich. But the industry is just getting started, according to Weber: “Mobile gaming is the next wave of social gaming, and with W3i’s strength in distribution and monetization, we can help Minnesota developers carve out a stake in it — without taking all the financial risk. The mobile social gaming market is expected to grow from less than $1 billion in 2010 to $5+ billion over the next three to five years.” Weber pointed out a good post on GigaOM recently talking about the growth of free apps on the Apple iOS platform using the freemium model: One Third of Top-Grossing iPhone Apps Are Free. Weber thinks Android will be in a similar state in about nine to twelve months.
He noted that it’s not out of line to think of Minnesota as a potential hotbed for gaming. “We’ve had some historical gaming successes — for example, ValuSoft, which sold to THQ. We also have an Activision office in town, which few know about in the local tech scene.”
So, what will be the second Recharge Studios game? Weber said it’s slated to be introduced in late January, and is being developed by Minnesota startup Veiled Games, which already has an awesome trailer for it on YouTube. (Read more about Veiled Games here.)
Merry Christmas, indeed — to W3i, and to all our Minnov8 readers!