• by Sean Hargrave , Staff Writer, January 6, 2016

The digital world was once described at a media cocktail party to me very succinctly. If the move from print to the Web was like cashing in dollars for quarters, then the shift to mobile was offering up those quarters for nickels. One can imagine that is exactly how the very likeable founder of Moshi Monsters must be feeling right now. Michael Acton Smith, founder of Mind Candy, is grappling with the looming issue of paying back a loan that was set up to allow the company to try to transition from the desktop to mobile. Put simply, things have not been going well and when it comes to paying back loans charged as a full dollar plus interest with the dimes you've been earning on mobile, you know you're always in for some difficult conversations.

Acton Smith is a lovely, energetic guy to talk with and deserving of every success Mind Candy has earned with its Moshi Monsters Web site and accompanying merchandise. For a year or two my two eldest kids were transfixed with signing up, creating worlds for their characters and putting cuddly toys and odd-looking wristbands on their Christmas lists. Like all these things, it has turned out to be a fad -- and a very lucrative one, initially. Subscriptions still cost nearly £30 per year, and if we're anything to go by, it made a very easy Christmas present for a relative to tick off the list. The trouble is that just like any other publisher or entertainment brand, the difficulty comes in taking this forward into mobile. Acton Smith spoke to me, and many others in the industry, about how much tougher this was than anticipated.

The real issue, beyond a technological challenge, was the very obvious one Acton Smith didn't have an answer for. A couple of years ago I pressed him on how he was going to make the elusive shift from desktop to mobile without depleting the Mind Candy coffers. I forget the exact words offered, but it was pretty clear he wasn't sure and belonged very much to the "build it and they will come" philosophy. Who can blame him? It worked out very well with Moshi Monsters online, but predictably, failed to make the monetary transition to mobile.

Take a look at the app store and the various Moshi games that are on offer are either free or less than a pound with further funding coming from in-app purchases. Same for PopJam, it's children's Instagram service, and World of Warriors. Entry is free but you may need to pay for a pound or two here and there for special stickers and better weapons. A child would need to buy a lot of stickers and armour to come close to the £30 they would have put in up front just to sign up to the once very popular Moshi Monsters.

The freemium model is tough at the best of times, but when it relies on children to get permission to buy extra goodies and the audience is tightly controlled when it comes to advertising, there are two additional challenges for Mind Candy.

I had suggested at the time to Acton Smith that the company just launched an app that allowed kids to enter their Moshi worlds on a mobile device. At Mind Candy, however, the feeling was that the new incarnation had to be mobile first and not a bolt on to its Web-based service. Only they can know how feasible it would have been to carry on charging £30 a year while offering a mobile gateway to the service. I find it very odd, though, that there is still no Moshi Monsters app. Given the current financial difficulty the company is in, it surely must be worth a try? Instead of developing games you might get a pound from a child for, it must be worth seeing whether you can keep them paying £30 a year for a Web- and mobile-based service? At least you would then have a chance of maintaining revenue, and if not, it can't be a lot worse than ploughing development time into freemium games, can it?

It's a real shame to see what's happening at Mind Candy, and not just because parents will have grown to love Moshi Monsters and because Acton Smith really does deserve every success that comes his way. It's a shame because it serves as a harsh warning to all those companies that may be thinking the transition to mobile is straightforward and that freemium is the way forward. Very few people make any money from freemium, the vast majority live on the breadline, as Mind Candy is starting to find out. The entire UK media and entertainments industry will be rooting for Acton Smith -- he's a very well-liked and respected guy, but I fear for anyone hoping to pay back debts with decimated online revenues and a new trickle of freemium earnings. 

Acton Smith once had to admit to his mum that the money she had lent him for a previous venture had all gone and there was nothing to show for it. Let's hope the experience isn't repeated with his current lender.