Justin Kan’s Stash gives game devs a platform for alternative web shops

Fractal renamed itself as Stash and launched a platform to create direct-to-consumer (D2C) web shops for game developers.

Justin Kan, CEO of Stash (formerly the Web3 firm Fractal), thinks of Stash as the anti-platform. It is built to counter the dominant platforms and empower game developers, Stash aims to return control to developers, enabling them to connect directly with players and break free from the constraints imposed by major platforms, Kan said in an interview with GamesBeat.

Kan said the gaming industry is witnessing a significant shift towards D2C models due to mounting anti-competitive regulations targeting major platforms like Apple and Google, coupled with challenges in user acquisition.

In fact, many of the game developers felt too reliant on the major platforms’ unilateral decisions – a snowball effect that started with IDFA deprecation in 2021, Stash said. Since then, there have been calls to reduce or nix the 30% platform fees and allow alternative payments and billing solutions.

Epic Games won an antitrust lawsuit against Google. And while it lost to Apple, the U.S. Supreme Court held this week that Epic had won one small point in its antitrust case against Apple. The court held that developers like Epic could steer their customers to alternative stores on the web where consumers could pay lower prices and skip the 30% royalty payment to Apple. On top of that, the European Union’s Digital Markets Act will force gatekeepers like Apple and Google to allow alternative stores starting in March.

“We’re launching a new product. We’re excited about it and the traditional gaming payment space. We’re creating this new product called Stash. And it’s a new way for developers to engage their customers and sell in-game items to their customers,” Kan said. “We address a couple problems that developers have.”

He added, “The No. 1 big thing is Apple and Google effectively gatekeep all their customers and Steam does to some extent. Developers have to pay Apple and Google this massive tax, which is the 30% tax, and Steam as well.

The second hardship for mobile game developers is that Apple retired the Identifier for Advertisers (IDFA) and that made it harder to track users and target ads at them.

“You don’t know who your customer is anymore, and you can’t remarket at them,” he said. “So more games are going to direct to consumer, so they can recapture the customer relationship and basically be able to own the customer by selling to them directly through their own managed web shop.”

They can also avoid the “App Store monopoly fees,” Kan said.

“It’s the right time because there are all these antitrust laws coming out and regulatory changes in Japan, where they announced they will require Apple and Google to allow third-party payment systems, Kan said.

Stash said it is responding by offering game developers a platform to completely own player relationships, eliminating the need for intermediary platforms. The benefits of embracing D2C with Stash include reclaiming the 30% store tax, gaining direct access to player data for improved user acquisition and retargeting, boosting player loyalty and retention, and achieving more control over in-app purchase management.

Fractal started as a blockchain gaming platform for games. But Kan pivoted to Stash as a better opportunity.

The company has 20 people and it raised $35 million in 2022. Kan said the company is in a holding pattern on its Web3 products, as the market hasn’t matured.

“Our focus is Stash,” he said.

As for Web3 games, Kan said that the high-quality games have not really materialized and the player base hasn’t come yet either.

“It’s really a young industry still,” Kan said. “When we talked to game companies, we heard a unified theme around wanting to be able to own their customer,” Kan said. “Being able to optimize their relationship with their customers is the next natural phase of these companies.”

Unlocking the power of Stash

Stash operates as a unique D2C web shop with a multi-layered approach designed to enhance user engagement and spending.

It has payment rails. Stash handles complex compliance, tax, and merchant of record processes, ensuring a seamless financial transaction experience for developers and players.

And Stash handles web-native ecommerce via its user experience. Going beyond traditional in-game store design, Stash offers a high-converting, sophisticated ecommerce strategy tailored for a seamless user experience.

Stash also employs loyalty and rewards programs inspired by successful D2C industries, encouraging increased spending on web shops.

And the company integrates gameplay-tailored experiences such as matchmaking, user-generated content forums, tournaments, and more to retain players.

Addressing pain points in web shops

Stash addresses the challenges faced by web shops, ensuring a higher spend and conversion rate. It drives traffic to web shops. Stash employs strategies like one-click account linking, advanced offers and discounts, customized loyalty programs, and engaging experiences beyond purchasing.

It also maximizes conversion rates for buyers. Focused on creating a smooth and compelling user experience, Stash borrows ecommerce features from successful industries, simplifies account linking, and enhances store browsing.

Stash ensures a seamless integration process, allowing developers to link the platform to their existing infrastructure effortlessly. The platform is compatible with Google and Apple in-app purchases, simplifying the integration experience.

Stash’s comprehensive solution has been crafted to meet the needs of game developers navigating a rapidly evolving industry landscape. With an emphasis on ease of integration, conversion optimization, and player engagement, Stash positions itself as a valuable ally for developers seeking independence from major platforms.

Kan said the product is kind of like Shopify for games, a white-label store that any game can roll out as their own ecommerce portal. The store enables personalization, dynamic pricing, loyalty programs, volume-based offers and a basic ability to understand your customers, Kan said.

While Activision launched its Call of Duty: Mobile store, Kan hopes that every game companies including small indies will be able to duplicate that tech. Cofounder Dan Borstelmann showed a demo of the shop working where you can buy something from within the game without having to be signed into the web shop. You can easily grant permissions and make payments.

Borstelmann likened it to the Amazon Kindle experience on iPhone. You go to buy something and the store links to a browser, which gives you more ecommerce customization and control. You buy the item and it appears immediately inside your app. The tech works on mobile and the PC.

Kan hopes that the company will be more nimble than existing players like Coda or Xsolla. He wants his company to be be the easiest for developers to work with.

“Apple and Google right now, from a contractual standpoint, require that if you load in the app, you pay them 30%,” Kan said. “And if you load it outside the app, it’s pretty much the exact same thing. You can see that even though the user experience is slightly degraded for those users, there’s a high incentive to push users outside of the app, similar to Kindle on iPhone.”

Kan added, “This industry is so strange because all of these limitations are not technical limitations. They’re all like contractual limitations put on by Apple and Google, which is really weird, especially as an engineer, to see that. Hopefully, as those things change over the next months and years, it will probably feel more native.”

Kan said the goal is to build out the web functionality for games to enable them to do a bunch of the web store features with rewards and customization and dynamic pricing and customizing their shop on a per player basis. The percentage that Stash takes from each developer transaction is likely to be 5%, but that may be subject to change.