How the addictive, controversial Israeli game ‘Coin Master’ raked in a fortune

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For several years after it was founded in 2011, Moon Active was a small but not particularly successful mobile gaming company. Few people had heard of it, and in truth there was little reason to know about it. It had a handful of employees, operating out of a third-floor apartment in an old building in central Tel Aviv, and had released a couple of smartphone games that didn’t really take off. It was also being ignored by investors, who weren’t particularly interested in the gaming field at the time. The company was going nowhere.

Everything changed, though, when it released a game for iOS and Android devices in January 2016 called “Coin Master.” The game’s goal was simple: spin a slot machine to earn glittering coins, then build virtual villages and loot other villages. Within just a couple of years, it had become a global sensation.

According to figures published by mobile apps research company Sensor Tower, as well as figures obtained by TheMarker, the game brought in $100 million in 2018. Revenues jumped to $550 million a year later, while in 2020 – the first year of the coronavirus pandemic, which caused the entire gaming industry to take off – the game more than doubled its revenues to a whopping $1.25 billion.

“Coin Master” was listed as the world’s fourth most profitable game last year, surpassed only by the megahits “Pokemon GO,” “Honor of Kings” and “PUBG Mobile.” The company is expected to end this year with revenues of about $1.5 billion, which includes a few additional games it has purchased.

In other words, Moon Active has generated some $3.5 billion over the past five years. Not all of this lands in the company’s coffers, of course. But after a 30 percent fee is taken by Apple and Google, it will still receive $1.05 billion this year and have banked $2.45 billion overall.

Moon Active’s “Coin Master” game, which combines classic gaming elements with a slot machine mechanism.
Moon Active

These are exceptional figures in the world of Israeli high-tech, and unprecedented in the local apps and gaming industry. Indeed, it’s hard to think of a single Israeli digital product that has made so much money in such a short time.

Yet despite leaving large and successful Israeli unicorns and high-tech companies in its wake, Moon Active remains relatively unknown outside of the gaming industry. One reason for this is that 37-year-old founder and CEO Samuel Albin zealously guards his company’s privacy.

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As for being a source of Israeli pride and another success in the so-called innovation industry? Well, not everyone thinks so. “Coin Master” belongs to the “social casino” genre of apps, which have proved increasingly controversial over the past decade. They are casual, superficial games in which it’s impossible to earn money, but use addictive game mechanisms that are identical to those in casinos – causing users to spend increasing amounts of money while playing them. One gaming website memorably described “Coin Master” as “a slot machine masquerading as a game.”

An image from the “Coin Master” game, which is the fourth most popular gaming app in the world.
Moon Active

Adam Neumann’s cousin

Moon Active, which has about 1,300 employees – 800 in Tel Aviv and the rest in Kyiv, London, Romania, Belarus and Lithuania – has raised $10 million since its inception. Recognizable names among early investors included SimilarWeb founder Or Offer, investor Gigi Levy-Weiss, Guy Gimzo, Jonathan Kolber, Saar Wilf and Adam Neumann (the WeWork founder is also Albin’s cousin). Additional investors who already sold their shares include an investment fund supported by Norbert Teufelberger (former CEO of the online betting site Bwin) and Moshe Hogeg, the former owner of Beitar Jerusalem soccer team.

In early 2020, the U.S. venture capital fund Insight brought a 10 percent stake in Moon Active for $125 million, based on a valuation of $1.25 billion – which added the firm to the prestigious list of unicorns worth over $1 billion. The company currently has over 30 million active users and had over 250 million downloads – the vast majority of them for “Coin Master.”

Yet while Moon Active finally struck it rich with “Coin Master,” its first four mobile games – “WonderBall,” “Super Sam,” “Bitter Sam” and “Super Sam Adventures” – didn’t really gain traction and were later scrapped. The success of “Coin Master” brought greater attention, though, and several industry sources (who asked not to be named here) note that the game’s basic model is very similar to another Israeli game, “Pirate Kings,” which was launched globally by Jelly Button in 2015.

Indeed, it’s impossible not to spot the similarities between the games: Both are based on a slot machine mechanism and feature elements of classic gaming, including animated figures, establishment of places (villages/pirate islands) and attacking other players.

There is one major difference, too: “Coin Master” became a huge hit; “Pirate Kings” didn’t. And while Moon Active has soared, Jelly Button was sold to Israeli social casino giant Playtika in 2017 for a reported sum of a few tens of millions of dollars.

Being inspired by other games is not a rare phenomenon in the gaming industry, but we are talking here about two Israeli firms and those at Jelly Button apparently still feel hurt by the episode. Meanwhile, there are mutterings in the local industry about a lack of collegiality at Moon Active.

So why did “Coin Master” succeed when “Pirate Kings” and numerous other apps didn’t? From discussions in the local gaming industry, the main reasons seem to be statistics, math and algorithms.

Under Albin, Moon Active vastly improved its analytical capabilities and data analysis, making it possible to amend the game in order to maximize players’ willingness to devote time and money to it. Or, as some might put it, to become addicted.

The company examines versions of many elements in the game – animations, illustrations, sounds, stories, features, figures – and runs data checks among its audience to gauge what works best. If the design of a certain button turns out to be more effective, it will be integrated into the game. Each tiny change in the game mechanism or design can mean the difference of millions of dollars in either direction. The trick is not only to reach conclusions and insights, but to successfully implement them.

The company also does in-depth analysis of its users, dividing them into demographic groups in order to understand what types of people spend the most money on the game. After the demographic division and characterization of the “big spenders,” the company knows how to advertise and reach those with similar characteristics, in order to bring in additional paying customers.

These methods are not unique to Moon Active, but a knowledgeable source says it excels at them. From day one, Albin spoke of the development of internal tools that would allow his company to analyze data and streamline processes. In addition, some of those capabilities were achieved due to the wealth of expertise in the field of online gambling and social casino games locally. It also involved the recruitment of experienced workers from Playtika, who brought with them a knowledgeable approach to managing and analyzing data.

“The secret sauce is analytics,” an industry source says. “Although everyone does it, Moon Active did it at the right stage. From the start, it took a game model that had already been proven, along with a good and experienced staff, and managed to reach the point at which the data analysis capabilities propelled it forward.”

Some of Moon Active’s employees, which now number some 1,300 at five offices globally.
Sharona Avraham

Calling the Kardashians

Success brought money, which enabled Moon Active to develop highly effective marketing strategies. The firm has always stood out thanks to worldwide viral internet advertising, starring celebrities and influencers from various countries. Actor Terry Crews and singer Jennifer Lopez are just some of the big names to star in its ads. One particularly memorable ad featured the Kardashians, which saw an argument end with two family members invading each other’s village and stealing coins from one another.

The company was less successful in 2019, though, when it recruited a popular German internet influencer named Bibi (aka Bianca Classen) – who is also very popular with children – for an ad. A furor erupted in Germany as a number of media outlets published articles claiming that “Coin Master” was aiming to cater to children and to encourage gambling.

German influencer Bibi

The storm reached its height when Jan Bohmermann – the presenter of a German satire TV show similar to John Oliver’s “Last Week Tonight” – devoted an entire episode to the game and claims that it encouraged gambling among minors. Immediately afterward, Germany’s Federal Review Board for Media Harmful to Minors, which usually deals with complaints about violence and pornography, began a process to get the game blacklisted, which would have made its distribution in Germany illegal.

However, it was later decided not to take steps against “Coin Master” – and since then the game has become even more successful. And though players are meant to be at least 17 years old, in effect there is no way of enforcing this.

It’s impossible not to be impressed by the outstanding capabilities that have turned “Coin Master” into one of the world’s most lucrative mobile games. But clearly, it’s impossible to separate its successful combination of technology and game design from the controversy at its heart.

Although at first glance “Coin Master” looks like another game of conquest and building villages, the central experience is actually a slot machine. Indeed, on the App Store page, it states that the game is limited to those age 17 and up due to “frequent/intense simulated gambling.”

The player is asked to repeatedly spin a slot machine in order to win coins, with the goal of upgrading their village and attacking other villages and stealing virtual coins. It’s impossible to lose on the slot machine, but the number of spins is limited. When a player’s quota of spins is finished, they have to wait for minutes or hours in order to get another batch that will allow them to continue playing.

That’s enough for random players, but anyone who wants to carry on playing has to pay money – real money. In fact, the most popular packages purchased in the game are “spin packages” costing a couple of dollars. That’s how “Coin Master” makes money.

The slot machine is only one element of the game, though, which is another secret of its success. In addition to the game elements of building and attacking, there are also social elements – for example, you can band together with friends and attack other villages – and smaller games, such as collecting cards and taking care of virtual pets, tournaments, and more.

But what seemingly keeps users glued to the screen is not the desire to defeat some rival, but the expectation of winning virtual coins and bonuses – and that’s also what causes them to provide their credit card number.

Getting addicted to the excitement

The social casino genre has always been controversial in the gaming world. The outstanding company in the field is Playtika, which held its initial public offering on Nasdaq earlier this year and is trading at a value of about $11 billion. The Herzliya-based company and Moon Active, incidentally, have almost exclusive control of the entire U.S. market for quasi-gambling games.

The main complaints against social casino games are that they simulate real casinos, and can therefore cause some people to move onto actual gambling, and that they cause people, mainly the socially disadvantaged, to become addicted to the excitement and spend huge sums – just like in a real casino.

An NBC investigative program last year included interviews with about 20 people who claimed they had become victims of the aggressive marketing tactics of quasi-gambling games (but not specifically those of Moon Active or Playtika), became addicted and ended up spending tens and hundreds of thousands of dollars. Their emotions echoed those of gambling addicts: they want to stop, but they simply can’t.

In the United States, lawsuits have been filed against the creators of gambling games, including Playtika, which ended up returning money to players and striking compromise agreements. Despite the calls to restrict these games, they are not subject to any federal regulation at present. It’s hard to know whether instances of people spending entire salaries on a game also take place with “Coin Master,” which is a softer version of gambling games because it is ultimately more of a game.

A promotional ad for the “Coin Master” game, which has generated billions of dollars for Israeli company Moon Active over the past five years.
Moon Active

According to one industry source, Moon Active did look to return money to some users who spent exaggerated sums on the game. On the other hand, at present the company does not restrict the amount of money users can spend. Sources in the gaming industry are aware of the problems, but note that “Coin Master” is not massively different from other addictive games, such as “Candy Crush,” which also contain an element of luck and randomness. They say that, ultimately, these are customers paying money in exchange for entertainment, even if it’s “superficial.”

“It’s like candies,” says an industry source. “People want and buy them, enjoy them, though that’s harmful to their health. ‘Coin Master’ is a kind of chewing gum for the brain, and people like that.”

Another source agrees: “In the marketplace, there’s great demand for games that don’t require skill. It’s a mechanism that wants your time, and in exchange gives you a false sense of progress. It’s a psychological need that’s easy to satisfy, and people are willing to devote time and money to it. People buy a few minutes of quiet and a chance to clear their heads. It’s not an evil machine; in the final analysis, it’s entertainment. The limitation is that it has to be done in the right dosage and the proper balance. As long as people pay money within reasonable boundaries and the company takes responsibility, and it doesn’t reach a situation where people are burning up their entire salary – there’s no problem with it.”

Moon Active investor Levy-Weiss, who is considered one of the most prominent figures in the Israeli gaming and social casino industry (he also co-founded Playtika), echoed those sentiments in a separate interview with TheMarker. “Is this a field that is evil? I don’t think so,” he says. “Does it make the world a better place? No, it’s entertainment – and there’s a need for entertainment in the world. It’s very acceptable all over the world, but far less in Israel: Here, there’s a tendency for too much self-flagellation.”

What next? Moon Active’s greatest fear is being a one-trick pony. What will happen when “Coin Master” stops being a cash cow? The value of Moon Active, as derived from the Insight investment in January 2020, was $1.25 billion – low relative to the company’s revenues, which totaled about $1 billion that year. The low multiple (the value of the company divided by its revenues) indicates the great risks involved in the gaming field and the company’s dependence on a single game. In fact, the growth in “Coin Master” revenues between 2020 and 2021 was slower than in previous years.

That’s why the company is now working on finding successors and diversifying its portfolio, expanding into games that are not in the social casino genre. TheMarker has learned that Moon Active is now at an advanced stage of development on several new games within its studios.

At the same time, it is also expanding its acquisitions. At the start of the year it purchased the Melsoft game studio located in Cyprus, for over $100 million, and has several successful games in the casual games genre (with simple rules, shorter sessions and a low barrier to entry).

It is reasonable to assume that Moon Active will continue acquiring more companies, out of a desire to become a giant gaming company. But until it finds the next hit, “Coin Master” will still be generating plenty of coins for it.