Rewind: How Penny Arcade is building its business — and how it isn’t

Robert Khoo (Erynn Rose photo)

Our guest this past week on the GeekWire podcast/radio show was Robert Khoo, the president of Penny Arcade — the Seattle company behind the hit Penny Arcade webcomic and the popular Penny Arcade Expos (better known as PAX) in Seattle and Boston. As part of the conversation, we delved into the company’s growth strategy, and Robert provided some insights that might surprise some people.

If you missed the show, or just prefer text, continue reading for excerpts.

What’s the state of the Penny Arcade business? Really a lot of it comes down to trying to find cool things to do that grow the business without ruining the business. It’s easier said than done, because a lot of companies don’t understand that concept. You have this built-in fan base, you have this amazing level of success, and there’s always this pressure to grow, but don’t do it at the detriment to what you’ve already built.

You’ve clearly got a huge user base. Can you be both mainstream and counterculture at the same time? Never would I ever want to be mainstream. That is not our bag. What we nail down is the 24- to 32-year-old male Atari generation that loves games. That is the audience that we serve. Mainstream is great, mainstream is big, there’s a lot of opportunities there, but not with us. We don’t care about them.

You’re in the position where you actually turn down advertisers, right? Yeah, so it’s interesting. With all media companies, the whole idea behind advertising is, OK, you need to take revenue from these companies but oftentimes, you are either reviewing those products or you are trying to be objective about those products. Quite frankly that model is broken in our opinion. What we decided to do was say, hey, any advertisement we have is actually PR. We’re mixing them. So if you see an ad on Penny Arcade, that means we have hand-picked that product, we have approved that product. … It was very slow starting when we started that 10 years ago, but now it’s a coveted piece to do — it’s very much a vanity buy. You know that if your ad is on Penny Arcade, (the product has) got our seal of approval.

What about European PAX, International PAX, PAX in Russia? Where do you guys go with this next? I’ll be honest with you, we always look at means to expand that portion of the business, just because we know we have a great formula, and we know that if we plop it down into a major metro area, it would probably be a success. We explored the U.K. quite a bit this year, actually. And what it came down to was there’s another show called the Eurogamer Expo. It’s a smaller show, but people who go to it really love it. If we were to go in there, yeah, we’d probably be successful, but it might put them out of business. And we’re not in the business of putting other businesses out of business. So we would never touch that. … The pie is pretty big out there, and there’s no need to make enemies if you don’t have to.

Listen to the full show below or subscribe via RSS, iTunes or Zune. Here’s the MP3 for this week’s show.

We’ll be back this weekend with a new episode on GeekWire and on 97.3 KIRO-FM in Seattle.

  • dya

    Khoo rules. That tune is bugging me, though. It’s so familiar, I just can’t place it.

  • Kurpav

    Dig Dug