Life’s a game — Leap of faith turns comic strip into successful gaming company

“Working with Robert Khoo is almost entirely painless.”  — Jerry ‘Tycho’ Holkins

By Sue Misao
Northwest Asian Weekly

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Robert Khoo, president of Penny Arcade, shares an office with Yoshi, a character from Mario Brothers. (Photo by Sue Misao/NWAW)


When he was 23, Robert Khoo took a giant leap of faith. A University of Washington Foster School of Business graduate on a career track, he quit his consultancy job to work for free for two guys from Spokane who drew an obscure comic strip called Penny Arcade, which they’d been posting on the Internet since 1998. The comic, by Mike Krahulik and Jerry Holkins, depicted the musings of their video game-playing alter egos, Gabe and Tycho. Khoo was a fan.

In 2002, when a client of Khoo’s wanted to partner with game media, he contacted Krahulik and Holkins. The partnership idea fizzled, but three months later, Khoo called them again. He had a new idea.

“I wanted to make a big move,” Khoo said. “I loved games and wanted to be in the industry.” By then, Penny Arcade had accumulated about one million readers worldwide, but with little financial reward. “These two guys didn’t know business, or what they had,” Khoo said.

What they had, Khoo thought, was the power of a brand. And what Khoo had was a way to monetize it. He wrote a business plan that included a strategy for advertising, merchandising, and licensing.

“I said, ‘You can have this, and I would love to be the guy that executes it. I will quit my job and work free for two months, then you can fire me.’”

Eleven years later, he is the president of Penny Arcade, which expanded its content into games, books, podcasts, merchandise, and three very large annual gaming conventions.

“If he hadn’t come by around the time that he did,” said Holkins, “I would be fixing computers at Best Buy.”

“There would be no company,” Krahulik added. “We would just be two guys making comics in our spare time. He figured out a way to make money off of our comic strips and turn what was a hobby into a real business.”

The comic, which has been occasionally controversial and not really funny to anyone who isn’t a gamer, still runs three times a week.

“I consider it to be a political cartoon for the game industry,” said Khoo, “really ‘inside baseball.’ Most stuff goes over people’s heads.” As Krahulik and Holkins grow older, he said, the cartoon has evolved.

“As fathers approaching 40, you definitely see comics about parenthood sprinkled about.”

The Penny Arcade podcast, called DLC (Downloadable Content), is “a fly-on-the-wall experience with Mike and Jerry when they write the comic,” said Khoo, who insists “they are absolutely not aware of the camera.”

The crew also produces a reality TV show about themselves, with 100,000 weekly viewers when it’s in season. “We lead very interesting lives,” Khoo stated.

Now 34, Khoo was born in Portland, Ore. He is half Chinese and half Japanese. His father was born in Malaysia and his mother was born in Tokyo. His parents met when his father went to medical school in Japan. The two were married in Tokyo, and then immigrated, first to Canada, then Portland, where Robert and his three siblings were born. Although his particular mix of ethnicity is rare (other than his siblings, he’s never met another Chinese/Japanese person), he said he doesn’t think about it much and identifies as simply “American.”

“We’re all of course shaped by our experiences,” he said, “but the vast majority of my positive and negative experiences have been because I’m Asian, rather than Chinese/Japanese.”

Khoo lives in downtown Seattle and doesn’t mind the 20-minute commute to Redmond, where Penny Arcade recently relocated after six years near Northgate and four years in Fremont. His office is filled with toys, games, and colorful stuffed characters. One wall has three prominent digital clock timers counting down the hours and minutes to the three gaming conventions the company hosts annually.

Beyond the large, open lobby is a large, open ping pong room. Everything revolves around gaming.

“Our target demographic is the 24-to-35-year-old person that plays games, whether it’s video or tabletop,” he said. “They play and identify gaming with who they are. It’s a lifestyle.”

The big show

The biggest thing they do is PAX – Penny Arcade Expo – which hosts a massive expo hall, game tournaments, panels, sessions, parties, music, and more. “It’s been called a Woodstock for games,” Khoo said. “It’s really a celebration of the culture more than anything else.”

The first PAX was held at the Meydenbauer Center in Bellevue in 2004. “Me and another guy did the planning,” said Khoo. “It was a three-person show.”

The expo drew a crowd of 3,500. Now called PAX Prime, the show brings 75,000 to 90,000 gamers each year to the Seattle Convention Center. “We stopped counting after 60,000.”

In 2010, they added PAX East in Boston, and last year, they introduced PAX Aus in Melbourne.

“We have room for one more,” said Khoo. “I can’t tell you where.”

The secretiveness is likely fallout from the intense popularity of the shows. Last year, tickets for the four-day convention sold out in less than six hours.

“We have more demand than supply,” said Khoo. Tickets are in the $75 range for a four-day badge. “Clearly, we could double our prices. We’ll never do that,” he said. “We could decrease demand by making the show worse.” Also unacceptable. The only other option, he said, would be to increase supply, which they did last year by adding Monday to the weekend show.

PAX Prime is a citywide ordeal, involving multiple venues. Despite being in Penny Arcade’s own back yard, it’s the most difficult one to produce, Khoo said, because the City of Seattle is not very cooperative. “It’s harder to plan here than it is across the planet,” he said, referring to the Melbourne show. Khoo finds the lack of city support frustrating. “Seattle acts as if it’s not happening.”

With 75 percent of attendees coming from outside Seattle, Khoo estimates the show brings $50 to $75 million into the local economy. The low ticket prices entice gamers to travel to Seattle, stay in hotels, and eat in restaurants.

Legacy

In 2003, Penny Arcade began an online charity called Child’s Play. “It gets the gaming community to focus its efforts to do something good,” Khoo said.

The first year, they raised $210,000 in donations. Last year, they raised $7.6 million. Child’s Play sends toys and games to children in 100 hospitals around the world. Khoo thinks it’s the best thing they do.

“This will be our legacy,” he said, “the one thing we’re most proud of.”

Profitable from the very start, Penny Arcade is not overly huge. Currently, the company employs about 17 people locally, and another 25 in other parts of the world. “My goal is to keep it small,” said Khoo.

Apparently, it’s also to have fun. “We come into work loving our jobs,” Khoo said. (end)

Sue Misao can be reached at editor@nwasianweekly.com.

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