Bozuko Is Betting on Its Platform for Mobile Consumer Games to Drive Loyalty at Local Businesses

New Boston-area startup Bozuko is working at the intersection of a lot of big trends. Mobile. Gaming. Location-awareness. Software-as-a-service. Marketing promotions. Sound crowded? Company co-founder Jake Epstein says that people would rather play for a smaller chance to win something big than a guaranteed slim discount, and that’s what makes his business different from what’s out there.

Medford, MA-based Bozuko offers a software platform enabling businesses to create mobile game promotions. Customers can play virtual scratch ticket or slot machine games on their smartphones to win prizes like free dinners, $25 gas cards, and baseball tickets from businesses offering those promotions.

And no, this isn’t a gambling startup. The only currency for playing the Bozuko games is some type of engagement with a particular business on Facebook. So, something like a “like” of a business’s Facebook fan page or mobile check-in to their location gives players entry into the games. Bozuko’s mobile app interface displays all the games going on near a consumer’s given location.

The aim is to tackle an area dominated by group buying and traditional paper coupons, says Epstein.

“This is a market that’s dominated by really boring coupons that no one cares about and really steep discounts that are very expensive to businesses and potentially damaging to their product or services,” he says.

Damaging? Epstein explains that businesses offering the massive discounts that come with group buying deals are basically reducing the value of their product and causing consumers to be less willing to ever pay full price for that product. “Bozuko has the opposite effect. It raises their own product as a prize you can win,” he says. Players also have the chance to win each time they walk into a business and play, so Bozuko has a better shot at driving customer loyalty for these businesses, says Epstein.

Bozuko will operate on a software-as-a-service model, requiring businesses to pay a monthly fee to use the platform. It will offer free access to the platform to smaller pools of consumers, but plans to charge a flat monthly rate once the volume of consumer players at a given business hits a certain level. Monthly rates will also increase for Bozuko to customize games and additional features in the games.

Businesses determine the win probability they want their Bozuko games to have. That way, handing out prizes is a “controlled cost for businesses,” says Epstein, unlike group buying promotions which are criticized for sometimes costing businesses dearly when one-time customers pour unexpectedly through their doors chasing a steep discount.

In August Bozuko kicked off a free pilot involving eight area businesses across 10 Boston-area locations. Among them, a car wash, a minor league sports team, a few bars and restaurants, and a parking garage. So far the app has seen 2,000 downloads and 60,000 unique plays, and has helped award about $5,000 in prize money. Bozuko announced last week that it had opened its platform to all interested businesses. The three-person company raised $346,000 in angel funding in the spring.

Bozuko obviously isn’t the first startup to offer discounts through mobile gaming or location tech. (Hello Foursquare, SCVNGR.) Epstein says what sets it apart is the fact that its games are “addictively simple” (even more so than Angry Birds, he claims), and that offering a chance to win bigger, more tangible prizes is more enticing than the small percentage discounts often offered through things like check-ins. We’ll have to see if he’s right.

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