Playing mind games Queensland-style is a real challenge

Australian Financial Review - Special Report - Your Business Quarterly

The perfect puzzle requires a variety of options and challenges, writes Miriam Hechtman.

Puzzles usually have a limited appeal. The consumer plays them once, or completes them once, then moves on; or finds them too difficult or too easy. But a recently formed, Queensland-based company, Mind Challenge, has overcome those limitations with a puzzle game that is always different and allows users to set their own challenge level. The result has been a major export success.

Mind Challenge’s first product, The Kaleidoscope Classic, is now selling into various countries, including India, where it has become that country’s largest-selling game. It has also proved a major success in Australia. The game is the intellectual property of two Australian inventors, psychologist Mark Wood and mathematician and physicist Frank Dyksterhuis. Between them, the inventors have spent more than 25 years creating a suite of puzzles and games that appeal to a wide audience.

Mind Challenge chief executive Vishal Mehrotra first met Wood at university in Queensland in early 2001. What began as a friendship soon developed into a business strategy for a game company and by mid-2001 Wood had convinced Mehrotra to help him market the idea. Mehrotra says that typically puzzles are limited as there is always an end point and they are either too easy or too difficult. What the Mind Challenge inventors created “was a suite of puzzles and games that took the two core limitations of puzzles and turned it on its head”. The Kaleidoscope Classic is composed of 18 unique pieces. It is multi-dimensional and, through the use of colour, provides a number of major challenge levels. The game is flexible and allows you to define your own personal level at which to play.

“We needed $1.6 million initially to get started,” says Mehrotra, who hit the streets with a “show monkey” spiel, detailing the unique features of the game. After numerous investors refused funding, they met a Gold Coast accountant, a former Queensland chief of JBWere, Marcus Titley, in mid-2002. Titley, who is now chairman of the company, saw enough potential in the fledgling idea to invest $1 million.

From April 2003 to July 2004, the company test-marketed the game in India. “The reason we picked India was it offered us almost a microcosm of the entire universe,” says Mehrotra. The product was formally launched in Australia at the Australian Toy Hobby and Nursery Fair in Melbourne last year, and within nine months had become the largest-selling game in Australia for Myer, the lead retailer of the product. Says Mehrotra: “It actually sold twice what normal products sell within that realm. We sold about 20,000 units in our first year in Australia alone.”

The formal launch in the Indian market was similarly successful. Within two months, The Kaleidoscope Classic became the largest-selling game in organised retail in the country. It ended its first year with nearly 50,000 units sold and it is expected to close at about 100,000 units this year. Says Mehrotra: “Australia is a small market and is a market that is robust within the toy industry, but it’s by no means spectacular in size. Because we manufactured the product out of dedicated production facilities in India, India presented a fantastic opportunity for Mind Challenge, and I think it’s been one of our big crowning glories so far. “India is hard to crack, but if you can do it it also is a market that offers you great brand loyalty, a massive customer base and huge potential for the longer term.”

The product enjoyed similar success when it was launched in Hamleys’ Regent Street store in London this year, selling one game every 14 minutes for the first 10 days. The game continues to sell roughly 70 to 80 units per week. Mehrotra says the game could sell 120 million units globally over a 10-year period.

Despite all these achievements, heavy marketing costs mean that Mind Challenge is not yet turning a profit. Revenue, however, is increasing sharply. Generating just $142,000 in sales in its first year, the company turned over $1.2 million last year and will close the 2005 year with $3 million to $5 million in sales. “The profits will come,” says Mehrotra.