Tuesday, September 30, 2008

The Most Beautiful Game on Facebook - Let's See How It Does

Following my post yesterday disputing the worth of high production value, I wanted to talk about the most beautiful game I've yet to see on Facebook. It's Lucky Strike Bowling (in beta) by Large Animal Games.

If high production values make a difference, then Lucky Strike Bowling should be a megahit. Gorgeous graphics, as polished as a bowling lanes. The lighting effects are amazing. Sound effects, top-notch. It looks 100x better than Playfish's Bowling Buddies (though I think Bowling Buddies is more fun to play).

The gameplay is not innovative, it follows the standards for a bowling game, which make it perfect for my purposes.

Basically, I'm proposing that if Lucky Strike Bowling doesn't acquire a million monthly users (my threshold for a hit on Facebook), then high production values aren't worth it.

Sure, it's hardly a scientific study, and surely not even a valid one, but it's a fun one.

I'm putting Large Animal on the spot here. They can handle it. They're an award-winning company that's been designing casual games since 2001.

My interest in Large Animal Games is not simply because they've made a beautiful game. Large Animal Games is the first casual games company I'm aware of that has made a major push into the social gaming space, on their way to releasing the third game on Facebook soon.

Their first foray was Bumper Stars, a game that was much discussed at Casual Connect, the casual game developers conference. For many in the casual games industry, it showed that a casual games company could succeed on Facebook. Though, success is a relative term, as Bumper Stars currently has ~87,000 monthly active users, which is just an okay showing by Facebook standards. It barely puts them in the top 500 applications on Facebook.

I've heard Large Animal Games CEO, Wade Tinney speak about the social gaming space. He understands the nuances of the new platforms. With established casual games companies moving into the social gaming space, it will be interesting to see how Large Animal fares being at the vanguard. If they fail, it certainly won't be out of ignorance.

The first people to develop games for Facebook were not game designers, they were internet guys seizing a new opportunity. Now that game designers are moving in for realz, the established players in the social gaming space will be seeing serious competition.

Monday, September 29, 2008

Does High Production Value Matter?

If you talk to the CEO of any well-funded games company (and I have talked to all of them), he will tell you that social games are moving in the phase where high production values will be necessary if you want a hit game.

What are high production values? Generally, pretty graphics, some animations, custom music, and an overall polished feel. In the case of the new social games, this all will be delivered via Flash.

I've been hearing this high production value (HPV) argument since the arrival of Playfish onto the social gaming scene, about 6 months ago, give or take. However, I have not seen any evidence of its truth.

Taking a look at the top ten games on Facebook, five of them are HPV, and five are not. I've been tracking recent games that are gaining traffic, most of not HPV games. In fact, some of the most beautiful HPV games have failed to get any traction at all.

So if the data doesn't suppor this conclusion, then why are people saying it, and worse why are other people believing it?

1. To explain why Playfish has been so successful. Playfish came out of nowhere and dominated Facebook, with hit after hit. Playfish games were graphically superior and delivered via Flash. It seems reasonable to suggest that graphics + Flash equalled success. The real reason for Playfish's success is they understand the audience and makes fun games with 3-5 minute playing sessions.

2. It's the graphics fallacy at work again. For some reason, games companies traditionally have believed that better graphics=better games. It's been showed repeatedly to be false by a high number of beautiful and expensive flops. Meanwhile, games with poor (relatively) graphics are incredibly popular: World of Warcraft, Habbo Hotel, Desktop Tower Defense, Mob Wars. I suspect it's because number of pixels is a measurable quantity, but fun (the real reason games succeed) is not. Executives are much more comfortable using a metric that can be quantified, where's the fun column in the spreadsheet?

3. It's a self-serving argument for well-funded companies. If you have a lot of money and a lot of employees you can afford to spend money making a game pretty. Bedroom developers can't. If you can get everyone to believe that HPV matters then you get them to play a game that only you (the well-funded company) can win.

My point: if you're an indie developer, worry about getting the gameplay right and you'll get an audience. Don't drop $50,000 of making a beautiful Flash game that sucks. Let the guys with money do that. They can afford to (try to) fix bad games. You can't.

And please don't let the graphics fallacy infect social games. Thanks.

I'm sure there will be many that disagree and will argue until they're blue in the face that HPV matters. That's cool, make your case in the comments.

Oh, and I am aware that HPV has another meaning.

Sunday, September 28, 2008

Reflections: The World, Entrepreneurship & Facebook as a Carousel

This Sunday Startup post is by Social Gaming Network CEO Shervin Pishevar. It's a thoughtful essay on what it's like to be an entrepreneur in the 21st century and how Facebook is changing things for the better. And it has a Mad Men reference for all you fanboys. And it means I don't have to write a post tonight. Score!

I find myself in a hotel in Eastern Europe after 3 days of red eye flights across 8 time zones on a secret mission for my start up. I have slept only 2-3 hours each day since Tuesday. It is in these sleepless hours, propelled by my inner drive to make a dent in world, where I find the solace to connect with the deepest parts my own soul. Some find that solace in yoga, exercise, religion, music. I find solace when I 'do'- when every cell in my body is telling me that I am doing something that will move my ideas from my brain into the hands of millions of people. This is when I am most alive. I feel the power that we all have inside of ourselves to bring life to the dreams we all hold in our hearts from childhood and beyond.

In the inner sanctum of my own mind, solace focuses and clarifies the stream of my ideas and thoughts. I project these thoughts on the canvas of my life where I see them like moving picture frames interwoven with all the threads of my life experience. I look up at the window of my lonely hotel room on the 11th floor, illuminated by the white glow of my Mac Powerbook- a golden apple shining in the night- and see first my own reflection, and the world looking back at me- a world in forward motion. A world evolved; of knowledge and expertise no longer bound to geography or culture. Of experience and talent unbound and accelerating forward beyond the valley of our own experience and into every corner of the world. In my combined travels as an entrepreneur, I have seen an evolution in the last 10 years that is astounding. The world is us now and it's pulling away.

A perfect storm has been brewing in my great country,America, whereby our competitive advantage- knowledge amalgamated with speedy execution propelled by an iron gut unafraid of risk- has now spread like a virus across the globe. We no longer have the monopoly on the classic American entrepreneurial spirit backed by angels and venture capital. The American Way has become the Global Way.

And yet this, I realize, at this very moment, is not a bad thing. It is a very great thing. It is the single greatest contribution we have made to the world. It now behooves us, the American entrepreneurs, to reach out to the talent that lies across the world, and embrace them. They need us as much as we need them-and it is a need that will not remain symmetric for long. They need us now but if we do not invest in building meaningful relationships and ties then they will evolve beyond us.

It is in this bridge that the future lies- it is in this future that hope lies. As much as we can teach others, we must be as open to learn from the world in return. We hacked our way into the American dream but we have not cracked the code on what that dream means in the 21st Century. This is the work of my generation. We must hack our way to a New American Dream in the 21st Century. While our financial systems lie teetering on near destruction, we realize we must build from the ground up a new system. That means our identity as a nation and culture will shift to reflect the quilted nature of a world not tethered by the traditional boundaries that kept out influences and isolated our evolution.

In the city I am in right now I was told that during the Communist regime they broadcast only 2 hours of television each day. One hour of that time was watching their 'dear' leader. There were no cartoons for children to watch. No movies to inspire. A generation was lost. I have seen the difference in the eyes of those born of that lost generation- an emptiness; a harshness; a coldness. But in the freedom generation who benefited from the fall of the Communist empire, you see a very distinct breed of American idealism, a hope for the future and the drive to get there. They haven't figured out everything but they are hacking their way into that future. We must hack along with them.

Looking back at the window across the cityscape, I see reflections of my past and present- my immigrant family, my friends, my colleagues. I miss my two children, Cyrus, 11, and Darya, 8, who are so excited about the games I am building. I just got off the phone with them and Cyrus and Darya was pitching their new ideas for games. I raised them as a single dad for 7 years. My daughter, Darya, was in a Baby Bjorn (a Godsend for me), as I wrote my business plans in my garage. My son Cyrus, would attend Board meetings, crawling between Board members legs. They both would witness brainstorming sessions as they played with Legos and watched Baby Einstein.

I remember those moments and tears come to my eyes as I remember last week when Cyrus heard that our game iGolf had become the number game on the iPhone. He said to me," Daddy, I am proud to be your son. I am proud to have a father like you." His statement hit me like a ton of bricks. Remembering all the sacrifice and hardships, I was floored by his love. It is moments like these that we live for.

Feeling nostalgic, I logged into Facebook to see pictures of my family and friends. As I logged in, I saw in my news feed a picture of Dave McClure's son Dante dressed up as a Native American. I then went to view my albums and my kids. While viewing them I had another epiphany when I connected the dots between Facebook and a recent scene (please watch it below) from "The Wheel" episode of Mad Men. Draper is pitching a campaign for the "The Carousel", the slide show projector, to representatives from Kodak.

In this scene, Draper, turns off the lights and begins to project personal pictures of himself with his family. As he speaks he says:

"[Teddy} also talked about a deeper bond with the product. Nostalgia. It's delicate but potent. Teddy told me that in Greek nostalgia literally means 'the pain from an old wound.' It's a twinge in your heart far more powerful than memory alone. This device isn't a space ship; it's a time machine. It goes backwards and forwards. It takes us to a place where we ache to go again. It's not called the wheel. It's called the Carousel. It let's us travel the way a child travels; round and around and back home again to a place where we know we are loved."

The look on the faces of the executives of Kodak as the lights come back on is so classic. Goose bumps rippled across my skin as I watched this scene. I remember my parents showing slides shows on their Kodak Carousel in the late 1970's and early 1980's. The dust in the air. The darkness of the room. The pride of my father as he projected our travels and vacations to us and friends. The delight in the eyes and voices of my parents and their friends as they watched and shared reflections of our recent past.

I realized at that moment, that Facebook, is my Carousel. Facebook is my time machine. It is my projector. It is a digital place where I know I am loved by my family and my friends. It is the room where my friends are showing me their slide shows from their lives, their travels. It is a slide show of the human soul. Of the human endeavor. It is the projector that brings clarity and focus to the lives of others. It brings us out of our inner sanctum and to the outer world of our relations. It displaces time and space and brings us back together again no matter how far or long we have been apart. We have all had that experience where you see your friend after 10 or 20 years and it feels like only a day has passed. That is because bonded human relationships are truly timeless. Those bonds can get tighter and stronger when we tap into the power of Facebook.

Those inside of Facebook must know and be driven by a higher mission and cause. They must realize that they should not treat their jobs as normal jobs. They are and should be on a mission to innovate around and extend Zuckerberg's genius and make it ever more elegant, relevant, personal and inspiring. Facebook is not a technology. It is not a portal. It is not a media company. Facebook is a new form of human communication. It is more akin to the invention of a new language. A new language the world is learning to adopt, appropriate and make its own. It is about anthropology and psychology. It is about humanity. It is about evolution. It is more than a job. It is a cause. A cause whose form can affect the function of our world.

If the cause is extended correctly as a new form of communication it can make an ever bigger dent in the universe. The challenge for Zuckerberg as he scales is to weed out those who are in it for the cause and those that are in it for something else. He has always surrounded himself with amazing talent who deeply believe in the cause- like Sean Parker and Matt Cohler. And he has amazing talent and leadership like Sheryl Sandberg, Dave Morin, Chamath Palihapitiya, Ruchi Sanghvi and others who are deeply driven by the cause. A cause this important must remain pure to become a once in a century contribution to how we live our lives and how we exchange ideas and goods together.

Those who are building businesses around this cause must also put the cause first. We must not dilute it. This new form of communication is what can bring us together across boundaries in ways that make it efficient for an entrepreneur like me to build a global gaming company with talent from everywhere. I see what I do as a cause too. I see Social Games as also a new form of communication and entertainment as important as email, instant messenger and television. I see games bringing people together in new and fun ways that they have never had a chance to connect before. (fluff)friends is a great example of a new community filled with love, that connects people together in totally new ways and engenders loyalty and communication. Users create totally new content like videos and even a children's book that no one could have ever predicted. By focusing on inspiration and user experience we will help evolve the form and the function and make it a part of daily life.

This new branch of gaming would not have been possible without Zuckerberg's bold bet that openness leads to greatness for all. It's an idea and meme that is spreading to every other closed system. Closed systems must go. Increased transparency married with open systems and user driven extensions and content will lead to a better world for all.

It is now 4:46 am here. I now will try to get some sleep and wake up in a few hours. There is another city to travel to. More connections to make with talented developers and artists and more dreams and ideas to bring to life to share with you all in the near future. The Carousel turns.

-Shervin Pishevar
Somewhere in Eastern Europe
September 27, 2008

Mad Men Episode:

Watch this video: http://www.youtube.com/watch?v=R2bLNkCqpuY

Friday, September 26, 2008

Starting a Games Company in a Recession

This is a repost of an article I did for Inside Social Games back in June. With the financial system currently imploding it seemed worth reposting.

Warren Buffett says that the economy in a recession. When it comes to the economy, I believe Warren Buffet. Recession is a scary word. But if you’re a social games company (or thinking about starting one), a recession may actually be a good thing.

Obviously macroeconomic factors affect tech startups, and the big and the wise are raising enough money to weather a 2-3 year drought. Most small startups are not in the position to raise 2-3 years of runway money. Instead, we have to tighten our belts or become profitable. Startups in most fields have a very low likelihood of becoming profitable, check out Jeremy Liew’s fantastic analysis on profitability in the consumer interest space.

However, profitability is not a problem in social games. Most, if not all of the top social games companies are already profitable (or would be if not for their rapid expansion plans). Many smaller, quieter players are also seeing excellent revenues, but you’ll have to take my word for it, since no one seems eager to advertise their success.

When it comes to a recession, the common wisdom is that home entertainment surges, because people feeling the pinch opt for staying home rather then the more expensive option of going out. If that holds true during this recession, then online games are certain to benefit. After all, no one is giving up their Internet connection. And if you’re a free online game, then…well, I mean is there any better entertainment deal for a consumer then a free game?

Of course, the problem as always with free services on the internet, is that we rely on advertisers for our revenue stream. Fortunately, the digital goods model removes that dependency, making it even more attractive in the face of an advertising downturn. It’s still an open question whether people will buy virtual goods with a thinner wallet.

This is an aside, but I’d suggest that virtual goods can offer an excellent substitute for purchasing more expensive real goods. The desire to shop does not go away just because a consumer has less money. That desire to buy real items, such as clothes, shoes, and accessories is easily transferred to vanity virtual goods. Goods that come at a fraction of the cost of a real item, and therefore attractive even when you have a thinner wallet.

However, some people believe that that online advertising will actually increase during the downturn, as ad agencies turn their budgets toward the measurable world of online v.s that vast unmeasurable wasteland that is TV and print. If you look at data aggregated by Pubmatic, smaller publishers (around the scale of most social games companies) have seen rising ad rates, even as the rates of larger publishers have fallen.

So to summarize:

Free online games using a virtual goods model with an advertising kicker are one of the safest bets you can make in a recession. So come join the party.

And if you need further convincing, the biggest games company in the world, EA, started in a recession.

Thursday, September 25, 2008

How to Make a Successful Social Game: Use Gifting

As I mentioned yesterday, (lil) Green Patch, an extremely simple game where you grow a garden and sent plants to your friends is the #1 game on Facebook. Read on and discover how and why they succeed.

This is Important: Facebook is a Communication Platform

It is not a gaming platform. Not yet, at least.

The primary reason people use Facebook is to communicate with friends. Messaging, wallposts, status messages, poking, commenting, etc.

The act of sending a gift leverages the communication aspect of Facebook. A gift, after all, is primarily a way of telling someone that you're thinking of them. And gifting is massive important to strengthening relationships:

Gift giving has long been a favorite subject for studies on human behavior, with psychologists, anthropologists, economists and marketers all weighing in. They have found that giving gifts is a surprisingly complex and important part of human interaction, helping to define relationships and strengthen bonds with family and friends. Indeed, psychologists say it is often the giver, rather than the recipient, who reaps the biggest psychological gains from a gift.
Thanks, NY Times!

The last sentence is the important one. The giver enjoys the act of giving.

Gifts Can Replace Invites

Motivating users to send their friend an invitation to your game is getting harder, especially since Facebook disallowed incentivized invites. Gifting solves this problem. A gift is basically an invite that the receiver wants, and one that motivates him to install that app. The pleasure of sending a gift motivates the sender. Provided the gifts are compelling enough to send on to more friends, then you have everyone's favorite goal, virality.

The key is having gifts worth sending. For each gender, worth is calculated differently.

Gender Differences in Gift-Giving

Men are practically minded when it comes to gifts. A man will more likely send a gift that has use, for instance an item that allows his friend to play better in a game.

Women uses gifts as an emotional proxy. They want to send gifts that express something about themselves and their relationship to the recepient, for instance, a gift that has a heart and a nice message.

However, if you're going to favor one type of gift over the other in your game design, opt for gifts for women. Women are more likely to send gifts to both men and women, while men usually only send to women (and generally only women in whom they are sexually interested).

Working Gifts into Your Game Design

Ha! Like I'm going to tell you. If you need help I'll be happy to consult for you. :)

Seriously, you have to do the hard work of making gifting an organic part of game play. Or just take the easy route, and clone (lil) Green Patch like Sea Garden did.

Wednesday, September 24, 2008

Social Gaming Chart - September: DAU is dead, long live MAU.

Recently, I've become suspicious of the data I've been getting from Adonomics, as well as some of the other analytics sites that provide daily active use data. I've confirmed this with a couple of other people in the space, so for the immediate future, I've decided to base my insights on Facebook's monthly users count. Fortunately, Myspace also provides this data. And monthly users is a standard metric used on the internet as a whole so we can make better cross-comparisions between properties on and off the socnets.

Here's an updated list of the top ten games on Facebook according to MAU.

1. (Lil) Green Patch - Ashish Dixit and David King. 6,104,887 monthly active users.
2. Texas HoldEm Poker - Zynga. 5,196,593 monthly active users.
3. Owned! - Coolapps.com. 4,417,398 monthly active users
4. Friends For Sale! - Serious Business. 3,653,035 monthly active users
5. Who Has The Biggest Brain? - Playfish. 3,558,737 monthly active users
6. Bowling Buddies - Playfish. 2,842,029 monthly active users

7. Mob Wars - Mob Wars. 2,715,222 monthly active users
8. Word Challenge - Playfish. 2,640,206 monthly active users
9. YoVille - Zynga. 1,933,267 monthly active users
10. Speed Racing - TripMonger, Inc. 1,822,869 monthly active users

Now here's the list I compiled last week of the top ten games on Facebook that was based on DAU:
1. (lil) Green Patch
2. Texas Holdem Poker - Zynga
3. Friends For Sale - Serious Business
4. Owned - Coolapps/Myyearbook.com
5. Mob Wars
6. Word Challenge - Playfish
7. Bowling Buddies - Playfish
8. Who Has the Biggest Brain? -Playfish
9. Speed Racing - Rockyou
10. Mindjolt Games - Mindjolt Games

As you can see the lists are VERY similar, enough so that I'm happy just to toss DAU under the train and rely on Facebook's monthly numbers.

1 million monthly users = hit game

Looking at the data, over 21 games on Facebooks have over a million monthly active users. I've decided to arbitrarily make that the threshold definition of a hit game.

(lil) Green Patch is #1????

Amazingly, a simple gifting app with extremely lightweight gameplay has bested the efforts of all the major social games companies. Some would argue that (lil) Green Patch isn't even a game. Tomorrow, I'm going to talk about the power of gifting in my next installment of "How to Make a Successful Social Game". Unfortunately, this entry won't be as controversial as the last one.

Tuesday, September 23, 2008

Recent Fundings in the Social Gaming Industry

Hollywood Interactive Group, Inc. MyHollywood.com - $5 million Series A. Investors: Led by BlueRun Ventures. Combining games, Hollywood gossip, avatars, and social networks to appeal to a female casual gamer. When I was still running Tenuki, I met with some of their exec team back in Feb. at the GDC. They have ambitious plans and a strong team. I imagine their current site will be evolving rapidly.

Challenge Games. $10 million Series B. Investors: Led by Globespan (their $4.5 million first round was led by Sequoia). Creates online roleplaying games, Duels and Baseball Boss. Both games use game mechanics common to many popular (or previously popular Facebook games). Both games have considerably more polish than your standard social game. Duels has a Facebook app presence, but it's little more than a funnel to their normal site. It has a paltry 1100 monthly users. $14.5 million in funding for games that are essentially Facebook games is a great argument for people to start moving their properties off Facebook.

ROBOTGALAXY. $5 million (on $25 million post-money valuation) Series B. Investors: Led by Bachmann Industries (their manufacturing partners who invested $7 million in their A round. Combining customized robot toys with an online virtual world (i.e. Webkins with robots).

Big Fish Games. $83 million. Investors: Balderton Capital, General Catalyst Partners, and Salmon River Capital. Combines downloadable casual games with light social networking site. 50.3 million in revenue last year. So why raise a big round? Methinks, they are looking to change business models or expand into a new market (they've already made a successful move into Nintendo DS games).

Raptr. $12 million Series A. Investors: Accel Partners and Founders Fund. The social network for playing games that aggregrates player data from various platforms (Xbox, Wii, PC games). You can read my thoughts about it here.

Monday, September 22, 2008

Browser-Based Games are an Interim Step?

In Adrian Crook's excellent coverage of the Austin GDC, I came across this tidbit:

"In S Korea, people have no problem downloading big client products as the web is so fast. I often wonder if browser-based gaming is an interim step until web speeds creep up and people can return to client download." - Min Kim, Nexon

It's an interesting speculation. I'm intrigued.

At the moment, there are many people in the games industry, including myself, decreeing that the client download model should be abandoned if you want to reach the casual audience. The willingness of players in S Korea to download huge clients has always been the example offered defending large download sizes. Sadly, it never occurred to me that it's because of their super-fast connection speeds.

Perhaps, Min is right and we'll see a move back towards client-based online games in the future.

Looks like it might be here sooner than later.

Digital Distribution Tech that Allows Players to Start Before Game Fully Downloads

Saturday, September 20, 2008

A Word From the Wise: 20 Million units sold has been the minimum US audience for a meaningful game device.

According to Bing Gordon, former Chief Creative Officer of EA, 20 million units sold in the US is the necessary threshold for a successful gaming platform. And he's would know.

Here's how the emerging platforms stack up:

Currently, iPhone is around 9 million worldwide.
Facebook has 100 million users worldwide.
Myspace has 60-80 millions users somewhere.

Can you tell I'm writing this at 3AM on a Friday night?

Friday, September 19, 2008

Top Social Game Companies: Top Ten Myspace Games Vs. Top Ten Facebook Apps

Now that I'm seeing that Myspace has finally arrived as a powerful social gaming platform, I figured I should take a look at who succeeding on that platform vs. who's succeeding on Facebook. Below are the top ten games from both platforms as of Wednesday.

Top Ten Games
1. Mobsters - unknown
2. Mafia Wars - Zynga
3. Own Your Friends - unknown
4. SuperPets - Rockyou
5. SuperPoke Pets - Slide
6. Texas Holdem Poker - Zynga
7. Vampires - Zynga (reskinned Mob Wars type game, not like Blake Commagere's Vampires)
8. Heroes - unknown
9. Friend Factory - Zynga
10. Dragon Wars - Zynga

Facebook Top Ten Games
1. (lil) Green Patch
2. Texas Holdem Poker - Zynga
3. Friends For Sale - Serious Business
4. Owned - Coolapps/Myyearbook.com
5. Mob Wars
6. Word Challenge - Playfish
7. Bowling Buddies - Playfish
8. Who Has the Biggest Brain? -Playfish
9. Speed Racing - Rockyou
10. Mindjolt Games - Mindjolt Games

Quick note: Unknown could be an indie developer or a company keeping a low profile, it's hard to tell on Myspace.

Looking at Myspace, the top ten is completely dominated by Zynga games. Slide and Rockyou also make an appearance, but other top game developers on Facebook are nowhere to be seen. Playfish, SGN, Serious Business, and Alamofire have yet to make a serious push onto Myspace. I will note that many of the popular Zynga games appear to be rethemed versions of Mob Wars. Re-theming a game engine to serve different interest groups is an approach I've been advocated privately since I had a company. Glad to see someone is doing it.

On Facebook, Playfish dominates. Overall, rankings have been very static for a couple of months. Either developers are moving toward other platforms (some, but not most), none of the new games are any good (doubtful) or perhaps the viral mechanisms in Facebook have been dampened enough that it's much harder to acquire new users (hmm...worth a post...)

It's understandable that many companies are reluctant to develop for two platforms (or more). It diverts resources and focus. Zynga, with their 80+ employees (soon to be 150+) is the only company currently with the scale to do so without suffering much.

Thursday, September 18, 2008

SGN expands into iPhone games.

Yesterday, Techcrunch broke the story that SGN has released a new game for the iPhone called iGolf. (I guess I shouldn't have unsubscribed from Techcrunch a couple months ago - oh well.)

Based on the video on Techcrunch, the game looks pretty awesome. You swing your phone to hit the ball. Like the Wii, the iPhone's accelerometer detects your swing and translate the motion into the game.

Developing iPhone games is a smart move for SGN and they've executed it well, creating a truly innovative game. And wisely, they've made it free.

Hopefully, we'll eventually see some games that tie the iPhone experience back into the social networks, taking advantage of the direct monetization possibilities of the iPhone's App store and the viral mechanisms of the socnets.

Just imagine if your high scores on iGolf showed up in the Facebook newsfeed. Or if you could play 18 holes against your Facebook friends (asynchronously, of course). Now, I'm getting excited.

Zynga Still On a Hiring Frenzy and My Rough Estimate of Zynga's Burn Rate

According to a post by Marc Pincus on his personal blog, Zynga is looking to hire 70 more people, which by my rough count would bring Zynga up to ~200 employees.

Using timeworn startup expense math, on average each employee costs about $200,000 a year with salary and benefits.

200 employees x $200,000 = 40 million dollars a year of overhead. That's some major burn rate.

I've heard that Zynga is making about 1 million a month in revenue, but that was back a couple of months ago at Casual Connect. I'm certain that revenue is even higher now that Myspace has become a viable platform. And Zynga has 3 of the top ten Myspace apps. Let's assume it's 2 million a month. That's $24 million annual revenue.

$24 million - $40 million = -$16 million (or roughly half of Zynga's total VC funding).

So if they're planning on running a $16 million annual deficit, and that doesn't take into consideration acquisitions. Either they have some aggressive revenue projections or intentions to raise another round of financing.

Or my math sucks. Which is very possible.

If You are Interested in a Job at Zynga...

Talk to my friend Flo (flo@zynga.com) over at Zynga. Tell her that I sent you and maybe I'll get invited over to Zynga for those free chef-prepped lunches I've heard about. Hey Flo, do they do vegan? (Yes, I'm a vegan, and yes, I think I'm crazy as well.)

Wednesday, September 17, 2008

27% of Teens Play Games With People They Are Connected With on The Internet, and Other Choice Nuggets From the Pew Report on Teens and Videogames

Every once in a while the Pew Internet and Life Project releases a report on some facet of Internet Use. Yesterday they released a report called Teens, Videogames, and Civics. You all will only be interested in the first two.

The following tidbits are exceptionally relevant to social games.

  • 27% of Teens Play Games With People They Are Connected With on The Internet(could easily be restated as 27% of teens play social games.
  • 76% of teens play games in a social context (others in the room or connected online)
  • 50% of teens played a videogame yesterday
Online Play: Friends vs. Non-Friends
  • 47% of teens who play games online play with their offline friends
  • 27% of teens play with people they met first online
  • 23% of teens play with both
For You Iphone Game Devs
  • 48% of teens use a cellphone or handheld organizer to play games
Social Networks
  • 46% of teens that communicate with friends daily uses social network messaging vs 27% who communicate via IM. Social network messaging is second only to talking on a cellphone (50%).
Virtual Worlds
  • 10% of teens play in virtual worlds
Girls like Puzzle Games - the Casual Games Industry was Right! :)
  • 87% of girls play puzzle games
I could continue, there's A LOT of info in this report. The stats on popular genre are pretty interesting. Maybe on Friday.

Tuesday, September 16, 2008

Social Gaming Company SGN acquires (fluff)Friends, the popular virtual pet game.

(fluff)Friends Creator, Mike Sego pictured above enjoying his first acquisition payout.

Due to my tentative reputation as a journalist, I just received news that SGN bought (fluff)Friends.

Hopefully, all my readers know that SGN is one of the top social game developers (and one of the top social game acquirers), but some of you might not know that (fluff)Friends, in addition to being one of the early successes on the Facebook platform is also one of the best monetized games, as well. Unsurprisingly, Slide chose to clone it as SuperPoke Pets on Myspace.

According to ever-cagey (fluff)Friends creator, Mike Sego, the game makes a little over a dollar per month per daily active user (as quoted by Venturebeat). At 90,000 DAU, that comes out to ~$90,000 per month income.

So how much did SGN play for (fluff)Friends? No one is saying, but I suspect that like SGN's previous round of acquisitions (Free Gifts, Nicknames, etc.), Mike was given equity in SGN.

But why would Mike want to join SGN if he already had a $90,000 a month income? Here's the quote from the press release: "We're looking forward to joining forces with SGN to make (fluff)Friends a much greater gaming experience for our users. The SGN team is very creative and focused on building great games and great user experience, which is why we know (fluff)Friends together with SGN will be a powerful combination."

Yeah, I'm guessing that they offered him a lot of stock. :)

By any standard, it's a smart buy for SGN, they get a consistent money-making app with a loyal and stable userbase, but more importantly, they get its creator, Mike Sego, one of the few experts in creating a virtual goods economy on a social network.

I expect we'll see SGN move deeper into a virtual goods monetization model. They already have Zach Allia, creator of Free Gifts, and now Mike Sego. Together, that's some deep expertise.

Here's the value Mike brings: According to SGN, since January 2008, (fluff)Friends has seen a 192% increase in revenue per spender, and a 143% increase in spend per transaction.

By the way, if you ever wondered why the game is named (fluff)Friends and not Fluff Friends, I'm guessing because punctuation marks appear before numbers and letters in directories, so (fluff)Friends would be on the top of the list of apps in the Facebook directory. Yep, Mike Sego is a smart guy.

Disclaimer: Mike is a friend of mine, but perhaps not after I published that picture. :)

Monday, September 15, 2008

Making Successful Games is Very, Very Hard

With all the news recently of games making millions of dollars a year on Facebook, many of you will be tempted to don your armor +1 and enter the arena.

Well, that gold isn't just lying around waiting to be snatched up. Most likely, you'll walk away with a couple of pennies.

There's over 40,000 apps on Facebook. 40 apps make enough to build a company. 400 apps make enough to live off. 4000 make enough for beer money. That's a very rough estimate.

Let me put it this way: 36,000 Facebook apps are worthless.

But they cost time and money to build.

Fact is, lots of talented, intelligent, and experienced game designers and game design companies have launched games on Facebook and seen them attract less than 5000 users a day. Many attract even less. I personally know teams that have spend tens of thousands of dollars on development of games that have gotten almost no traction. It's horrible.

It's All About Luck, Except For Playfish

Even the top companies in the space, Zynga and SGN have had very mixed track records even with their game networks and millions in the bank. Playfish, however, are batting %100. Those guys are AMAZING. Someone observed to me recently that Playfish is just remaking Nintendo DS games (Biggest Brain = Brain Age, Pet Society = Animal Crossing). If so, it's working brilliantly.

Just thought I should let you know.

Sunday, September 14, 2008

Sunday Startup Aphorism: Forget a Space That Already Has Five Companies in It

Forget a Space That Already Has Five Startups in It.

This piece of advice comes from SGN's CEO Shervin Pishevar.

I had been talking to Shervin about my belief that a virtual goods infrastructure company was good bet. When you're dealing with an industry with a lot of content risk like games, it's usually a smart bet to provide infrastructure rather than content. Take Offerpal and Superrewards, two monetization services companies that are pulling in millions from offering CPA offers via social games while avoiding content risk.

Surveying the landscape, we named a few companies entering the space. That's when he busted out the aphorism.

The view is that if there's already that many companies in the space, there are probably more of whom you're not aware. And they're will be even more. Not only don't you have a headstart, but you're behind the curve.

Big opportunities attract a lot of competitors. Unfortunately, so do smaller opportunities with lower bars of entry. Take to-do list sites. There's tons of them. And yet, people still make them. It used to baffle me, until I realized how easy they were to make. Don't fall for the fallacious argument that just because there's a lot of competitors means that it's a space worth winning.

Unless you have a completely innovative approach to the problem that is cheaper, faster, and better, don't get caught up in the landgrab for a new space.

Friday, September 12, 2008

Is Myspace Finally a Equal to Facebook for App Developers?

A few months ago, Myspace opened up their platform to app developers. Many Facebook app developers excited poured onto the new platform, hoping to strike gold.

They were disappointed. Apps simply did not spread fast on Myspace.

Things have changed.

Since then Myspace has improved their invite system, allowing apps to spread rapidly. Blake Commagere, creators of the Monsters apps (Zombies, Vampires, etc.) has seen his traffic increase 30-40x since implementing invites on Myspace. Thanks Blake!

Recently Offerpal, a monetization service for app developers reported that 50% of their revenue comes from apps on Myspace. Many of those apps are games from Zynga.

Traffic+ Money = Joy!

Looks like developers trying to decide whether to focus on Facebook or Myspace will have a much harder time of it.

Thursday, September 11, 2008

Zynga Relaunches their Company Blog, and a Quick Rundown of Other Social Gaming Blogs

A couple days ago, Zynga relaunched their company blog (zblog.zynga.com) with an intention of taking a broader look at the social gaming industry beyond product releases.

At least that's what my friend Scott Jon Siegel tells me. He's a game designer over at Zynga and has a game design column over at the Escapist. (He also owes me a guest blog post.)

Honestly, I'm looking most forward to more posts from Bing Gordon, former head of EA and current investor and operating director over at Zynga. (Bing, you can guest post over here anytime.)

Anyway, the news gives me an opportunity to let you know about some other company blogs:

SGN (blog.sgn.com). Social games company. Updated monthly with information. Started out a blog aimed at developers in the SGN network. Most recent post was an overview of the explosive growth in the social games industry written by CEO Shervin Pishevar.

Playfish (blog.playfish.com). Social games company. Updated monthly (or a little more frequently). New product releases and industry perspectives. All written by CEO Kristian Segerstrale.

Mytopia (http://mytopia.com/blog/). Social and mobile games company. Updated monthly. Company news and personal insights about gameplay from co-founder Galia Ben-Artzi.

Three Rings (http://thefloggingwillcontinue.com/). Casual MMO developer. CEO Daniel James' blog. Rarely updated, but always amusing.

Sparkplay (http://forge.ironrealms.com/). Casual MMO developer. CEO Matt Mihaly's blog. Frequently updated with thoughts on games, politics, whatever is getting Matt excited.

Cafe.com (blog.cafe.com). Casual games social network. Updated weekly with game release news, company news, and thoughts on games.

That's off the top of my head. If you have a company blog and you're a social games company (casual MMOs included, give me a heads-up - maybe I'll create a blogroll.)

Wednesday, September 10, 2008

How do the Chinese Play Social Games?

According to David Wallerstein of QQ Games, the majority of gameplay is with strangers.

QQ Games is the massively successful real-time games service in China, based around the QQ IM client. The service is so popular they have a currency that rivaled the Chinese national currency.

So why strangers?

Here's David's explanation: The Chinese enjoy competing. However, they feel compelled by custom to let friends win. When playing against strangers they can compete fully.

Nice reminder to for social game designers to understand their audience.

Tuesday, September 9, 2008

Excellent Summary of the Top Ten Free2Play Publishers

The blog Free to Play, which covers the free to play games industry, has compiled an excellent summary of the important publishers in the industry. Read the whole thing.

Social games companies, SGN and Zynga make the list at number 10 as representatives of the social games industry. Here's what Free To Play says about them:

They represent a second wave of disruptive F2P businesses, thanks to that tie-in with the major Social Networks; without any partnership deal, in less than a year they’ve achieved user figures - as high as 18 million active - that are a notch faster again than the super-fast-growing Chinese F2P publishers. We’re seeing them uncharacteristically early - it took the games industry a good 5 years to even notice the existence of games like Runescape (now running at well over 1 million subscribers). So it’s no surprise that things like revenue levels are unquoted and relatively meaningless for these two - those will become established over the coming year or so. What we’re looking at here is very early businesses whose only direct, clear, measurable value (and indicator of probable lasting success) is the huge audience they command. These are almost typical web businesses, not games businesses, but the expectation among many is that with hindsight we’ll look back and say that they were the start of the new combined web + games industry, which is widely expected to eclipse traditional games.
Fact is, nearly all social games currently uses the free to play model, with the exception of CasualCafe. I don't see that changing any time soon.

Monday, September 8, 2008

White Label Gift Apps Creator, LOLapps, gets 4.5 Million in Funding

Venturebeat reported yesterday that LOLapps recently raised $3.5 million dollars, part of a $4.5 million Series A from Polaris Venture Partners.

$4.5 Million is the highest amount of funding I've seen for a Facebook apps company that isn't focused on games (not counting Slide and Rockyou who are not purely Facebook apps companies).

From what I can gather (they're in Stealth), LOLapps has two main apps, Gift Creator and Quiz Creator. Together, they have about 25,000 daily active users, which barely places them in the top two hundred apps in terms of traffic.

However, these numbers are not representative of LOLapps' true reach. Their audience is much wider.

Here's why: their apps allow Facebook users to create their own gifts and quiz apps. On those gift and quiz apps, LOLapps runs ads from which they derive revenue. Users create the content, LOLapps gets the cash. Pretty brilliant.

One of these user-generated apps, Shots, Shooters, and Exotic Drinks has ~8000 DAU. There's at least twenty more listed in their gift app directory. Same with quizzes. Who knows how wide their reach extends.

Another company, Sharendipity is trying something similar with games, though fun games are MUCH harder to create then gift and quiz apps.

With a 4.5 million round, LOLapps is entering the big leagues as far as app companies are concerned. They must have big plans. After all, why else you raise money if you're already profitable if you didn't? Well, unless of course, your traffic was in inevitable decline...

Whatever, they're doing, I'm sure they're monetizing it with virtual goods. :)

Friday, September 5, 2008

Raptr, The New Social Network for Gamers: Will It Affect the Social Games Industry?

Raptr is a new social network for people who play games. They achieved the amazing feat of auto-detecting and pulling together game information from Xbox games, Flash games, browser-based games, PC games, and yes, even games on Facebook.

They're trying to solve a couple problems. 1. They want to make it easier to find your friends who are playing online when you are. 2. They want to make it easier to discover games you'd want to play.

If this sounds familiar to you, then you probably realize that this is exactly what SGN and Zynga were both trying to do for people playing games on Facebook back in the beginning of this year. Like Raptr, SGN even had a newsfeed of games that you're friends were playing.

It turned out that, as least on Facebook, people didn't care much to play games with their friends in real-time. Nor were the majority particularly interested in discovering other games on the Zynga or SGN networks.

Since then, both companies appear to have been more focused on being game development studios. Though perhaps, they both still have plans to expand the social capabilities on their network?

So where does that leave Raptr?

Players on Facebook don't care about their friend's gaming habits. Games are not the centerpiece around which the socialization of the majority of the Facebook audience rotates. Facebook is a communications platform with games on it. That isn't changing.

Raptr's appeal will be to people who care about their friend's gaming habits. That will be the hardcore gaming audience. The values of this audience revolves around their relationship to games.

I believe Raptr will absolutely be successful, much like Dennis Fong's previous company Xfire, the IM client for PC gamers. However, I do not believe it will expand its audience much wider than Xfire's audience (and who cares if it does since that company sold for 110 million dollars).

Bottom line: Raptr will enhance the social aspects of the hardcore gamer audience (an audience which is pretty social already due to the popularity of multiplayer games in that space), but it'll have no impact on games already on existing social networks.

Wednesday, September 3, 2008

How to Make a Successful Social Game: Violate Someone Else's Copyright.

Today I'm starting a series of posts on how to create a successful social game. I'm not sure about their frequency, I tend to write when the mood strikes me, but expect them regularly.

Initially, I'm going to look at some trends that have held true for games on Facebook. As I've followed the space, I've extracted some insights, some practical, some cynical. Today's post falls under the cynical (yet true) heading.

Lesson #1: Appropriate Someone Else's Intellectual Property

Facebook users, like most people, respond to brands to which they are already familiar. Therefore, as a developer it makes sense to take advantage of that brand equity by associating it with your game. This is especially true if you've built a game that is a very close copy of a game that has enormous brand awareness.

Take Scrabulous, for example. It's a Scrabble clone. That's fairly obvious by the name. Now imagine if it had been named Word Tiles or Word Grid. No one would know it was a Scrabble clone unless they tried it out. A percentage, let's say 10% would have ignored the invite for a game that they didn't recognize. Yes, that's a made up number, but based on my interviews with average players, I'd suspect it should be higher.

People who otherwise would never play games played Scrabulous because they instantly recognized it as Scrabble by the name.

Here's some other successful brand appropriations:

Pacman 2.0. If you remember, Pacman was initially the most popular game on Facebook, until it was voluntarily taken down after a cease and desist order. In the last couple of weeks, I've watched a poorly done Pacman clone called Pacman 2.0 rapidly acquire traffic. It currently has ~60,000 DAU.

Send Pokemon. A gifting app that lets you send Pokemon characters. ~25,000 DAU

Winnie the Pooh. A gifting app that lets you send Winnie the Pooh characters. ~20,000 DAU

Super Mario. A port of the Nintendo game. ~12,000 DAU

These numbers seems small, but each of these apps are in the top 400, and each has the potential to make 1000s of dollars a month.

What If I Get Sued?

It's a risk. But unless you become really popular, then you don't have much to worry about. Giant companies like Nintendo can't be bothered with small-fry copyright violators. It's not worth the legal fees. If Disney, the most litigious of all copyright holders, hasn't come after the Winnie the Pooh app, then you don't have much to worry about.

Downside, if you're extremely successful like Scrabulous...well, being that successful is a great problem to have.

The Secret Behind the Popularity of Yahoo's Homepage

Recently, I was down in LA and met with a really smart guy working on his fifth company. In passing, he explained why Yahoo's homepage was so popular with the 95% of the country that are not techies (who generally prefer Google). Here's the insight:

Yahoo starts the conversation, Google leaves it up to you.

I'll explain, via metaphor. Imagine you're at a party. Someone comes up to you and starts telling you about the last headlines or their trip to Brazil. That's Yahoo. They offer up a bunch of content and you choose what interests you.

Now imagine you're at a different party, this time everyone is standing around looking awkward as they wait for someone to talk to them. You need to go up to them and think up some question to get the conversation started. That's Google.

If you're looking for information, then the second party is great. You can ask questions without being distracted.

But if you're looking to be entertained, then you'd much rather be at the first party. That's where I'd rather be.

Most people are looking to be entertained by the Internet. They want to waste time. They don't know what they're looking for. They browse content.

Silicon Valley is Not Normal

Sometimes it seems like Silicon Valley is obsessed with more efficient ways to deliver the "right" content to the audience. That's because most people in Silicon Valley is obsessed with acquiring information. They're knowledge whores. It's a culture of smart, well-read information junkies who have more work than time.

That's not normal. Lots of brilliant people are wasting their time building products for less than 1% of the population. Because they're building it for themselves. It makes me sad.

That is not to say creating games is somehow a more honorable profession. The majority of people I talk to have never played a game on Facebook. And I ask everyone I meet. If they have, they've tried Scrabulous. Yet millions of people play games everyday. Some games get over 100,000 players daily. What startup in the Valley wouldn't kill for that kind of audience?

Facebook continuously pushes the application development community to build more useful applications. Underlying that desire is the notion that tools have more value than pasttimes. It's a very Silicon Valley notion. And completely in opposition to what normal people value. Which is fun. Excitement. Anything to kill time. But I don't expect you to believe me, just count how many useful apps are in the top 200 apps on Facebook. You can use one hand.

Good games kill time. If you're really smart, you'll figure out that giving people something to enjoy can have just as much impact as giving them a better way to solve a problem. Here's a problem for you: everyone wants to be happy. Yet, most of the time, they aren't.

Games help with that. Does your startup?

Tuesday, September 2, 2008

News You Might Have Missed

I'm coming back from a long weekend in LA and my head is not back into social games quite yet, so here's a digest of stories from the last couple weeks that should hold you over until I get wordy again.

Webcarrz Raises $4 million Series A for a Car-based Virtual Flash-Based MMO. Pretty nice round for a company that I suspect is build on a Powerpoint presentation (considering their product is being made by a partner) . Their management team must be pretty strong. Here's a link to the CEO's Linkedin profile so you can decide.

U.S. Retailer Kohl's Partners with Virtual Dress-Up Site Stardoll. Read for the all-to-brief analysis of downstream traffic from the Stardoll site.

Google Announces Android Market, the App Store For Android Handsets. Once again, developers will have to choose where to place their development resources, Apple or Google.

Monday, September 1, 2008

Labor Day Labor Break

I took an unannounced blog break this weekend. Will start up again on Tuesday.