Since I didn't take notes, here are some of the things still rattling around my brain days later:
Channels Panel: Zynga and SGN suggested that they might be working on linking their networks. The basic idea is that they would sell clicks to companies wanting to get their properties in front of the gaming audience and the network that served the game link that was clicked through would get the credit. I know both these companies have greater ambitions than to be ad, *cough*, I mean, game networks, and this detente suggests that they may be differentiating toward different aspects of social gaming. Or not. :)
Platforms Panel: Jessica Alter of Bebo indicated that AOL Instant Messenger would be integrated directly into the Bebo platform. The AOL-Bebo acquisition just closed, but Jessica indicated that this was an immediate priority for the AOL-Bebo team. Despite my general bearishness on real-time games in the near future, I think Bebo may soon offer the best opportunity for real-time games. One immediate beneficiary should by the team leading the QQ Games US division, who already have a close relationship with AOL and would benefit immensely from the social network traffic (that is if people can get over having to download the QQ client).
VC Panel: Jeremy Liew, Lightspeed Venture Partners believes that there is an opportunity for a social games publisher to emerge much in the way that EA did back at the birth of computer games. His thesis rests on the presupposition that a publisher can create/acquire a succession of hit games. It's a risky proposition (especially for a VC) considering that so far, no publisher has seen more than 1-2 hit games in their portfolio, despite hundreds of games being launched on Facebook. Meanwhile, Naval Ravikant, Hitforge felt that Facebook was no place for venture-backed companies, since the revenue wasn't there yet, but it was great for lifestyle businesses. Accel's Ping Li is looking at gaming infrastructure plays, which strikes me as the typical venture approach, i.e. avoiding content risk and focusing on platform plays.
Advertising Panel: Sadly, I missed most of it due to , but there was an indication that branded virtual items were already becoming a big source of revenue.
Virtual Economy Panel: I heard the moderator was amazing, some guy name Bret. Extremely handsome and wow, was he funny. Okay, it was me, I was the moderator. The panel agreed that if you don't THROUGHLY think through your economy before you launch your game, you will be screwed. Siqi Chen, CEO of Serious Business indicated that he believes the slowing growth of Friends For Sale is due to inflation - simply put, it's becoming too expensive for newer players to buy anyone. I think it's a very reasonable assumption, and shows how important economy is to the overall health of a game. Fraud was also a huge issue for all the panelists, Siqi revealed that 3 of his 12 employees did nothing but handle fraud issues. That's 25% of the headcount for all you kids out there making your business plans.
Siqi also made the claim that just being on a panel with him would get us laid. I'm not going to say whether it's true or not, you'll have to judge by the title of this Facebook group.
Developer Analytics and Playfish both offered excellent presentations which I will link to once they get them posted. And I'll possibly comment on them.
Tuesday, May 27, 2008
Since I didn't take notes, here are some of the things still rattling around my brain days later:
Friday, May 23, 2008
Normally, I hate writing soft posts, you know those posts where the author talks about how much they love risotto, when all I really care about is their analysis of the social games industry. That is why you all subscribe to my blog, after all.
Well, there'll be no analysis today, nor talk about the finer aspects of risotto (I know you're disappointed). This is just a love letter to the social games industry.
If you give it a moment of thought, to spend your adult life creating games seems pretty trivial when compared to say curing cancer. It probably is. But it's a helluva lot more fun. Oncologists may feel free to disagree.
But honestly, would you really want to live in a world without games? I know people who never play games. I don't like them. They're boring. Their imagination has been drained. They're afraid to say fuck at work. You can often find them in the telecom industry (or so I've heard).
One of the sad truths about being in the games industry is that many of us work so hard that we don't get to play games. I've never played World of Warcraft. I'm terrified of it. I know that if I started playing it...well, let's just say that I once was so addicted to Civilization 2 that I had to destroy the installation CD. Sadly, I bought a new copy the next afternoon. Even now, if someone even mentions Persians I start to...dear god, I just gave myself a Civ craving.
Fortunately, people in the games industry have gigantic stores of imagination, enough to carry us through droughts where we can't find time to play. And guess what, imaginative people are fucking awesome. They're smart, friendly, open, funny, cool, gracious, curious...the person that deep down we all want to be, but we're afraid we're not.
Yesterday, I got to spend my day with two hundred of these amazing, imaginative people at the first ever social gaming conference, Interplay. It was a privilege, and I thank every single one of you for making our nascent industry feel like a family.
Wednesday, May 7, 2008
As anyone who reads this blog knows, back in February Zynga and SGN opened up their game networks to 3rd party developers. For the moment, these networks are essentially link exchanges facilitated through game bars embedded on the 3rd party developer's canvas page.
Fortunately, these embedded game bars resolve to unique addresses. For Zygna, it's zbar.zynga.com, and for SGN, it's sgnbar.com. You'll note the graphs below list zynga.com, not zbar.zynga.com, that's because Compete doesn't provide breakdowns on subdomains. However, according to Quantcast, ~99% of traffic to zynga.com is to the zbar.zygna.com subdomain, so for my purposes, zynga.com is the domain of interest.
First let's look at monthly unique visitors:
When looking at the graph, it's important to note that most 3rd party games didn't come onto the network until March. Keeping that in mind, April is the most telling month, Zynga increased their monthly uniques by 200,000, while SGN, increased by 300,000.
How much of this traffic increase can be attributed to the 3rd party games, and not growth in the game network's core properties? In SGN's case, all of it, their core properties have been in steady decline since December. I suspect, it's helped Zynga, as well, since growth in their core games has flat-lined, as well.
So it's seems that when in comes to acquiring new users, the game network strategy has worked very well for the game networks.
One interesting note, SGN claims 1 million daily active users, which is the aggregate number from all their core game apps. However, if you look at the monthly uniques count, it's around 425,000 for the ENTIRE network, including 3rd party developers. That suggests that there's an immense amount of user overlap between SGN's core game properties. If the Compete data is accurate, then it's unlikely that SGN has more than 400,000 UNIQUE daily active users across their core properties, with the caveat that their flagship game Warbook oddly does not have the gamebar embedded in it, so its visitors are not included in the graph above. However, Warbook has less than 40,000 DAU, most of whom probably play other games in the SGN network and are thus counted.
According to Adonomics, Zynga has about 2 million DAU. However, their monthly unique visitor count is 800,000. Again, suggesting that more than half of that audience plays more than one game and is counts multiple times in Adonomics aggregate number.
Having just pointed out the massive overlap, I'd like to point out that if we DID NOT see at least a 50% overlap of users between games, it would be much more troubling. It would imply that most users do not play more than one game in a game network, and therefore a game network would offer no value. So, clearly the games network strategy is working.
UPDATE: After being reminded by Joe G. of Flixster that Compete only tracks U.S. visitors, it occurred to me that the gap between DAU and monthly unique visitors could be a result of a large number of Zynga and SGN's users being located outside the U.S. That would hardly be surprisingly, since Facebook (which provides the large bulk of the traffic) has an enormous international audience.
With that in mind, now I'm concerned that we might not be seeing the overlap I identified above, which WOULD suggest that game networks are effective at sending users to other games on their network. Right now, I can't answer this definitively one way or the other because of lack of the necessary data. Sigh.
Now that we have the monthly unique visitor count, we can compare SGN and Zynga to destination game sites that do not have social network integration. Which I will have to do tomorrow, as Compete's web server is currently down. Drats.
Now, let's look at pageviews, one of the standard metrics of engagement:
Again, April is the interesting month here, since it's the most recent data and it's the month where both networks had fully launched. In April, Zynga's pageviews increased slightly, but SGN's pageviews took a 25% nosedive. Why? I have no idea. Speculate in the comments.
Finally, my favorite metric, average length of visit. As a measure of engagement, I find this metric to be most accurate when comparing different types of games.
Both SGN and Zynga experienced a severe drop in engagement from March to April. This drop is troubling. Both networks added 20+ games between late February and April and engagement drops. You would think it would be the opposite, that engagement would increase, as users spend time trying out the new games. But they spend less time, suggesting that either they got bored fast of the new games, or they didn't even try the new games. Which I think may have happened, since both networks operate as link exchanges that offer more presence to games that send them traffic. As a result, only games with significant traffic independent of the network got heavy placement on the gamebar. I doubt many small games got a significant boost in traffic from participation in either game network. Looking at three games on the Zynga network: Perfect Warrior, Downman, and PuzzleBee; none show any noticeable bump in growth during the last three months. In fact, PuzzleBee saw a slight decline.
I think that unless Zynga and SGN become much more generous in promoting small non-viral games, both networks will not see any boost in engagement.
The fact is, many of these small games are highly engaging, but lack virality. They need a network to promote them in order to succeed. The 1:1 economics of link exchanges will not solve this problem.
It appears for the moment, that game networks benefit the network, far more than they benefit the independent developers. I hope that will change.
My prediction is that we'll see growth plateau quickly for both game networks, topping out by July (barring acquisitions, and expansion into new markets which will mask their stagnation in the maturing Facebook market).
My other prediction is that we're going to see a lot more acquisitions designed to mask stagnant growth.
My other other prediction is that Texas Holdem Poker will dominates all social networks.