yaz b's List: social games

• At 99 cents a piece, the game has generated a steady income for Bolt Creative’s Dave Castelnuevo and freelance artist Allan Dye. They’ve made as much as $18,000 a day from it. And the two have figured out how to keep it generating revenue on a weekly basis, via updates to the game.

• Playfish has learned that games on social networks are completely different from games on portals. They’re an ongoing service, not a finished product that you ship and forget about, says Playfish co-founder and chief operating officer Sebastien deHalleux (right). They’re constantly revised by a team that sticks with the game long after it makes its debut.
• more than 37 million people are playing eight Playfish games on Facebook. There are about eight million daily active users. That’s a huge reach for a company that hasn’t even hit its two-year anniversary
• It explains why Playfish has raised $21 million. The company has 200 employees and is profitable, says deHalleux.
• On Facebook, it’s easy to upgrade a game with the latest fixes and improvements. The metrics on player behavior are available for the game developers to study and learn from. It’s easy, for instance, to find the point in a game where players are dropping out. The developers fix the problem and then work on the next place where players drop out.
• the users take control of distribution themselves on social networks. They do so by recommending games to their friends. Viral distribution becomes the No. 1 way that games are discovered. It’s so powerful that Playfish doesn’t spend any money on marketing.

• Facebook has grown to more than 250 million members. Every time a member looks at a Facebook page, it generates an ad that in turn generates revenue for Facebook.

   

  Hence, Facebook itself doesn’t have to take a big cut from the developers on its platform. Its ranking system and viral discovery means that the best games can rise to the top, so Facebook doesn’t worry that there are too many apps on its site. That allows it to accommodate lots of games
• . It handles the virality by word-of-mouth among friends, and it monetizes through models such as virtual goods.
• Facebook is thriving in part because it embraced the virtual goods models, where third-party companies such as PlaySpan supply the currency system so that goods in the game can be inventoried, tracked, exchanged, sold or cashed in. As this model kicked into high gear this year, it replaced the pure ad-driven models of the web or the try-before-you-buy model of casual downloadable games. On Facebook, virtual goods could generate $500 million in revenues this year, according to estimates in our past stories.
• “Virtual goods is a hot space,” said Andrew Schneider, president of Live Gamer, which just yesterday announced it was acquiring virtual goods provider N-Cash of South Korea.
• Chang says. If nightclubs hang a velvet rope outside and hire a bouncer, people start lining up. Inside, the nightclubs charge you more if you want table service with a bottle of wine. And if you want to get into the VIP area, you have to pay more. That’s how the motivation and monetization works in virtual goods transactions as well.
• There are other monetization schemes in place such as special offers from companies such as Super Rewards, Offerpal, Peanut Labs and others. But virtual goods, which had its origins in the Korean online game industry, is finally coming into its own in the U.S. with social games.

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• In little more than a year, more than 14,000 games have appeared on both the iPhone and Facebook platforms. It took many more years to get as many games on casual game web sites on the Internet.
• And in spite of the recession, the growth means that games are gaining on other forms of entertainment such as movies, TV and music. More than 63 percent of Americans now play games.
• “This has been one of the most transformative years in gaming,” said Anita Frazier, an analyst at market researcher NPD Group.
• The social networks are essentially coming in and stealing our customers,” said one casual game web site industry executive.
• raditional casual game companies who built their businesses over years are envious of newcomers like Zynga, Playdom, Playfish, Tapulous, Ngmoco and Social Gaming Network. These Young Turks are attracting investors, users, and revenues in record time despite the recession. The social game companies are in a burst of hiring, and their speakers drew the biggest crowds at the conference.
• Last year, Bart Decrem, chief executive of Tapulous, was hoping he could score a million customers in a year for his iPhone rhythm tapping game, Tap Tap Revenge. He got a million customers in 10 days and now has 15 million. In effect, the upstarts are crashing the party of the experienced casual game developers.
• Social games might hit a half billion in revenues this year. In 2007, before a price war began, casual games were an estimated $2.25 billion industry.

• Zynga, which rose to fame with a simple social poker game, now has more than 66 million monthly active users.

   

  “I’m envious of Zynga because they make it look so easy,” said the chief executive of a casual game studio that is closing its doors.
• The casual game makers discovered they could monetize the fans of casual games with the “try before you buy” model, where you played a game for a limited period and then paid $19.99 to unlock the game for an unlimited time.

• They ran comfortable businesses, creating a game in a few months with a few people at low expenses.

   

  They could fire and forget, meaning they could publish a game and move on to the next one.
• There are ways to monetize free games. Companies such as Mochi Media insert ads into casual web games built with Adobe Flash. But the ad revenues often generated hundreds of thousands of dollars for hit games, not millions, and the ad model has taken a hit in the recession. Flash games are viewed as a hobbyist market, even as their numbers have grown to more than 20,000.
• Life is easier for companies that are successfully combining gaming with social networks. This so-called Casual Games 2.0 phenomenon is creating a migration from the old guard casual to social casual games
• Zynga, whose Texas HoldEm poker game on Facebook has a monthly audience of 15 million players, is expanding as if there were no recession. The company makes revenue when players purchase poker chips. It is thus cashing in on a “virtual goods” business model in transactions that have become seamless on the Facebook platform
• Playdom, which is the leading social game company on MySpace, has 75 employees and is expanding to 200 in the next four months, if it meets its hiring plans, said John Pleasants, chief executive of the Mountain View, Calif.-based company. Pleasants himself left the No. 2 job at Electronic Arts to join Playdom. He happily threw a party at Casual Connect that became a standing-room only affair, packed with apparent job seekers from Casual 1.0.
• For those who want to be indie developers, the options are plentiful. We’ve told the stories of iPhone hits such as Pocket God, a No. 1 hit developed by a two-man company, Bolt Creative.
• Chang says that there has never been a better time to be an entrepreneur to create a “lifestyle business,” where you can quit your day job and make money as an indie game developer. If a one-person shop created a 99 cent game that hit No. 1 on the AppStore, that game could generate $50,000 a day in revenues while at the No. 1 slot.

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