May 7, 2010

Social Gaming Summit: Playing the distribution game

Is viral the only economically feasible way to distribute a social game?

David SparkNo, answered a panel of four game developers and publishers at the Social Gaming Summit in San Francisco which should have been called the “Facebook” gaming summit. Every time someone mentioned “social” gaming, someone asked the question, “Are you being social anywhere else?” The answer was always no.

That’s because by using viral hooks, the cost to acquire a player through Facebook is essentially costless. You can still pay to acquire players through Facebook advertising. None of the panelists during the session “Lessons from Leaders – Distribution” admitted they did. Although they did say they were willing to try as many realized that the viral “honeymoon” of collecting players goes very quickly soon after launch. Once it starts to settle down you have to look at other options, like traditional marketing, to gather more players.

Over lunch, fellow game developers and publishers were very skeptical of the panelists’ claim that they only gathered players virally. Using Facebook advertising, the cost of gathering a top quality player for a social game, one who will spend money to play or purchase virtual assets, ranges from about $1 to $1.20. The industry blames social gaming powerhouse Zynga for driving up that cost which was far lower when Zynga was first gathering its players for games like Farmville and Mafia Wars.

The following people were on the social gaming distribution panel:

Ro Choy, PeerPong (moderator)
Keith Rabois, Slide
Jia Shen, RockYou
Rex Ng, 6waves
Kavin Steward, LOLapps

Here are some of the issues that came up in the discussion:

  • Viral needs to be baked into game development. When you have viral, it’s free user acquisition. That was repeated over and over.
  • Viral is only one aspect. You need to build in staying power because replacing users that are bored is not an exciting business to build.
  • Viral coefficient combined with staying power of a user is the most important statistic.
  • Game play is important. But you want to see how you can logically integrate viral and social into the game.
  • Most excited about Facebook “likes” as a powerful viral channel.
  • Viral is what plays into engagement. This is true for all players in the industry.
  • Many games are a lot more fun with more people. Usually there’s one person that goes out recruiting more to play the game to make it more fun for him and thus others.
  • To build a social gaming business, look at the revenue you want to produce, not the number of users you want. You can build a business by getting thousands if not millions of low value customers. For example, using Facebook advertising, you can acquire players in Indonesia for as little as eight cents each. The reason they’re so low is they don’t spend any money to play games or purchase virtual goods. If you wanted you could have tons of players for your game community, with no revenue coming in. Be wary of that if you’re looking to purchase a social gaming company. Look at players, the type of players, and average revenue per user (ARPU).
  • When you develop on another platform (in this case Facebook) your application is susceptible to the changes the other platform makes. Sometimes Facebook makes updates and it breaks the functionality of social games requiring developers to do last minute unexpected patches.
  • If you think the deals you have to make with Facebook are bad, try the Asian countries. They take far bigger revenue shares and they create lock-in. For example, in some agreements if you put your game on a competitor’s site, they can kick you off their social network.
  • Nobody is developing for or even thinking about OpenSocial because with 200 million daily active users, there are still many opportunities on Facebook.

For more coverage of the Social Gaming Summit:

Photo credit: kgregson / CC BY-NC 2.0.

David Spark, a partner in Socialmedia.biz, helps businesses grow by developing thought leadership through storytelling and covering live events. Contact David by email, follow him on Twitter and Google Plus or leave a comment below.