New boss, old boss?
The wild frontier of the Web for game and app distribution is rapidly looking a lot like the old landscape. The biggest challenge is distribution: the power to get your game in front of users. A lot of folks look to the centralized distribution available on things like the iPhone’s App Store or using Facebook’s apps infrastructure. But as noise rises, you need clout to get seen in the midst of an endless sea of apps.
And the answer to that? A powerful distribution network in the hands of an aggregator. In short, a company that has the funds to commission games and spend heavily to advertise them, to cross-promote them with their other titles (and get economies of scale on that marketing dollar), and to make their titles rise above the noise. In other words, a publisher. Take Zynga, for example:
“We do spend a lot of money on advertising when we want to, like when we launched Farmville,” Pincus said. “We spent a couple million dollars advertising it and we’re not shy about that.”
via Social Game Developers Spending Millions on Facebook Advertising.
That’s more in marketing alone than most apps have in development budget. Possibly more than their makers have in total funding.
What does this mean? Well, there’s still room for scrappy viral hits. But distribution clout is a huge huge factor. In effect, we’re just seeing the birth of new kinds of publishers, just as we saw the raw power of Miniclip and other portals to create hit titles in the browser space. Being viral and marketed is a powerful combo; get onto the first page of apps and it’s likely that network effects sustain you for a long time.
What’s more, the titles in the newly burgeoning “social game” space look an awful lot like the Tycoon genre of games, and are starting to get similarly complex. I would expect to see more genres of games jump over to these new distribution platforms, and bring bigger budgets with them.
Despite the long tail, the question remains open, I think, how much the new industry landscape ends up looking like the old. We’re a long way from the budgets for the titles being as high and causing the sort of pressures we see in the boxed game industry — but marketing budgets being this high can trigger some of the same effects. It won’t look exactly the same, but I bet over time we see more similarities than differences, including a much more hit-driven environment (the casual games market on the web is already well along on this path).
In that kind of world, the deepest pockets win, and the likeliest candidates there are the companies that have already established themselves in the new space, plus some from the old space who make the jump successfully (some via acquisition, some via learning).
The good news is that there’s no stranglehold on the “shelf space” by those with the distribution power. It’s not like the physical goods industry where you simply cannot get your box on the shelf. But the shelf space of top search results or listings on the apps page is finite, and the battle for those slots is now a multi-million dollar one.
17 Responses to “New boss, old boss?”
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Advertisers are already hitting the word of mouth spaces, and that will grow too, I think.
Running my own website has made me painfully aware that I’m just another face in the crowd. Any thoughts that beckon my inner urges to start development on a flash game are quickly stymied by this realization. I’m an invisible personality in a sea of noise that is the internet.
However, I never quite fully made the mental connection that web-games and app distribution is rapidly looking a lot like the old landscape. Which is a disarming revelation. Although the pros of digital distribution on the net are inviting, with its low barriers to entry, I still feel overcome with an disheartening reality that, in space, no one can hear you scream.
How is the web, from a publishing perspective, any different? Especially considering there is a lot more content and noise on the web than the old media landscape. Does this not outweigh the webs pros?
No, I don’t think so.
Some developers in social gaming are spending millions per month advertising, but many of those developers are selling what are in effect clone apps. Zynga, for example, have spoent heavily to get users in for FarmTown and continue to spend heavily to prop up users for Mafia Wars. However Farm Town, the app that Farm Ville looks a lot like ( 😉 ) has achieved the same level of users with no advertising at all.
The secret to any kind of viral distribution is, as Seth Godin would say, “Be Remarkable” which is exactly what Farm Town did. It’s also exactly what Playfish has done with each of its 8 games (although their new one, Country Town, is yet another farm game, which is a surprising disappointment from them).
Overall, most of the top social games (As seen in AppData) do not advertise and they still get millions of users. While it may appear with a veneer examination that some of the old practises of publishing are a success, I am not convinced that simply blasting the whole of Facebook with banner ads is really the most efficient way to acquire new users. It really does seem to be better to have spent good money on innovating your game to be remarkable and letting the users spread it versus doing it the old fashioned way.
Besides, there is evidence (Evony) that web users are starting to get mightily sick of seeing the same intrusive ads again and again. As social gaming grows up, it will learn that race-to-the-bottom and blanket coverage isn’t really a sound model. Successful game design is the most important thing.
As an addendum: The other thing to note is that succesful social games are, by and large, completely different from casual games. Some casual games have been ported into Facebook recently but most of them are not doing that well. Successful social games are mostly rpgs in one form or another (or Poker).
There’s things to be learned from the social model here: It does not have all the hallmarks of being a hit-driven business at all because the kinds of games and gameplay that it attracts is long-term engagement rather than short head thrills. Social distribution is all about the infinite niches effect, and that is something we are seeing all over the place.
I would be very hesitant in drawing the ‘social network is the new portal’ analogy because there are vast differences.
I am sympathetic to tadgh’d response. I think that the internet is different. That doesn’t mean that some of the same old problems won’t arise. In the final analysis the internet is more of an evolutionary surge than a profound revolution, at least for gaming. But that still means real differences.
One of the differences is the ability run around the noise or to create a foothold within it. I think the middle ground, or at least pockets of it, is more viable than ever before.
My impression is that the importance of traditional marketing and advertising is diminishing as people develop ever-more sophisticated filters (mental and technological) to block it. The clout that makes a real difference is having the contacts to get your game seen by bloggers, reviewers, and alpha players, and having a compelling enough design and execution that it captures their imagination and makes them want to review it not just once, but stick with it, follow development, participate in beta, dedicate web pages to it, and write tricks and tips features for months after launch.
You accomplish that with networking, but just as importantly with design basics like having a solid hook, plenty of diverse and quality content, a ruthless glee in smashing bugs, and some sweet eye candy (in the game, not in the ads). You don’t have to spend millions… you’ve just got to have a game that looks and plays like you did.
Not to dismiss the importance of distribution clout, but if the game is a pile, sinking millions into marketing just spreads around the stink.
Welcome to the real entertainment business.
“The fact of the matter is we are successful in selling good products and unsuccessful in selling poor ones. In the end, consumer satisfaction, or lack of it, is more powerful than all our tools and ingenuity put together. You know the story: we had the perfect dog food except for one thing – the dog wouldn’t eat it.” (source)
Is there data anywhere for:
1) The player growth rate for these games. How many players do they gain in the first month, and what is the growth rate after that?
2) How much money is spent per player.
Our industry is terribly about reporting financial information that would be helpful to the industry’s growth. Does anyone know these things or have some verifiable data anywhere?
For the growth, try
http://www.insidesocialgames.com/2009/08/03/the-top-25-facebook-games-for-august-2009/
for this month, and http://www.appdata.com/ in general.
Thanks Raph. Those are some great links.
I’ve held off commenting on this for a few days to get my thoughts together on the important points that Raph has brought up. The large games portals are changing the landscape in a way that not only makes the soil less fertile for independent developers, but also in a way that threatens the long tail that browser based MMOs have enjoyed in this space.
Developers of free to play games have to be careful with how aggressive they choose to be with monetization. Finding the right balance is important to retaining players as being too aggressive can increase the churn rate to the point where you just have a revolving door of short term players. The key point is this: Publishers and large game portals do not have the same interest in the long term success of a game as the developer does. As many new MMOs are released on a free to play, pay for stuff model, some publishers have become the self proclaimed experts on methods of generating higher RPU. As a game developer you are competing with the other games in that publisher’s inventory not on the basis of quality, but on the basis of revenue per user. If they are going to spend marketing dollars, they expect a return. They are going to “suggest” that you use more aggressive forms of monetization (like consumables), whether or not your player base will tolerate it. Their advice may not be in the best interest of your game.
As Raph said, there’s “an endless sea of apps” and publishers can switch anytime. Publishers are primarily interested in short term return, not long term player retention and that fact threatens the traditionaly long tail of browser based MMOs. Game portals need to maintain a constant flow of new games for retention. That’s not a formula for loyalty or partnership for any developer and it can be just a matter of time before you’re relegated to the back pages.
Some very good points above by Tadhg and Gene in particular. I’ve been scrutinizing a lot of the data about these games, and while there’s still a curve (no escaping Pareto, it seems 🙂 ), what I’m not seeing is a classic hit-driven industry like we see in box retail games where only about 5% of released games make significant revenue. For example,
– the top 200 games on Facebook (slightly more than are shown on appdata.com, as they don’t capture all the top games) have 100K MAU or more. This doesn’t include games that aren’t primarily on FB (e.g., Ikarium).
– the top social 50 games have 1,000,000 MAU or more.
– the top 5 have 10M MAU or more.
Now, the top 5 or 10 is where the monstrously big money is. But what that curve means is that even if your game is relatively obscure, you can make enough on one in the top 200 to run a small team full-time (and looking at those games in the 100+ range, the competition isn’t too stiff as yet). ARPU numbers vary from about $0.30 to $1.40/month based on a number of factors, so say ~$0.50 ARPU * 100K MAU = ~$50K revenue per month. That’s a huge difference over existing models in retail, MMOG, or downloadable games.
Also significant is that the web –and even Facebook, which is the closest thing we have right now to a social games portal– isn’t like the Appstore or the retail shelf. Yes, there’s only so many entries on the search page, but most people don’t find hot new social games online primarily by search or by a top-25 list, or even by ads (absent carpetbombing like that from Evony); they find them by word-of-mouth, which knows no inventory limit.
Now, as has been said, that word of mouth depends on having a quality product, designed and developed to provide gameplay, encourage virality, and support careful monetization (a balance everyone is still learning about). If you do those things, you don’t need to pour millions into marketing.
Alternatively you can just make a we’re-still-okay-legally clone of another game and fight the old-style uphill marketing battle with ads, since you have nothing else to distinguish your game. Some dev/pubs with deep pockets will choose to go that way — it’s the conservative approach, the approach EA would use borrowed from the retail days. It’s not, IMO, a long-term sustainable approach, since you’re always fighting the market defensively rather than expanding your own portfolio offensively and gaining users that way.
Ah, but Mike, WOM has ALWAYS been the top marketing driver for titles, even in a shelf-based world. And even shelf-based games have had Amazon and other online retailers driving diversity for a long long time now. 200 is a bigger shelf, certainly, but it’s still finite.
I am not saying that we’re there at a hit-driven world today. I am saying that the pressures are driving us in that direction. We’re going to have a power law curve, the question is the slope. It may not be as steep as the one we used to have, but may still be plenty steep.
I agree with most of what’s been said, especially that although there are “top social apps” I don’t know anyone who uses those types of charts to find new games.
What attracts me to Facebook is that word of mouth becomes a lot easier for users. They just post a link to their profile (something nearly every Facebook user knows how to do) or click a button in your app to send an invite.
In the “old world” a user would have to open an email client, compose a message with a link (copy/paste can be a huge barrier to some people, we must remember), and then send it. That’s actually a lot of work compared to clicking one button in a list of friends!
And you’ve also got activity streams where players’ friends can see what they’re doing in your app. That is a form of indirect word of mouth that you can’t find anywhere else.
I have to believe there’s still hope for the little guys (because I’m one of ’em!), but undoubtedly the bigger fish are moving in. Look at Ubi’s move into Facebook. Big budget games on Facebook can’t be far behind.
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