The social gaming networks
There was a feeling of uneasiness in the room at last month's Social Gaming Summit in San Francisco. The realisation that viral growth on Facebook was quickly losing momentum had many worried. Some whispered that the platform's recent push to make developers invest their own money into the marketing of applications was making things worse for the development community; others said developers were too dependent on Facebook to be able to be profitable anywhere else. Many saw the recent and public feud between Facebook and its biggest social gaming partner, Zynga, as a precursor of things to come. Altogether, things weren't looking up for social games.
In October 2009, Facebook shocked its social game developers by announcing the introduction of its own virtual currency--Facebook Credits, to be used in social games and other site applications. The move made perfect sense: instead of hundreds of different microtransaction currencies floating around for every social game on Facebook, users would be able to use just one currency to buy in-game items and virtual goods across all applications. But there was a catch: Facebook would take a 30 percent cut of all in-game purchases. While this angered many developers, few could do anything about it because developing for Facebook still remained the most profitable and simplest business solution. Only one developer was large enough to take Facebook head-on.
Just weeks after the announcement, Zynga launched FarmVille.com on its own site--undoubtedly a bid to loosen its dependence on Facebook and draw users away from the platform. So began a highly publicized feud between the developer and Facebook, culminating in months of unsubstantiated accusations from both sides. Finally, in May 2010, Zynga announced its plans to completely break away from Facebook by starting Zynga Live, a social gaming network where it could independently host all of its titles. But the act of defiance didn't last long: just weeks later Zynga agreed to sign a five-year deal with Facebook, allowing the platform to take a 30 percent cut of its credit purchases.
Whether Zynga Live will ever surface is uncertain, and even immaterial. Developers, backed into a corner by Facebook policy and discouraged by a viral slackening of pace are already looking for a way out. And Zynga may have unwillingly provided one: dedicated social gaming networks.
Until recently, social gaming networks did not enjoy much popularity outside concentrated demographics of the market. Asking an average citizen what NeoPets are wouldn't have produced much of a response outside the 14-year-old-girl crowd, while more than one person would have scoffed at the idea of spending hours building a virtual farm. But the social gaming boom has done a lot to change this, boosting user numbers in social gaming networks and drawing in record crowds of aspiring social game developers. If Facebook as a gaming platform is in decline, is it possible social games will move into their own, segregated online space? And will this shift see social titles having less impact in the future of video game development?
Gaia Online, an amalgam of social community and social game, is widely credited as the first to use the microtransaction model that makes up the basis of social games. The site was founded in 2004 by a group of US-based comic book artists who wanted to create an online space for users interested in anime, role-playing, and video games. It grew organically in the months following, until its founders realised that the costs and resources needed to run an online community out of a shared apartment was not something they could do alone. Seeking the help of its users, Gaia placed a "donate" button on the front page, offering those who donated a small virtual golden halo as a thank you. Just 12 hours later, donations began pouring in; 24 hours later they had tripled in number.
Gaia now attracts 9 million unique visitors per month, with time spent per user per visit higher than any other social network. The site's user base is largely North American, made up of 60 percent females in the 13- to 25-year-old bracket. The core experience is connecting users to one another through a virtual avatar--users can earn virtual gold to personalise their avatar by participating in site activities such as playing social games, participating in forums, uploading art, poetry, and fiction, or by joining a virtual club. Users can also buy virtual items, ranging from US$0.50 to US$10. Gaia CEO Craig Sherman says the site has grown 10 times its growth in traffic in the last four years, making over a million dollars a month in revenue sales.
"The industry is broken into two camps: companies that have succeeded with their own branded destination website (like Gaia) and companies that have succeed by leveraging the Facebook platform," Sherman says. "But in the last year a shakeout has happened in both these categories."
Sherman believes the social gaming boom has instigated a survival-of-the-fittest scenario in both camps, a kind of Darwinian race where everyone begins at the same time, but only a few make it to the finish. While Zynga's domination on Facebook has turned other game developers away, in the dedicated social gaming space sites like Gaia, Club Penguin, Habbo, and Second Life have prospered while others have fallen behind.
"A new breed of games has emerged where social emphasis is worth more than gameplay mechanics. We actually don't see the other camp as competition--we see them as complementary in driving more traffic to social gaming in general. The secret is recognising that there is a new category that is occupying a large part of consumers' free time. A larger portion of humanity is now spending more of their leisure time playing games than they were before, so naturally this is going to keep growing at the expense of older forms of media like books, magazines, and TV."
The social gaming boom has also had an effect on social utility networks like Hi5. Founded in 2003, the Hi5 network--whose operation interface is similar to that of Facebook--found early success as one of the few social networks to be translated into 50 languages and localised throughout parts of the world. The network is popular in parts of Europe, Asia, and Mexico, with some 270 million registered users. Four months ago, the company brought on board new president and CTO Alex St John, whose job will be to transform the network into a completely dedicated social games and entertainment platform.
"One of the early insights we had was that because of that international purview, we saw a lot of sites in Asia that had success with virtual goods," St John says. "Games were the runaway success, so that's why we wanted to reorient towards social gaming."
To do this, Hi5 has launched a dedicated games portal complete with virtual currency and animated avatars; its future plans are to make major investments in new game content and a new developer program that will see an influx of new IP to the site.
"We're looking for startup developers that need a home. Almost all developers making games for Facebook feel that the window has closed, so we'd like to take them on. Everybody wants to play, wants to interact, and light games and heavy games all fall into the spectrum of people playing with each other. From that point of view, social networks are a compelling entertainment medium to almost everybody. We want to reach a younger demographic that has grown tired of console gaming."
St John believes future social games will look and feel much like the MMOs. He also believes traditional console gaming is dying and will be replaced by online games.
"You won't see an Xbox 720 or a PlayStation 4 in this lifetime," he says. "But you won't see a takeover by social games either, at least not in their current form. Social games right now are parasitic. They're viral, thin games that lose their value very quickly. Zynga only became popular because the US government cracked down on off-shore poker companies, which drove a lot of players to the Facebook application. FarmVille is a giant spamming machine."
St John has a point. In the days of arcade games, consumers were used to paying for gameplay in direct proportion to how much they wanted to play--a dollar for two games, four dollars for five games, and so on. This ensured no one ever paid for what they didn't like. Consoles turned this model on its head, making consumers pay a lot more for content whose worth was decided by game publishers. This is why St John believes social games have become so popular.
"Television sets were once very rare, so if you wanted to play a game like Zelda you had to gather your four friends around the one screen in someone's living room. Nowadays screens are everywhere. Everyone has one. But people still crave that social context of playing with your friends. The role of social networking is to satisfy this craving in a world where it's become so easy to lose touch. In the future, I think all gamers will want long-term, deep, and addictive gameplay experiences that are both social and online." Will social games change the future of the video game industry? Will we all be playing FarmVille someday, blissfully unaware of our gaming past? Or will these titles naturally evolve and grow into their own online community? Let us know by leaving your comments below!
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