[This post originally appeared on Adrian Crook’s Freetoplay.biz site.]
Panel:
- Mark Skaggs, VP of Product Development, Zynga
- Niren Hiro, CEO, Crowdstar
- Christa Quarles, CFO, Playdom
- Dean Takahashi (Moderator), Writer, VentureBeat
DEAN – Panel is about next-gen social games. We’re in a post-viral Facebook world. How do you see the landscape now?
Mark
- It’s opportunity. Before it was easy to have an app grow. Now is the point where skills are tested. Are you real or are you lucky?
CHRISTA
- Viral multiplier can’t get much lower. Facebook is strategically bringing back some of the best viral features of days gone by. We are cautiously optimistic on the viral front. We have to be smart about cross-promotion.
NIREN
- The burden is now on the games makers to make awesome games. Games that are exciting and foster more social interaction will end up winning.
DEAN – User numbers look like they’ve stabilized now. What do you think is critical to staying on top?
MARK
- Quality of games and is your connection with friends relevant?
CHRISTA
- Actual social content in the games so far has been really light. We are also trying to get more relevant with the social part. There is more time spent playing games than going to movie theatres. How do we compete for people’s time more broadly. How do we get audiences to come back.
NIREN
- We have to keep taking risks. As a large company, it’s easy to focus on copying. In this business, we have an idea at 7am, thow it up by noon and have data by end of day. We have to stay fast-paced.
DEAN – Seems like we’re in a big exit stage now. Lot of consolidation. What do you think of the different corp strategies out there?
CHRISTA
- We got acquired, so that explains our strategy. Disney was exciting because we gained access to their IP library. But you can still make a crappy game with good IP, so that’s just one part of the product. We just look at IP as a way to make the marketing spend more efficient. But it’s still incumbent on us to make the consumer want to come back after they’ve tried it once.
- The uncertainty of FB Credits was part of our reason to be acquired – could have been a rocky road.
NIREN
- Self-funded, never raised venture money. We’ve stayed small and focused and allowed us to make creative games fast. But as a company we are partner-friendly. We joined up on FB Credits earlier so that users would be more comfortable spending money on virtual goods. We’re pretty clear that we are here for the long term. If there is a partner that will put us on a faster path to growth, we’ll look at that.
- To be self-funded and get this big was high risk – reinvesting profits in talent and games. We’ve stayed focused, lean and mean, and there is a growth path we’re on on our own.
DEAN – What do you think when you see companies moving faster because they have money?
NIREN
- A partner that accelerates Crowdstar does not need to be a big media company. Could be a small studio that has great ideas. We’re very clear on what we’re good at and where we need to improve.
MARK
- Our strategy is “connect the world through games”. We look for whichever platforms and partners that will let us do that as fast as possible. You can see how our acquisitions fit into that strategy.
DEAN – Last 6 months for Zynga has been moving to new platforms.
MARK
- Dipping our toe into Japan. Picking up studios around the world. We need to be in more places to develop more games. More generally said, “Go where the players are”.
CHRISTA
- The next big fastest-growing social network in a lot of regions is still Facebook. In India and Brazil Facebook is passing Orkut. But we need to make sure the ROI in going into that country makes sense. Need to balance ARPU and conversion rates with cost of entry into that territory. One of our games that was big in Latin America had price points that were out of whack for the US – need to create dynamic pricing structures.
DEAN – What is a next gen social game to you? I thought Civ on FB would be it.
MARK
- Civ felt very hardcore to me. Like PC hardcore, which is not the FB audience. Women 35-50 love Farmville – that doesn’t match to Civ. I think about it as “what’s that fast light experience they can do for 5 minutes” – that’s how I target next gen social.
NIREN
- Games that require social interaction to play are the next gen. I don’t think there will be one giant leap in one direction. Will be baby steps. IT Girl is about taking text-based RPGs in a new direction. Interesting thing about this business is that the users are defining the next gen, unlike the core games biz where the platform owner dictates next gen.
- FB could be a billion users in the future. That means there will likely be a variety of 25-50M user niches, rather than one big next gen marekt
- The other place to look for next gen is Japan, Korea and China. Korea is way future forward on PC platform, Japan on phone. We put products in those markets to force us to think creatively. Keeps us future proof.
CHRISTA
- Not trivial to put social wrapper on a game. We’ve looked at traditional gaming concepts and bringing them into FB environment and it’s not a trivial thing. Figuring out a way to do that is not an easy thing to do. In City of Wonder you have a classic iso-decorator, but there is a PVP element in there. You can attack a neighboring land or you can do a trade with them or even a cultural exchange. So for women, a surprisingly large number of women play it despite this PVP side. We bought Acclaim – they have a light-weight MMO-type game. We’re still trying to understand how to engage core gamers on FB.
NIREN
- Gamers on FB are partly coming from casual portals and partly from consoles. So there will be different types and monetization levels. If you look at microtransactions on a per capita basis, we are nowhere near other territories – $7/capita China, $20/capita Japan. So there is many times more growth left in the US.
DEAN – Where do you look for what’s next?
MARK
- You know there are some established genres, sometimes ppl want a new style wrapped around it. We had some open field there where non-traditional gamers were looking for new experiences. Picking successes will be just as hard but there are more chances to experiment.
CHRISTA
- It is going to be iterative. Each new social game will layer on a new mechanic. Go back to boardgames – what are all the gaming mechanics when you distill them down to their essence. There aren’t that many. It’s about finding a concept, environment and art style that appeals to that user base. We’ve looked at segmentation a lot in City of Wonder.
NIREN
- Blend of recognizing user aspirations and being mindful of what worked before but making sure that the innovation pivots around the social aspect.
MARK
- At EA, our team would often look at what are the sections in the book store and apply those to games.
NIREN
- Location-based and mobile games are really the biggest area of innovation and we can look to markets like Japan for leadership on those. Eventually iPhone will come up to that level.
DEAN – FB has talked about FB Credits putting more energy in the system. What impact have you noticed?
CHRISTA
- 2-2.4% conversion rates would be awesome – 2-4% would be incredible. Card-on-file data definitely helps conversion rates. Hard to draw analogies with foreign markets… in Korea 10-15% payers may be misleading as they are more targeted users, where on FB we are broader. If a FB Credit card is everywhere on the planet, it will transform how many people pay. How smoothly we get there is the question. Is this e-commerce circa 1997? All these things may need to be solved again, but the long term possibility is exciting
NIREN
- It’s inevitable. We started with Credits last Christmas. If you went to Amazon and as you were checking out you were presented with 32 different payment options, you’d think twice. If we don’t pull these speed breakers out of the way it will hurt our ability to grow.
MARK
- Is it FB Credits creating that change or is that change already coming and they are the mechanism for it. iTunes used to be odd, now it’s not. As more generations get used to buying online, FB Credits is an easy way to get there.
Questions
What are the barriers you faced when implenting advertising in games? How much would you pay to acquire a user?
NIREN
- Biggest barrier is audience response. Some audiences don’t want to be bothered, some are OK. Repurposed ads do not work. Need to customize ad units.
CHRISTA
- Can’t sell ads in the traditional way. Need to come up with creative that is in line with game’s fiction. Don’t want to disturb the 2% who pay and impact retention for the sake of an ad.
MARK
- Advertisers need to be educated on the space. We haven’t pursued it as of yet.
As FB clamps down on viral channels, what is the approach? Going outside FB?
CHRISTA
- Advertising on Google and bringing people back to Facebook requires people to sign in, which causes a material decrease in conversion.
NIREN
- We fish where the fish are. Over time as FB’s tentacles go deeper into the net, the experience will be more seamless.
DEAN – Do you guys design for whales (big purchasers)
MARK
- We look at elder gameplay and designing for them… not necessarily who spends the most.
CHRISTA
- We look at that as well. Sorority Life we recently added new geographies and reset the economics so you can start those whales on another ladder.
NIREN
- Great news about the business is that you have the data. So you can optimize the experience for each segment. But you need the community as a whole to be engaged.
DEAN – Google rumoured to be moving into competition with FB. What scenario do you envision unfolding?
MARK
- Can’t comment on Google’s strategy.
CHRISTA
- Time spent on FB just surpassed Google. So that’s not lost on Google. It would be great to have different approaches to the social problem. Will be hard for Google as it’s not in their DNA the same way it is for FB.
NIREN
- If you’re winning on FB, you’re invited to the party when a new entrant sets up. So those dialogs are happening. As a growth company, it’s important to reserve a bit of your company for growth platforms and opportunities. We do that with Japan. We just have t make sure that if the community is viable, we should be there.
How young are your youngest spenders?
NIREN
- My 8 year old spends a lot on my account.
CHRISTA
- FB is 13 and over, so you can’t be too young. Are younger players are not as good at paying because they have to ask mom and dad, so figuring out alternatives like subscriptions and working with FB to allow that occur would be good.
DEAN – What do you see as the future of the social games market?
MARK
- Social game market will have more platforms. May be a shift away from going to one place for their social game experience. Mobile games will be big.
NIREN
- Best games will win. Mobile will be much more central and so will one or two markets outside of the US or Facebook.
