IndustryGamers has an interesting article from a product manager at Activision about what social gaming companies need to do in order to be successful. There are some good insights in there about how companies need to look past the raw numbers and learn why their players are playing.
The article is a good one, but it starts with the asinine quote that Denis Dyack spouted a while back about social gaming being a massive bubble that's going to crash hard. Yes, social gaming is the new big thing, and it's attracting lots of VC money, but there's one key difference between social gaming and other bubbles like the dot com crash of 2000. These companies are PROFITABLE. When VC's were throwing millions around in 1998-99, they were backing companies that had no real strategy for making money. Basically anyone who had a website could get funding. That's what led to the crash. When the VCs wanted to see some return, there wasn't any because these "businesses" weren't really businesses at all.
Social gaming is very different. It's based on a business model that works. Whether you call it Free to Play or Freemium, this business model is so successful, that numerous subscription model MMOs have made the switch. Lord of the Rings Online actually made more money after switching to the free to play model than it did before, and games like Free Realms and Wizard101 have been successful with this model since their inception.
After covering the social gaming space for more than a year, I know that the majority of these companies are turning a profit, and they're growing because their profits are growing. Are there some foolish VCs jumping on the bandwagon backing companies that don't deserve it? Sure. Will every company that makes a Facebook game survive? No. But that's no different than the rest of the gaming industry. Some developers and publishers are successful; some aren't.
Dyack calling this industry a bubble represents to me a trend I'm seeing in a lot of old-school gaming industry folks. They don't understand social gaming, therefore they bad-mouth it. Quite frankly, I think a lot of these folks are practically shitting their pants because they can't turn the same sort of profit margins as the big social gaming companies.
Old-school developers need to wake up and start figuring out ways to use social to make their games better rather than dismissing it and ignoring it. I think the industry is primed for some major shifts in the next few years, and social is driving them. Those who don't pay attention will become extinct.
1 comments:
Great points, and I totally agree.
Even Valve got the message, and made TF2 free to play! The Free to play style makes the point of entry opened to everyone, and by getting that first hit, you can rope gamers into buying more things, such as map packs, upgrades etc.
Also, there are gamers who pay monthly fees for online gaming, MMOs, etc. These same types of gamers are the type who will pay for these extra features. Starting them out free just sweetens the deal, and makes it more assessable to a wider expanse of people.
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