Thursday, September 23, 2010

The social games sky is falling! The social games sky is falling!

Have you seen any "social gaming is doomed" articles recently? I have. How typical, a new market appears, everyone loves it, then everyone hates it, then it becomes... a market.

The typical social games sky is falling article comes from a market outsider. Often this person was (or still is) in the download games business. They have a huge interest in convincing themselves, as well as you, that social gaming will soon die off and we can all get back to playing regular online games.

One argument you see, increasingly, is that Facebook (come on now, we all say "social games" but we're really talking about Facebook, as it is by far the market-dominating social games platform) has changed its policies around viral messaging, which undermines the advantage of social games. Without that they will have to compete with all other online games in a level playing field. Since the regular online games market is filled with awesome real games, social games are doomed to fail.

Hmm... let me explain why that's totally wrong: this competition, social games vs other online games, doesn't actually exist. People play games on social networks because they are already on that social network checking up on their friends. While there, they get exposed to a game and can get hooked on it. How do people get into other online games? They see an ad on a website that they otherwise frequent and try out a game that looks appealing. Sometimes they get hooked on it.

Once they have played (and bought) one download game you need to keep that customer, and to do this aggregator websites - Pogo.com, for example - were created. Have you noticed that Facebook has some applications that are aggregators for pre-existing download games? That's very typical of download businesses that are trying to move into social games.

The cross-advertising bar at the top of the game (or just above the game) is an equivalent method that fits the platform much better. These bars advertise other social games made by the same developer, or increasingly, that have deals with the same publisher. 

The need to drive customers from one game to the next exists because players exhaust the content of one game and you'll lose them unless they see another game they want to play. This is very typical of hidden object games (the most recent downloadable game fad). This issue of content exhaustion does not apply equally to all games. Bejeweled and its ilk are so strong because they have infinite repeat content. Many of the most successful social network games have infinite content or provide an endless stream of content. Farmville / Frontierville have little maintenance tasks never end. On top of this they gush content out every week. The constant flow of new things keeps players from "finishing" the game and needing to find a new game. You should be thinking of social games as a service, not as a one-and-done. We're getting a little off track here, but I'll come back to this another day.

Back to the issue at hand: the death of social games. The social games scene is seeing a lot of consolidation, typical of new markets that have shifted from the explosive growth stage to the "show me the money" stage. I bet a lot of these companies have a lot of users for their games, but aren't making any money. They sell themselves on the information that is public ("we have 5 million players") and pocket the sale fee while the new owner tries to figure out where the profits are going to come from. This happens in all fields, right? Social games aren't dying, they're going through very standard life stages for any market. Perhaps they are going through them more rapidly than others have, but that's no reason to go all Chicken Little on us.

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