Social Gaming Q&A

Discussion in 'Indie Business' started by synapse, May 10, 2010.

  1. synapse

    synapse New Member

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    1) Zynga has threatened to leave Facebook in two weeks and start their own platform due to Facebook's crushing of the viral channels and complete neglect of the App Platform. What does this mean for smaller developers?

    2) Virality seems to be mostly dead (meaning a k-factor glass-ceilinged at around .5 in almost all cases). What does this mean for small developers?

    3) Just what exactly is a good ARPU?

    4) Facebook's ad network has claimed that CPMs will receive less clicks and CPCs will soon receive more. What does this mean for user acquisition?

    5) Will Facebook enforce credits on all apps, ensuring a 30% cut across the board?

    6) Combining a possibly increasing cost of ad-based user acquisition and a lowering of virality and a lowered margin from Facebook credits, what exactly is in store for a small developer do?

    7) The world is ending, and developing $3.99 downloadable games is the best business model?
     
  2. Jack Norton

    Indie Author

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    Don't know, I usually develop $19.99 and above downloadable games ;)
    Your news don't surprise me. You want to do FB games? Play by their rules. You think they would have been your friends? It's a business, and like Apple, they can change the rules from a day to the other.
    I think FB/social games will be still profitable for a while before the bubble pops though, you're being a bit overdramatic IMHO.
     
  3. Applewood

    Moderator Original Member Indie Author

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    Total agreement.

    Once again there will be a flood of "indies" moaning that a 3rd party is affecting their business model. Bizarre.
     
  4. PoV

    PoV
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    Maybe Farm Town will get its customers back. :p
     
  5. Qitsune

    Qitsune New Member

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    Well I sure would be happy if Zynga left Facebook. I'm sick of their dodgy tricks to circumvent my hiding them (like creating loads and loads of tiny standalone apps that I have to hide individually, like the f**king purple alien cow.) If I hide Farmville, I don't want to hear about alien cows either. Dodgy devs are to blame for Facebook putting limits on them imho.
     
    #5 Qitsune, May 10, 2010
    Last edited: May 10, 2010
  6. WoopK

    WoopK New Member

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    Facebook are doing you the favour by delivering a great platform for publicising your app and gaining players/customers. Companies might not like them changing the rules from time to time, but that's what happens when you use someone elses platform as the foundations for your business.

    If a Facebook developer wants to remain successful, just make a truly social game that rewards friends more than most of the current ones do. At least you'll maintain your viral growth.
     
  7. synapse

    synapse New Member

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    Well, #7 was a joke :p

    My post isn't a complaint at all. It's still a massively huge opportunity - it's just that things are changing a lot. I'm mostly curious how other Facebook developers are navigating the changes (assuming there are other Facebook developers here.)
     
  8. James C. Smith

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    Did this actually happen or is this just speculation? The only reference I can find to this is in the "Zynga Gunning Up" article on Techcrunch and they don't provide any source. Is there any public announcement that Facebook is FORCING the FB Credits on developers and disallowing other payment methods? Is there are least a confirmed rumor about this? I just see it mentioned in passing as part of a bigger problem (like #5 on this list) but not talked about directly anywhere.

    I guess here you are speculating about what could happen. That's fair. But that Techcrunch article bugs me because it makes it sound like it has already happened and provides no links to anything real.
     
  9. zoombapup

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    Daniel James from three rings talked about this a bit in his talk at GDC. He thought that FB credits would become required this year. He suggested that FB creds would definitely put a crimp on the bigger social game companies like zynga who are used to around 60% margin who will see that fall substantially.

    The bigger issue is that FB are in a bit of a hard place here. Zynga drives an awful of lot traffic for FB. I cant see Zynga leaving the platform, but I'm sure its giving FB headaches.

    I personally think FB creds are a brilliant idea, in that its a very large player starting to do payment systems that are ubiquitous and accept micro-transaction style amounts. I think it takes someone like FB or google to really pull that kind of "pay anywhere" system together and if it works, will mean FB becomes the defacto payment system. Which in turn means that anyone who is either doing games on facebook or has built itself to work with facebook connect will be able to monetize itself that way. I guess it depends what kind of cut they want for the pleasure.

    There's still a fair bit of life left in this platform I think.
     
  10. KNau

    Original Member

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    Haven't we done this dance before?
    1. A new market opens up; it's the wild west, you hear claims that everyone is getting rich.
    2. Development leaders quickly form and dominate mindshare. If you don't make the top 10 list, you make no money. The stories of indie riches don't survive real-world scrutiny.
    3. The owner of the market wants a piece of the action and starts squeezing developers.
    4. The shine fades and it becomes just another steaming crap pile where the developers receive a microscopic fraction of the revenue they generate.
    We are just between stages 2 and 3 on this particular goldrush but it's inevitable that social gaming will eventually reach stage 4. We have yet to experience a boom that didn't go this way and the time from "new market" to "steaming pile" is getting shorter with each one.
     
  11. andrew

    andrew New Member

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    Can Zynga really pull out? Are they really going to be able to migrate 70 million Farmville players to a new game-only social network? Wouldn't other developers just jump in to to fill the slots that Zynga abandoned?

    Is 30% really that bad of a cut to use the platform?

    XBLA: 30% to MSFT
    Steam: 40% to Valve
    App Store: 30% to Apple

    - andrew
     
  12. synapse

    synapse New Member

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    You're actually totally wrong on that regard. Lots, and lots, and lots of money has been made by indies. It also has a much more linear relationship to number of users, rather than an rapid dropoff after the top 10 or top 100. This is why Facebook gaming is, has, and will remain to be a much better business model than portal systems like most downloadable games, regardless of the issues I brought up.
     
  13. zoombapup

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    I think the advantage of the FB platform for games, is that there is a small ecosystem of people who evangelize your game. The difference here is that FB makes it easier for them to do that evangelizing. Normally they might write a blog post and someone might read it if you're lucky. But with FB, they can literally accept a prompt from you to let their friends know.

    Of course FB changed the rules to rule out a lot of the crappy spam stuff that Zynga were doing, but theyre sleazy anyway so I doubt thats a bad thing for users. It will just mean you need to do more marketing within the FB ecosystem which should at least be targetted (the main change is that FB are monetizing the ads that you'll need to use to promote your game).

    Tis interesting to see though.
     
  14. synapse

    synapse New Member

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    Nobody is answering specific questions, just giving their opinion on the industry in general. I don't give a shit about that >.< Are there no other FB developers out there? tolik?!
     
  15. Nexic

    Indie Author

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    Plenty of guys developing games for FB right now, but not many who have actually done it.
     
  16. zoombapup

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    You definitely could have worded that better. If you dont give a shit about someone's opinion, why even solicit it?

    1) Zynga has threatened to leave Facebook in two weeks and start their own platform due to Facebook's crushing of the viral channels and complete neglect of the App Platform. What does this mean for smaller developers?

    Who gives a shit? Doesn't matter what someone else does right?

    2) Virality seems to be mostly dead (meaning a k-factor glass-ceilinged at around .5 in almost all cases). What does this mean for small developers?

    It means you will have to actually market and not expect it to be done for you (which I'm assuming was FB's goal to drive revenues to FB ads).

    3) Just what exactly is a good ARPU?

    Check out Daniel James's talk from GDC, he's got a blog at "thefloggingwillcontinue" with his slides I believe.

    4) Facebook's ad network has claimed that CPMs will receive less clicks and CPCs will soon receive more. What does this mean for user acquisition?

    No idea

    5) Will Facebook enforce credits on all apps, ensuring a 30% cut across the board?

    Ask facebook

    6) Combining a possibly increasing cost of ad-based user acquisition and a lowering of virality and a lowered margin from Facebook credits, what exactly is in store for a small developer do?

    Market better?

    7) The world is ending, and developing $3.99 downloadable games is the best business model?

    Sure is!

    Seriously though, only time will tell for some of this. The better question is what will YOU do differently? I doubt anyone knows the actual answer to the FB changes until theyve gathered metrics on its effect.

    You might even want to ping Daniel himself for his take on this. If he hasnt already done a blog on it (they have multiple facebook games btw).
     
  17. Morgan Ramsay

    Morgan Ramsay New Member

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    Zynga to depart Facebook? Google to leave China? Comic-Con to relocate from San Diego? Each of these large firms has a great deal of bargaining power.

    • For Comic-Con, use of its bargaining power means leveraging an expansion of the San Diego Convention Center that will cost $753M.
    • For Google, use of its bargaining power means leveraging shifts in national policy that favor the company.
    • For Zynga, use of its bargaining power means leveraging a reduction or freezing of the 30% share of credits transactions that Facebook receives.
     
    #17 Morgan Ramsay, May 11, 2010
    Last edited: May 11, 2010
  18. tolik

    Original Member

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    Sorry it took so long, I'm currently travelling.

    Highly doubt that, this should be a trick to force Facebook to improve their virality ASAP and improve payment solution terms as well.
    If they'll decide to leave. Well, great. They'll bring the trust back to external game sites and will teach people to use Facebook Connect.

    Virality is crucial for new apps, however all the major players have millions of DAU, so it's easy for them to move traffic from here to there and expand their audience with new games.
    Meanwhile retention is more important and Games Dashboard sucks really much. Not only they've killed virality by disabling one-liners, notifications and other instant chat notifications that players were waiting for (when will this guy send me a gift?), but a stupid idea that a person should basically re-LIKE versus bookmark & fan and only then you could set personal messages and increase dashboard counters... This is bogus. Their dashboard is as weak sauce, as their app directory.

    Depending on your appetite and cost of operations. Major players grew enormous appetite and are paying for that (typical EA-Ubisoft style!).

    More traffic bought from rockyou and others or more reasonable prices everywhere.

    They will be obligatory, primary source. But NOT the only source (or FTC! as dozens of other companies depend on Facebook), other payment solutions will still work (and will be more efficient in various regions). Games will adopt by asking to cash in $5-$10-$20... into the game instead of paying per-item, as some of the lame games did now. Players will trust Facebook Credits and paying userbase will expand when Facebook will introduce more local payment options (e.g. instant wire transfers in europe).

    Make better, more engaging apps. Niche apps are welcome now.

    If you are in singapore or malaysia.
     
  19. synapse

    synapse New Member

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    Thanks for the responses, guys.

    The 'I don't care' was meant for the state of the industry in general terms, not the opinions you guys gave about it. Sorry to sound like a snarky little poop :D

    The Zynga separation would definitely affect everyone, in some ways, especially if this 'Zlive' rumor is true.

    What role do you think publishers will play in the months to come? Revshares are still way better than the traditional industry, and you can immediately reach a bigger userbase that way. However, you don't really 'own your users'. zoomba - since you're just getting started in the space, are you looking into publishers? What's your plan for user acquisition?
     
  20. zoombapup

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    I figure allowing someone else to get your users is very much a copout for social game devs. I'm planning on getting to know the whole "how to drive traffic from facebook ads" part of gamedev as well as just the technical stuff.

    From what Daniel said at GDC, the idea of niche games does seem to be relatively do-able on facebook because of the scale of its userbase. There were some interesting anecdotes about how they did testing of various concepts by measuring click through of test ads as a way of gathering metrics for initial user interest in a given concept (from which they saw a 5x difference between the worst concept and the best which was "Downtown" a social game they are now making).

    So the suggestion seems to be that niche CAN work, but of course saturation will be reached at some stage. I'm treating this more as an opportunity to experiment with online games with a platform I know has a feasible audience and a clear method of advertising and monetizing said audience (and measuring success from a hard data angle).

    To get back to your point about publishers. I honestly don't see what a publisher is offering me here? I mean I don't want to go with an aggregator in any form, I am happy making my own ads and monitoring their effectiveness. So unless I'm missing something, I can't see what they offer that is compelling?

    I'm happy that FB is doing the credits thing, hopefully it will become a standard payment method and we can finally start monetizing in a way that's not a complete pain. I'm not happy about the 30% take though, if it's a universal payment system then its far too steep. I do wonder if that will be the final take if the system is rolled out a lot broader though.

    I kind of expected google to do the payment thing to be honest (I dropped a booboo at GDC by talking to a guy who worked for FB about this over dinner :))

    Of course, I'll be happy to just get it shipped.
     

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