I have been part of many discussions about the best way to build competitive advantage for a game company, and a recent article in the MIT Sloan Management Review has helped crystallize my thinking. The article, “Creating Value Through Business Model Innovation,” shows the benefits of focusing on creating competitive advantage through your business model rather than through product or branding. That is, it is more important to create a unique, sustainable and innovative business model than better games or unique branding. The article pointed to a survey by the Economist Intelligence Unit that found that a majority of business managers favored new business models over new products and services as a source of competitive advantage.
I recently read about Lloyd’s of London’s (no relation) contingency planning in case of a full Euro collapse and realized social game companies should be doing the same. There is a real possibility that by the end of June Greece will leave the Euro and bring back the drachma, I would peg this scenario at greater than 50 percent, but as I believe few of you have significant Greek exposure the greater risk is that a Greek withdrawal of the Euro either brings down the entire currency or forces other at-risk economies (Spain, Portugal, Italy and Ireland) also out of the Euro. If it happened, and economists peg the possibility at between 10 and 25 percent, it would happen quite quickly, possibly over a weekend, leaving game companies little time to react. Rather than reacting to what happens in Brussels and potentially losing key revenue for weeks, it is better to plan now. There are several key issues you should consider. Continue reading
A few takeaways from the Social Gaming Summit:
- Analytics are evolving. The most exciting trend I saw was how analytics are evolving. While most of the existing analytic packages are excellent at show past behavior, there are several products either recently released or scheduled for later this year that will really improve the effectiveness of social game companies. Some of these tools enable predictive modeling while others are targeted to better understanding consumer behavior, including segmentation and much more detailed analysis of the player lifecycle. These tools can have a great effect on profitability. Continue reading
This is going to be a short post as I am at the Social Gaming Summit, but I wanted to share my feeling on why Facebook’s stock has been under pressure since the IPO as it is obviously having an effect on the social gaming ecosystem. This post is not a deep financial analysis, I will leave that to the “geniuses” on Wall Street. Instead, it is a simple observation.
Facebook is currently valued at slightly over $70 billion, after the declines since its IPO. In 2011, Facebook generated $3.7 billion in net revenue and net income of about $1 billion. Conversely, Disney currently has a market cap of slightly more than $79 billion, after several advances this week. So they have very comparable valuations. Continue reading
If you haven’t seen the news, they had to halt trading today in Zynga’s share because of a very sharp decline. Given that there really has been no change in Zynga’s business, I would guess this is due to the secondary offering not sucking up enough demand for employee shares finding their way onto the market.
I am in the middle of preparing my presentation for the Social Gaming Summit next week in Berlin, and wanted to pass on the highlights. Back in November, I wrote about the need to move beyond performance marketing, and I do not see a reason to repeat myself here (or to cut and paste), but the overall theme was that as the cost of performance increased, social game companies needed to develop robust marketing strategies so they could acquire players at a reasonable cost. I went on to discuss why you should create a full launch plan to ensure a successful launch. So I repeated myself a little but now I will go into some of the new elements I will be discussing next week.
After last week’s post on the two countries I do not feel are worth the attention of social game companies , I received more emails than after any other post, with many asking what territories I felt positive about. I now know how the writers of 24 felt as people clamored to know what was going to happen next. So next week, I will post about the countries I think deserve your attention.
Just kidding! The countries that I am most optimistic about are Poland, Turkey and Colombia.
As most of you know, this blog started with a focus on helping social game companies increase their international business, largely reflecting my role at Disney/Playdom leading the EMEA/LATAM/Russia/India team. As my career has evolved, so has the blog, though my strongest passion remains international opportunities in social gaming. Thus, I am really happy to have a chance to blog about an international topic, two emerging market countries where recent developments suggest you should avoid or pull back.
I am going to be speaking at the TiE Carolinas Dinner: Are you serious or social? Gaming as you have never known before. The dinner is Thursday, 17 May in Raleigh, and I think it will be really interesting. If you are planning on attending let me know so we can chat.
One of the most telling statistics I have seen recently is that Zynga.com had 2.8 million MAU (monthly active users) in April, after a March launch. These numbers show that Zynga will not build a viable alternative to Facebook, and if Zynga cannot do it, then nobody can.