I have been lucky enough to be invited to speak at the Social Gaming Summit in Berlin next month. If you are going to be at the show, please let me know if you would like to get together; I will be joined by our CRO and VP Operations.
Author: Lloyd Melnick
I am GM of Chumba at VGW, where I lead the Chumba Casino team. Previously, I was Director of StarsPlay, the social gaming vertical for the Stars Group. I was also Sr Dir at Zynga's social casino (including Hit It Rich! slots, Zynga Poker and our mobile games), where I led VIP CRM efforts and arranged licensing deals. I have been a central part of the senior management team (CCO, GM and CGO) at three exits (Merscom/Playdom, Playdom/Disney and Spooky Cool/Zynga) worth over $700 million.
Lessons from Moneyball for the social game industry
I finally watched Moneyball on DVD and it reminded me how applicable it was to the social game industry. I read the book when it was first published and immediately felt it was applicable to my company, Merscom, as a way for us to gain a competitive advantage despite not having raised as much VC as our competitors. We even asked all new hires to read it. Despite my affinity for Moneyball, I could not bring myself to see the movie as I assumed it would not do justice to the underlying concepts.
After seeing the movie, I realized even more that the lessons from Moneyball were directly applicable to the game industry. The scene where scouts sit around in a room and evaluating free agents was almost a carbon copy of many greenlight meetings I have sat through. In those meetings, arrogant game executives and creatives “pontificate” and yell until they decide what games to spend millions developing and marketing. They always argue that there many years of experience and intuition will lead to hits, and they generally end up with multiple failures for every hit.
One of my first takeaways from the movie was how important it is to overcome the old way of thinking in the game industry despite institutional resistance. The old timers are going to want to do things their way and are going to look down on making decisions via analytics. To succeed, you are going to need to push analytic solutions and potentially replace people who cannot accept this new way of doing things.
Another takeaway came from the Art Howe example, where Beane could not get Howe to make line-up decisions based on analytics so he ended up trading his starting first baseman (Carlos Pena) to force Howe to play the guy with a higher on-base percentage (Scott Hatteberg). The lesson here is that if you cannot get your organization to embrace analytics immediately, you may need to make other moves to prompt your team to take the right path.
A final lesson came from the epilogue, where the Boston Red Sox followed the A’s path in embracing analytics and ended up winning the World Series, while the A’s have largely floundered. Although not covered in the film, what largely happened in baseball is that as many team’s embraced analytics, then the A’s advantage over competitors evaporated. In the social game space, obviously most companies use analytics to improve a game’s performance, largely focusing on monetization, engagement and virality. I have argued in other blog posts how important it is to use analytics in all parts of your business, not just game development. I think the experiences in baseball show even more that the only way to sustain a competitive advantage through analytics is to expand their use into ways your competitors do not.
Recruiting, NCAAs and Building a Great Social Game Company
The championship game last night got me thinking about the similarities between building a title team and a great social game company. Although there seem to be a million books on how you can use lessons from sports in the business world, one topic that seems quite neglected is recruiting. Since I did not really care who won last night (thanks Lehigh), I took the opportunity to put together a few lessons we can learn from college recruiting to make our game companies stronger.
Do not underestimate the impact one person can have
One person can be the difference between success and failure, and that person does not necessarily have to be the high profile rock star. A good example from sports (going from the NCAA to the NBA) is Jeremy Lin (you knew I would get a Linsanity mention into this post). He turned the Knicks from a team that probably would not have made the playoffs into a team that had potential to do very interesting things (until he subsequently got injured). Just as a point guard can turn a basketball team around, a great BI analyst or Producer can have a huge impact on a social game company. They can be the difference between a game failing and a game being a runaway success (and for the impact one successful game has, please see Omgpop). Lesson: The lesson here is that you should treat all open positions (spots on your roster) as a potential game changer, make the effort to select great people for all positions and then do everything possible to bring them into the organization.
Recruiting can make up for many shortcomings
As Roy Williams has shown repeatedly, having great talent can make up for a lot of other weaknesses. Even if a coach is not great in creating a game plan or building a strong system, if they can bring in top talent they will at least usually be in the mix for a championship. Lesson: Even if it turns out there are holes in your business plan or executive team, bringing in great people can still lead to a success.
Avoid transfers, be honest
One of the things that most disrupts a team is having many players transfer to other schools. Losing players causes issues with team cohesiveness, planning and creating gameplans (as they leverage your talent) and cause coaches to spend large amounts of time to replace players rather than finding other pieces to the puzzle. Usually, players transfer because what they expected from the program (for example, starting or playing time) was not the reality. Other times, the style of play the coach implemented was not how the player wanted to develop their skills. Lesson: Be very open with candidates about what their role will be and what the environment is overall, so that when people start their expectations equal the reality. Also, measure and track how many new hires you lose in the first six months as a metric for how well you are setting expectations.
You are always recruiting
Although there are official recruiting periods, the great coaches are recruiting 365 days/year, 7 days/week, 24 hours/day. Recruiting is not limited to the official visits (the interviews) but should be looked at holistically. The top coaches have radio shows (Coach K is Sirius), they might coach the Olympic team, they may even appear on Letterman. All of this activity makes them top of mind when they or their assistants have the formal meeting (interview). Lesson: Do not limit your recruiting to interviewing candidates, a lot of a social game company’s executive time should be devoted to activity that will make your company more attractive to potential candidates and put you over the finish line if the interview goes well.
Everyone is recruiting
Coach K, Roy Williams, John Calipari are not the only touch points for recruits. All the coaches, current players, alumni are all involved in the recruiting process. It is not coincidence that Grant Hill and Jay Williams are back for big Duke games, they are big parts of the recruiting process and the reason the rich keep getting richer. Lesson: Everyone in your organization and tied to your organization should be part of your recruiting process. It is not an HR function or the responsibility of the hiring manager, a great social game company will engage all its people to help find and attract the best talent. And it is not only in the organization, but investors, Board members and other stakeholders need to be encouraged to be actively involved in recruitment.
You are always selling
Although the top basketball programs only have a limited number of scholarships available, they do not know who will end up committing, who may get injured and who might transfer. They are thus actively recruiting a large number of potential players until they have filled all of their slots and not rejecting players until they have to (unless they are not interested). Lesson: Until the final decision has been made on a candidate, you and your team should always be trying to convince him to join your company. The candidate should leave every interview excited about the opportunity.
Know the competition
Coaches are not recruiting in a vacuum. They will understand what other programs a player is considering and highlight the advantages of their program. Lesson: It is important to determine what other options your candidate is considering and explain to them the benefits you offer.
Now go out and WIN
Millennials Aren’t All Bad
Although I try to be metrics driven in all aspects of running fiveonenine games, I recently caught myself taking for fact some commonly held beliefs about millennials (people under 30) as employees. A recent article in Strategy + Business (Five Millennial Myths article)dispels the five key myths about millennials. Given the need for social game companies to hire the best talent (really the need for any good company, but this blog is not intended to save the world), having preconceptions about job candidates could severely negatively impact your business. In addition, companies often devote resources to engaging millennial workers, while they may not need engaging.
Myth: Millennials do not want to be told what to do
The basis for this belief is that millennials have always been told by their parents that everything they did was great, so they are difficult to manage. The reality is that the idea that millennials will not listen to authority is wrong. According to the article’s author’s (Jennifer Deal) research, millennials presently working are more willing to defer to authority than either Baby Boomers or Gen Xers.
Myth: Millennials lack organizational loyalty
Here, the perception is that those under 30 are not committed to their employer and will switch jobs for a small salary raise. The research shows that this perception is also incorrect, as millennials have the same level of organizational commitment as boomers and Gen Xers. The author believes that this misperception is largely caused by the fact that young people of every generation change jobs more frequently than older workers.
Myth: Millennials are not interested in their work
The idea behind this stereotype is that their lack of commitment to an organization is also shown by their lack of interest in their job. Deal’s research clearly refutes this belief, as millennials are just as intrinsically motivated as boomers and Gen Xers. The research did show that people lower in an organization are slightly less motivated by the content of their jobs than people at higher levels. Given millennials are under 30, they are often lower in the organization and thus those display less interest in their jobs.
Myth: Millennials are motivated by perks and high pay
This belief is that millennials are only interested in material rewards and organizations could never satisfy their desires. The research, however, shows no correlation between age and whether the person is motivated by salary and perks.
Myth: Millennials want more work-life balance
According to this conviction, millennials want to spend lots of time outside the office, whereas Baby Boomers and Gen Xers are workaholics. Guess what, this belief is somewhat true. Millennials are interested in work-life balance, but not much more than Gen Xers. The author believes that even this difference is caused by the different stages of life the people are at, rather than a shift among generations.
My takeaway
My biggest takeaway from this article is that hiring and HR needs to be as analytics driven as the rest of your company. When we start to use perceptions and anecdotes to make decisions rather than data, we often make bad decisions. If those decisions lead to creating a weaker team than you had to or wasting resources trying to “satisfy” already happy employees, it could seriously hamper your company’s ability to thrive.
What Zynga’s acquisition of Omgpop Means
I blogged several times about how Zynga’s IPO would affect the social game industry and now we have the first data point, Zynga’s $180 million (and potentially more) acquisition of DrawSomething’s developer, Omgpop.
Zynga has some cash
Although I am restating the obvious, Zynga is sitting on a ton of cash (they added with the offering $1 billion to ample cash reservoir). As most people have learned anecdotally, when you have a lot of cash in your wallet (or purse), you are more likely to spend it. Although Zynga was not exactly averse to acquisitions prior to its IPO, they are now willing and able to spend big bucks when they see a great opportunity. Given how much cash they still hold, Omgpop is likely not Zynga’s last major acquisition, providing a clear exit path to companies with something valuable.
Users are more valuable than talent
My second takeaway from the acquisition is that what is now valuable to Zynga, and thus also to the other major players, is users, not talent or competencies. What Zynga is spending almost $200 million on is Draw Something’s 10.8 million DAU (and the company’s reported 20 million DAU). Zynga can quite easily create a similar game for much less money so it is not the technology; while the size of the deal and the related size of the Omgpop team shows it is not a talent acquisition.
In previous posts I had mentioned how Zynga’s multiples would set a benchmark for how other social games are valued, unfortunately, you cannot draw a straight line valuation of your company based on this sale. The analogy I like to use is the Super Bowl. Ads during the Super Bowl selling at a much higher CPM than other TV ads because advertisers do not have any other opportunities to reach as many people at once. In this situation, Omgpop sold for more per DAU than a smaller company would because there are not many other opportunities to pick up as many DAU at one time.
UA is indeed the biggest issue facing social game companies
The biggest issue social game companies face, both on Facebook and mobile platforms, is user acquisition, which is why Zynga was willing to pay so much for Omgpop. If it was the good old days, Zynga could just use performance marketing (ads on a CPI or CPA basis) to acquire 10-20 million users and it would probably cost them a lot less than $200 million. For a large social game company, this deal shows how hard it is to get incremental users. Unless you have $200 million to spend, social game companies will need to approach marketing smartly and adopt robust marketing strategies to survive and thrive.
Perseverance often works
What seems overlooked in the Omgpop story is that the company is about six years old and has launched about 35 games (NY Times article about Omgpop’s struggles). In fact, the NY Times reported the company would of run out of money by this May if Draw Something was not a huge success. Omgpop is clearly not a one hit wonder, but a company that has persevered and not given up. It actually reminds me of another hugely successful mobile game developer, Rovia. Like Omgpop, Rovio launched over 30 games in a three year period before breaking through with Angry Birds. And I have to mention my previous company Merscom, which we founded in 1993, dealt with some tough times but eventually sold to Playdom in 2010. These examples show that you should not expect a home run on your first swing and not give up when things are harder than you expected.
The industry does not start and end in the Valley
When you are in the San Francisco area, there is an unspoken (well it is sometimes spoken) attitude that social gaming begins and ends there. They do not take companies from outside the region very seriously. Omgpop, however, was a New York company whose core team was not SF boys. If my math is right, three (Omgpop, Doubledown and Playfish) of the four largest acquisitions in the social space came from outside the Bay Area (with Playdom being the exception, not the rule).
Parting thoughts
My key takeaways from the acquisition of Omgpop by Zynga are
- M&A is not dead in the social game space
- Large acquirers are not interested in talent acquisitions but are looking at ways to continue growing
- User acquisition is becoming the central issue in the social space and will drive M&A. The companies with strong marketing will thrive
- The best companies are not necessarily great in the first 90 days
- The best companies are not necessarily in northern California
Thoughts from GDC
This is probably my twelfth or thirteenth GDC, so there is going to be little that surprises me anymore. That said, the shift to social over the last two years has been interesting and sharper than I expected. This year, there are some other interesting developments that I wanted to share.
There is great development talent in Col0mbia
Colombia seems like the next force in game development. For almost twenty years, I have been working with international game development teams either for contract work or licensing products and have found great talent in eastern Europe, the former Soviet Union, Brazil, etc. At GDC this year I was amazed that some of the best development teams are coming from Colombia, a territory that previously was not even on my radar. I met with multiple Colombian companies and they showed a great combination of technical competence, design flair and an understanding of the current market for social and mobile games. It is exciting to see this talent enter our space. Takeaway: Look at Colombia for development and art resources.
There will be a big consolidation and shakeout in the user acquisition space
I was amazed at how many different companies are playing in the mobile user acquisition space. There are ad networks, seller mediation levels, buyer mediation levels, agencies, traffic holders looking to monetize their users, social gaming networks, etc. It is also amusing that every single meeting begins with we will give you better users for lower CPI. I guess I was lucky not to schedule any meetings with companies offering bad users for more money. Comparing all these layers to the advertising industry in more mature industries it is clear there will need to be consolidation and a shake out. I expect to see vertical integration, where a few vendors offer complete services to ad buyers and to publishers monetizing their inventory and those companies that do not end up with one of these vertical roll-ups cannot survive. Takeaway: Be careful who you partner with as they may not be around when you most need them.
Overall, more companies need exits than will get them
There are a lot of social game companies, as well as ancillary support companies, that have received one or two rounds of financing but have little opportunity to raise another round. Many of these companies raised money two or three years ago and their investors are now more focused on an exit than injecting more growth capital. I came across a lot of companies “raising” a round and only one that just completed its raise. Takeaway: There is going to be an increasing emphasis on profitability, as companies will actually need to make more money than they spend to survive.
HTML5 is gaining traction
I was surprised at how many developers were pitching projects or development capabilities using HTML5. I am still not sold on it for immediate use, nobody was able to show me a great game developed in HTML5, but given all the development resources being thrown at HTML5 it is only a matter of time. It reminds me of the adage, which I believe was from Bill Gates, that people underestimate how long it will take for a technology to be adopted but also do not realize how wide spread that adaption will be once it happens. Takeaway: Carefully evaluate HTML5 opportunities for your development and be ready to leverage this platform when it is right for your games.
The publishing model is gaining traction in social
I blogged about it a few weeks ago (my post on the publishing model in the social space) and saw this week that the emergence of the publishing model in the social and mobile space is speeding up. A year ago, 6Waves on the social web side and Chillingo on the mobile side were really the only options available and most developers wanted to self-publish. At GDC this year, the ratio was probably reversed, with more than half the developers looking for a publishing partner (probably also tied to the lack of financing available). Takeaway: The social space is evolving to a model much like the traditional game space.
Thoughts from Mobile World Congress
I wanted to pass on my thoughts from my first Mobile World Congress. A few things this week particularly struck me.
The mobile sector is much larger than the game sector
As I mentioned, this is my first Mobile World Congress and I was expecting something comparable to E3 or GDC. What I got instead is a tradeshow an order of magnitude larger. Without looking at “official” numbers from either show (and I don’t much credence in those numbers), MWC is probably 2-5 times larger in terms of attendees and probably 10X larger in terms of floor space. This shows that mobile industry is huge (GSMA estimates a US$3.5 trillion mobile industry by 2020), dwarfing the game industry. Takeaway: The sheer size of the mobile space will make it a key, if not the key, future platform for social games (sorry Facebook and Google +).
The big buzz word is “cloud”
Cloud solutions are the greatest driver of buzz and activity in the mobile space. It was hard to go more than ten meters without seeing a service or product tied to the mobile cloud. It was by far the most talked about new “technology.” It was so prevalent I could swear I saw at the snack stand cloud donuts and coke cloud zero. Takeaway: Say cloud at least ten times during your next investor pitch.
The dead buzz phrase is “augmented reality”
While the cloud was everywhere, augmented reality generated virtually no interest. I think at the entire show, spanning eight halls, I saw at most three exhibits that even touched augmented reality. Takeaway: If you are seeking investment based on an augmented reality offering or building a product around it, pivot as soon as possible.
Microsoft and Nokia are giving Windows Mobile a fighting chance
I have always been a fan of Windows Mobile and love my Samsung Focus Flash, so I probably am a little biased but it is clear here that Microsoft and Nokia are throwing their substantial resources at making Windows a relevant mobile platform (and keeping Nokia a relevant handset manufacturer). Not only does Nokia have the largest exhibit at the show with presentation after presentation but you can’t go two feet without seeing a banner for a Windows Phone device. That said, almost everyone I talked to is dubious at best about the chances of Windows Phone becoming a relevant platform. I have not met a company yet making money on the platform. More importantly, Nokia’s decision to position its phone with a 41 megapixel (the Lumia 9000) at the forefront of its MWC publicity campaign shows a lack of understanding of the smartphone market. Virtually no consumer wants a phone with that powerful a camera, they want apps.Takeway: Keep Windows Phone on your radar but don’t bet the company on it.
Facebook is not the force in the mobile space
Given Facebook’s expected valuation and the fact it had two key executives speak at Mobile World Congress, I expected Facebook to be more top of mind and incorporated in other offerings. Instead, it was virtually non-existent. You can argue that since it did not exhibit here its presence was muted but Apple did not have an official presence and iOS was omnipresent. Takeaway: Do not assume Facebook will be as dominant in the mobile world as it is in the web world. For social game companies, you may need to find new ways to make your games social and generate virality.
The tablet market will become increasingly fragmented
The number of tablet offerings is exploding, with different features, sizes and form factors. Although none will probably come close to overtaking Apple individually, I expect they will continue to erode the iPad’s share. It reminds me of an interesting theme from Chris Anderson’s book The Long Tail, the big hit initially will never be replicated (while people always predict that if X sold 1 million units, the next X will sell two million) because there will be more niche offerings that have strong appeal to certain sectors. I have seen this in the game space repeatedly, with Bejeweled in the casual sector and Farmville in the social space (yes, I know Cityville had more DAU, but that was inflated by marketing and my guess is never approached Farmville’s profitability). Takeaway: If you are developing social games for tablets, at some point it is not going to make sense only to focus on the iPad despite the costs of optimizing for multiple devices and OSs.
The mobile industry is more global than the game industry
I am amazed at how international Mobile World Congress is, much more so than the traditional game industry. On a bus, I was chatting with someone from Gambia, and I have run into people from everywhere, including Nigeria, Egypt, Israel, Malaysia, New Zealand, UAE and scores of other countries. You might think this is because I am at a European show, but I have been to Gamescon (and previously Games Convention), Milia, Tokyo Game Show, ECTS, Casual Connect, etc., and none of these shows had the same breadth of nationalities; they usually were dominated by two or three markets. There is also buzz that the smartphone market will become increasingly important in emerging markets once there is a $50 product. Takeaway: While international markets have always been a great opportunity for social game companies (the original topic of this blog), it is even more important in the mobile social gaming space. Rather than potentially being 50% of your revenue, eventually I could see non-US revenue exceeding 75 percent.
How Social Game Companies Can Create Viral Video Ads
I have argued in this blog for months and at tradeshows that social game companies need to create robust marketing strategies (not simply rely on performance marketing) to survive and prosper. Today, I will talk about how you can create effective video ads (either for YouTube, television, or something in between). I was inspired to create this post by a recent Harvard Business Review article, The New Science of Viral Ads. In fact, this post largely summarizes that article and discusses how it could be applied to social game marketing.
Do not force your brand or product down the user’s throat
The first principle in creating ads that will go viral is not to make the branding or product name too prominent. Consumers are very sophisticated and this practice will turn them off immediately. Instead, subtly show your game, via screenshots or people playing it, repeatedly without the big logo popping up every five seconds.
Avoid boring viewers
Consumers have many alternatives, even when viewing ads, and can quickly get bored if the ad is not entertaining. To keep viewers, you need to introduce joy and surprise quickly; you need to generate at least one of these responses early on. What is also interesting about the research that points to the need to build quickly joy and surprise is that it is very similar to good social game design.
Users will watch for a while but then stop
A video ad that creates joy quickly and delivers it at the same pace have been shown to be ineffective at engaging consumers for long periods. Instead, an effective video ad will create an emotional roller coaster; ie. joy-no joy-joy again-no joy again-etc.
Even popular ads are often not viral
The HBR article showed that even ads that people liked are often not shared. Given that the goal of your video is probably is to persuade as many potential players as possible to try your game, virally spreading the ad is one of the most important means to achieving this goal. To increase your odds of going viral, the authors of the article suggest surprising the game players without shocking them (no naked videos of the CEO ).
Even perfectly done videos often are not viral
The final point that the authors of the article make is that only a small subset of perfectly tailored videos ever go viral. The way around this problem is to target the viewers who will share the video. The people who are most likely to share videos are ones who demonstrate extroversion and egocentricity. Obviously, you can just target your ads to those who are egocentric (at least I have not seen that checkbox on the Facebook Ads submission form) but you can be creative in finding these people. Twitter is a great resource to try to identify the appropriate targets. Even in Facebook, companies are placing ads on the pages of users who often post links.
Putting it together
If you follow the hints above while creating promotional videos, you are much more likely to build cost effective marketing for your games. You may not get it right the first time (you probably will not), but you will be building the skills needed to market your social games in the years ahead.
The Emergence of the Publishing Model in the Social Game Space
There has been a development recently in the social gaming ecosystem that has generated very little buzz but probably will have a major impact moving forward, the fact that two of the top social gaming companies are now publishing third party titles. In the last few weeks, Playdom licensed Triple Town from SpryFox to publish in English on Facebook (Playdom announcement). Even more significantly, last week Zynga announced it was publishing Slingo (Washington Post article on Zynga’s move).
These moves are significant because for the first three years of the Facebook game business, the only publishing option for developers who could not or did not want to self-publish on Facebook was 6 Waves (now 6 Waves/LOLApps). With Zynga and Playdom both moving into third party publishing (though for Playdom, it did try some publishing in 2010), and the way the social game business is almost defined by fast following, it is likely smaller developers will have multiple publishing options on Facebook.
The Risks and Downside of Soliciting a Publisher
Before you rush out the door and try to find a publisher, I wanted to highlight a few of the risks. First, there have been a few big stories lately about companies allegedly “borrowing” ideas from developers. A few weeks ago I blogged about 6 Waves/LOLApps allegedly copying Triple Town while in negotiations with Spry Fox (my blog post). Earlier this month, a federal district court refused to throw out the lawsuit from SocialApps against Zynga claiming Zynga used confidential information obtained while negotiating to license myFarm (Zynga/Social Apps article).
A second reason not to rush into a publishing relationship is the foregone revenue. In the social gaming space, I have seen many publishing deals pay the developer up to 50 percent of revenue, especially if no advance or guaranteed payment is involved. In the traditional core game space, the royalty back to the developer is usually in the 15% to 35% range (i.e, the developer gets paid 15 percent of the revenue its game generates). So you are looking at foregoing from half to more than three quarters of your revenue, which could be a huge cost if the game is a hit or even keep you from breaking even if the game is mediocre.
A third concern with using a publisher is how much mindshare and resources the publisher will devote to your game. When you are negotiating, they will tell you how much they love you and will treat it just like an internal title. That claim is worth about as much as a politician’s promise during an election campaign. Now the first few games a publisher licenses will probably get a lot of attention, as their publishing model matures you will be fighting for resources with all the third party titles (and not even be in the conversation compared to first party titles). If the game comes out of the gate strongly, they will probably continue to promote it. If the game, however, stumbles either in terms of monetization or overall adoption, you are likely dead. Once the publisher moves on to another game, they will not revisit yours regardless of the changes you make (despite what they say). In my experience, contractual marketing commitments have little value. Publishers will either ignore them or fudge the numbers. At the end of the day, if the game is not hot they do not worry about losing the rights.
Reasons to Consider Using a Publisher
Although there are some significant drawbacks to using a publisher, there are still several major reasons to consider this option. Most importantly, it costs a boatload of money to launch and market a social game. The major Facebook game publishers spend well over $3 million per month per top title just on Facebook ads (with some spending much more than that). Those companies that claim to generate most of their installs organically (cross promotion, virality and other free channels); well see my comment earlier about politicians during an election. You may be able to get traction and grow a game slowly and steadily without a huge marketing spend, but if you want to acquire users quickly (important if you are worried about being cloned), you need access to deep pockets. If you do not have the resources on hand, a publisher can be an appropriate choice.
A second reason is cross-promotion. The major social game companies have millions of monthly users that they can direct to a chosen title (in Zynga’s case, hundreds of millions). For a company launching its first title or one that does not have a large user base, the traffic a publisher can bring is a huge advantage.
A publisher can also give a developer expertise in does not have. Small developers, especially if they are on their first social title, may not have the understanding of monetization, analytics, game services (customer support) or marketing/user acquisition, which a proven publisher does. These competencies are often the difference between success and failure for a social game. Depending on the type of relationship you enter into, access to the publisher’s expertise could be more valuable than anything else they bring to the table (and may have a greater long-term benefit to your company, as you can then learn and leverage these skills on future titles).
When to Use a Publisher
Unfortunately, there is no clear cut rule as to when to use a publisher or when to self-publish. It is not just an issue of size, even some of the largest publishers license to other publishers outside their core markets. The thing you must do is look at the situation objectively and weight the benefits and costs.
You must also do your due diligence on the publisher so you can minimize those costs and risks. See how they have treated other developers. Understand how your product fits into their portfolio. Learn how they will market your game and what their key indicators are for continued support. Go past the first phone call and dig deep to understand exactly what they can and cannot do for you. Then, once you have made your decision, get behind it fully and do everything you can to succeed.
The Bot Controversy
It seems that the talk of the social gaming space is about Bots and using them to manipulate the iOS charts. It started with rumors that several companies were working with a “marketing” firm that actually just used bots to create fake downloads to move games up the free charts, to more rumors that this manipulation was being done by low-wage labor to even more rumors that it was Chinese slave labor. My guess is the truth is somewhere in between but what I find humorous is the high and mighty attitude some in the industry have taken. There may be some companies that knew what was going and decided not to partake, though why they did not report it to Apple or the press confounds me (and is bad business, as it put them at a competitive disadvantage). There are probably more companies that just did not know how to move up the charts in this manner. For the record, fiveonenine’s first iOS title will come out a few weeks so we do not have to make this “choice.”
What I actually find more interesting is that Apple did not stop this practice sooner. Given how widespread everyone in the industry knows it is and more importantly how even basic analysis of the traffic (i.e. tons of downloads with zero retention), Apple had to have known what was going on. Thus, they apparently decided not to stop it until the press made an issue of the manipulation. Furthermore, given how beautifully Amazon polices its customer ratings (they very diligent about eliminating fraudulent comments or those made by people even remotely tied to a product), Apple could stop the manipulation of its charts anytime it wants to.
All that said, what really matters to mobile social game companies is that this development reinforces the need to have a robust marketing strategy (and yes, insert here the trite comment that they just need to make good games that will naturally go high in the charts). Those companies (even if they are tiny) that relied on this “marketing tool” for their installs are now left dry, they need to find quickly a way to replace the installs generated by being artificially moved to the top of the charts. Companies, however, that have multiple marketing channels (performance marketing, web advertising, PR, social media marketing, etc.) can now just alter their marketing mix and maintain their business. This latest little controversy is just the most recent piece of evidence why it is necessary for social game companies to create full and robust marketing strategies for their games rather than rely on one tool.
The Business of Social Games and Casino 