As a follow up to my post on Friday (Social Game Opportunities in Africa), here’s a link to great piece on TechCrunch about how most Africans will have Smartphones within five years.
Social game opportunities in Africa
This is a topic I did not expect to be writing about but a recent article in The Economist got me thinking about opportunities for social game companies in Africa. To be perfectly open, this is not a region I have focused on professionally since the late 1980s and I have no first-hand experience with monetization opportunities there. That said, I am going to be exploring the region further and think it may hold potential.
Here are the reasons I am giving Africa a look and ones you may want to consider:
Creating a powerful pricing strategy for social games
I recently read an article on pricing in the Harvard Business Review, “Pricing to Create Shared Value,” that has direct implications on monetization strategy in the social gaming space. It is so counter to the current strategy of so many social game companies, I am sure many of you will either disregard it or just think I am wrong. Before you do, keep in mind the underlying article was written by star professors from Harvard Business School (John T. Gourville) and the London School of Business (Marco Bertini), based on years of research, so maybe the 20-something monetization whiz in the Bay Area does not know it all.
Continue reading “Creating a powerful pricing strategy for social games”
What to learn from Rovio
I read a great interview on CNN.com with Rovio’s VP Bus Dev, Ville Heijari. Rather than repeat the interview, I strongly recommend you read it yourself.
My big takeaways from it were:
- Rovio started in 2003 and did not have a success until Angry Birds (2009). Before Angry Birds launched, they had to cut their staff from 55-60 to 12. If Angry Birds was not successful, they would have had to decide whether or not to continue operating.
- Until Angry Birds, Rovio normally spent 3-4 months on a mobile title. Angry Birds took about eight months because of additional iterations and polishing (including adding the catapult).
- What the above two points combined say to me is that if they did not spend the additional time on polish, Rovio would not exist today, let alone be worth over $1 billion.
- Rovio is now moving into publishing, having licensed a game called Amazing Alex. It is consistent with Zynga’s strategy to add third party publishing, thus increasing the value of their player base.
- Rovio sees itself as an entertainment company, not a game studio.
Overall, I found the article a very useful insight into one of the key players in the mobile game space.
How a social game company should create competitive advantage
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.
Continue reading “How a social game company should create competitive advantage”
Planning for a Euro breakdown
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 “Planning for a Euro breakdown”
Takeaways from the Social Gaming Summit
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 “Takeaways from the Social Gaming Summit”
My thoughts on Facebook’s valuation
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 “My thoughts on Facebook’s valuation”
Zynga’s stock value decline
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.
Social Game Marketing presentation for SGS
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.
Continue reading “Social Game Marketing presentation for SGS”
The Business of Social Games and Casino 