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”
Tag: social games
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”
And the markets where I am optimistic
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.
A couple countries to avoid
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.
Kindle Fire may not be a great alternative
I have been a huge advocate of developing social games for the Kindle Fire since it launched last year, but the most recent sales data has me thinking twice.
Given the numbers, coupled with Microsoft’s Nook investment and the interesting new tablets coming from Samsung, it probably makes sense to look at the Android tablet market overall rather than just focusing on the Fire.
The most important secret in monetization
There are many conversations, articles and even books on how to optimize in-application purchases (IAP) in social games but most neglect the most important element. Rather than focusing on adding friction, tweaking price levels, running sales, etc., there is one aspect that does not get enough attention and can make all the difference between success and failure: Continue reading “The most important secret in monetization”
Microsoft’s Nook investment is huge for the social game industry
Microsoft’s $300 million initial investment in Barnes & Noble’s Nook unit is arguably the biggest news to hit the social game industry this year. Just last week, I was saying to some colleagues that there have not been any major developments in our sector recently. That changed yesterday. Over the next five years, Microsoft has committed to a total investment of $605 million in Barnes & Noble’s Nook, making it a bigger deal than Disney’s acquisition of Playdom in 2010.
Continue reading “Microsoft’s Nook investment is huge for the social game industry”
Becoming a Great Social Game Company Leader
Given that many readers of this blog are in leadership positions at social game companies, I wanted to pass on the key lessons from an article in the MIT Sloan Management Review on How to Become a Better Leader. The gist of the article is that while great leaders make their work look natural, the reality is that most work very hard to manage or compensate potentially career limiting traits. Even Richard Branson, who seems like one of the most natural and gifted leaders, said he was “shy and retiring” before starting Virgin Airways.
The article points out that there are five traits commonly accepted by researchers in leadership to describe leaders. Below, I will summarize these five traits and how leaders control these traits to become great and hopefully ways you can apply them to create a great social game company. Continue reading “Becoming a Great Social Game Company Leader”
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 