Industry Leaders: In-Depth Interview with Playfish CEO Kristian Segerstråle

playfishPlayfish is one of the most exciting companies you haven’t heard of. Founded just last year, the company has already opened studios in Europe, Asia, and (soon) North America, and is the developer of 3 of the top 10 games on Facebook today.

We spent some time with Kristian Segerstråle, CEO of Playfish, to learn more about his vision for the company, the emerging “social gaming” space, and how social networks compare to other gaming platforms.

Kristian, thanks for sitting down with us today. So how did Playfish get started?

Playfish was founded in October of last year. We are a team of games entrepreneurs – we came from Glu Mobile, and were a part of building up that industry. When we saw the Facebook Platform, we thought to ourselves, “Aha, this might be the next big thing in video games.” For the first time, Facebook gave video game developers access to your real world friends. You have to be a much more hardcore player to play online games with strangers, so we thought this was a big opportunity.

So we raised $4 million in seed financing and started running. We have a studio structure – our London studio launched Who Has the Biggest Brain? just before Christmas.  Then they started on Word Challenge. Our Norwegian studio started working on Bowling Buddies. The first title from our Beijing studio should be coming out in the next couple months, with more from London and Norwegian studios as well.

Obbiously it’s still a very early market, but there’s already a lot of games out there. This is the first time in the recent history of the video game industry that we’re not waiting for hardware. It’s usually a slow ramp up because you’re waiting for hardware to get sold. Facebook turned on a platform that reaches 70 million people, so it’s not surprising how quickly the industry has developed.

What lessons have you learned so far?

Designing social games is totally different than designing video games for other platforms. On the surface they look quite similar, but actually you have to think about them quite differently. When you design a game on a standalone platform, you try to draw players in quickly and keep them motivated over time. You do things like visual and audio rewards and achievements, and give ways for people who are into it to keep going. But when you design for social platforms, you do those things in the beginning because you want to get players started in the game, but then you want to get the users to take a step out of the game and use it as a way to communicate with friends.

In addition, the sheer amount of user feedback you get allows you to, in a sense, outsource a part of your design. You have the luxury to update your game, you can listen to your users and give them what they want. It creates a great emotional relationship between a publisher and a player.

How do you see risks in developing for the Facebook platform?

If you compare the rules of publishing on Facebook to the rules of publishing on any other platform (like cell phones), you’re talking about orders of magnitudes of difference. On mobile platforms, you have to get approved, certified, sometimes there are age ratings, and typically you even pay a share of your income to the platform holder. Compared to that kind of environment, Facebook is an amazing place to publish games. It’s a great thing to see them take their role of managing the platform seriously. The more consumers want to hang out on social networks the better it is for us in the long run… if social networks don’t moderate the environment, consumers will.

Are you spending time on other platforms?

We started with Facebook because it is the most mature platform out there. We think of ourselves as creating games wherever people hang out, whether that be Facebook, MySpace, hi5, Orkut, or wherever.

What do you see as the areas of true innovation in social games?

We have been awed by the innovation that has taken place on the Facebook Platform so far. For example, games like Friends For Sale or apps like Bumper Stickers that have game like elements. Even in the 30 year old video game industry, the number of truly original ideas that come out is relatively small. Social games allow you to evoke different kinds of player behavior, but having said that, some of the mechanics are a bit like the multi-user dungeons invented in the 90s that evolved into WOW.  We aren’t waiting for the hardware like the MUDs were, but we think those mechanics are here to stay. I think we’ll see production values quickly rising.

Who else do you see playing in this space?

If you think about game creation focus on the Y axis, and social focus of companies on the X axis, folks like EA Sports fit in top left, while widget companies like RockYou and Slide fit in the bottom right – their games are considerably lighter than Madden 08 but incredibly viral and social. We think there are few plays in the top right corner. We think we’re there, and SGN and Zynga are there (though some of their apps are more communcation tools). We have seen some experiments from game companies like Smarty Pants from EA.

The challenge of social networks for traditional game developers are several:

  • You’ve got to write games in Flash, which is not the best language if you’re used to serious game platforms.
  • You can’t just take an existing game and port it onto Facebook – you run into that design problem where if you design a deep single player experience you’re not making it more fun to play together. If it’s not more fun to play together than by yourself, you’ll never invite anyone.
  • The business model is against you. if you’re selling a box that people are willing to pay $60 for, then you probably should not be giving that away for free on Facebook.
  • And finally, the internal game development process is different. Depending on the size of the title, it can take six months to a couple years of prototyping, design, development, crunch time, and launch, and then it’s the marketing team’s problem and you move on. Maybe if it’s good you do a sequel at some point. For social games, it’s completely different. Once you’ve launched, you have to improve the product and optimize it over time, because if you don’t, you’re not likely to succeed. Most game companies are not set up to develop product like that; they’ve got to set up entirely different departments. EA has puclicly stated that they’re setting up departments to do this, and we think others are as well. We welcome that, but we do think that it’s quire different.

What is your business model?

We’re looking to build a transactional business. It will always be some combination of advertising and transactions. We’ve focused on building audience so far, and you’ll see more transactional stuff coming from us in the next couple of months. Transactions have been well proven as a source of revenue across the casual games industry and MMO space, but no one’s got a great example of how it works on social networks yet. Maybe it’s in feature unlocks, which are popular in casual games industry, or the virtual goods driven model in MMOs to look cooler or express yourself.

Do you think the recent Facebook Connect and Google Friend Connect initiaves will gain traction, and if so, how do you think they’re relevant to social games?

It’s certainly a great idea to allow games on other platforms to access your Facebook friends. What they don’t let you do is share as easily, so it will be a slightly different type of game and service that will use Facebook Connect and Friend Connect. Using it on the iphone would be a compelling idea. I am still a believer that mobile is a mass market entertainment platform of the future, but the business models aren’t quite there yet. Doing transactions and advertising is a very exciting prospect, but we’re not quite there yet.

Thanks Kristian. Do you have any final thoughts?

Something that struck me recently – if you look at any top 10 game charts for any platform, they are dominated 80% by sequels or IP that’s licensed from somebody else. For example, Halo 3 or Transformers or Super Mario or the Matrix. And the reason for that is that retail games is a shelf life environment. As I was going through the top 20 or 30 social games on FB i couldn’t find a single sequel or a matrix, and I think this is really exciting because it means we just might be able to free ourselves (as the games industry) from having to license IP or be stuck doing sequels. How that will pan out over time we will see, it could just be a reflection of where we are as an industry.

Playfish is really just trying to create great games at the moment and learn as much as we can. We’ve released 3 titles so far, and we’re busy building bigger more ambitious products. We’ll see how far this will go – we think it’s got awesome potential. The video game industry is $40-50 billion, which is bigger than music or movies, and we think that social gaming has the potential to grab a reasonable portion of that and become a billion dollar industry because it’s such a new emotional experience to play with your friends.