In our second panel of the day, industry expert Eric Goldberg is moderating a panel comprised of the leaders on other social networks, as well as payment provider PayPal and cross-platform developer PopCap Games.
Manu Rekhi, GM Games & Platform, MySpace
Carey Kolaja, Senior Director, Digital Goods Operations, PayPal
Geoff Cook, CEO, MyYearbook
Dennis Ryan, EVP Worldwide Publishing, PopCap Games
Eric Goldberg, Managing Director, Crossover Technologies (moderator)
The live transcript (paraphrased in parts and edited for brevity)
EG: How do you decide where to develop, Dennis?
DY: Opportunity cost. How does market fit of platform apply to your game? Second, what about game portfolio? Active, passive, open, closed? Depending on interest, may align or not align.
EG: What about small devs?
DY: MyYearbook is meeting new people, so if we were to develop there we’d think — how can we meet new people?
GC: When I think of social networks, I think social graphs. Facebook owns real-life friends but plenty of other interesting ones. Topics (quora), content (MySpace), professional (LinkedIn)…. how does this given social network enable this?
EG: Manu, what about opportunities for small developers?
MR: Look where growth is coming from. When tide rises takes everyone forward. Other places. Not that much competition on other places. If you go to build on Android, you don’t have competition like on iOS. Not too many people building games in Spanish, for example.
EG: Carey, now that we’re talking about growth.
CK: What I’d like to share first. How do you go assessing from a financing and monetization perspective the types of social networks you’re looking at. We have the privilege to look across types of social networks, international too — some sort of currency that can engage users. Large rise in virtual currency. Reason developers make their own currencies is to help increase conversion. Challenge is distributing across real currencies in different countries. What about direct versus indirect payments.
EG: You made an element argument for a universal payment system, you know where to find one. What about Paypal and Credits.
CK: I’ll take a step back. Lot of discussion about us and our relationship with Facebook. We announced Paypal as a dominant form of payments for Credits. In October, Facebook was implementing new checkout experience that PayPal launched. Allowed you to not leave. PayPal can be used to distribute revenue from Facebook to developers. You don’t want to necessarily be contained to payment method. You have to look across the spectrum of what you want to achieve. The in-context experience — we’re testing it.
EG: Asks about drop-off in users.
CK: Deflects question.
EG: So are there SNSs — what social networks have graphs that aren’t easy to replicate or they have no strategic reason to replicate?
GC: Everyone other than your real friendships or relationships are ones that Facebook isn’t seeking an advantage in. So with asynchronous games — one of the reasons they’ve taken off compared to synchronous games — is that it’s hard to find real friends to play with at any given time. But synchronous games can work with graphs that don’t involve your real friends.
Gives examples of other social graphs. Twitter. Quora. Interest-graphs.
EG: Asks Manu about its switch from being an SNS and going to social entertainment. What kinds of opportunities are there in social entertainment?
MR: Music was always a really big part of what MySpace did. Can analyze likes of artists. There’s nothing you can do on Facebook except see all the other people who like Lady Gaga. We’re asking if we can find relevant content for you — her music videos, articles, news pieces. You can get connected to that with one click.
EG: That’s useful for celebrities. But what about non-celebrities? Things that people here could make use of.
CK: You mentioned LinkedIn. LinkedIn is for me a fantastic community and for connecting with professionals. But it starts and stops there. And you think about applying mechanics in that community and it could be endless. That’s a little bit where things are going. There’s a company like EPIC, if I remember that correctly. They take to-do lists and they make it a game. Someone was asking about the ‘Under 13’ age group and being the mother of two boys, I think about how fascinating their ability to learn and play is.
EG: One of the key takeaways is you can use game mechanics in service. But you have to go to what the SNS actually is. LinkedIn is about networking. Quora is about knowledge. Start with figuring out what the purpose of the SNS is and start building from there. I wanted to move onto international. Asks about PopCap attacks international audience.
DR: So we approach it from the perspective of which countries we were interested in — it broke down to Korea, China and Japan. In Korea, we deployed against Cyworld. In China, RenRen. In Japan, Gree. In terms of market fit, it required looking through the lense of PopCap and then looking through web and mobile. Dealing through that lense.
EG: As a small developer, a company that’s been making a lot of noise is ngmoco:), which is now part of DeNA. Which opportunities are worth pursuing for a small developer?
DR: Everyone has a limited skill set and limited resources. You need to make sure you’re making the right platform investment. Small and large opportunity cost is where it comes down to.
EG: Asks Manu Rekhi, how would you go about getting an outside audience?
MR: You launch the game and it becomes the fact that you’re approach an audience that’s non-English speaking. Our APIs allow you to customize the experience. If you look at a lot of games, the biggest number of people coming to games is outside the U.S.
EG: Will MySpace provide assistance to developers looking to reach out to international markets?
MR: We launched a project called GameLabs and we help them understand how to use viral marketing. The program was launched six months ago.
EG: Carey, Manu talked about international audiences having a lower per capita rate. Can you give us a very broad view of which countries have a higher per capita rate?
CK: What we’ve been able to see in our stats is when you look at the average volume per user, you see it higher in APAC than you may see it in the U.S. There’s a couple theories as to why that may be, what they’re willing to spend money on and also with PAC buying virtual currency that’s bundled. China, Japan, we see a lot of activity there. We tend to see the average volume is a bit higher.
EG: There’s a fair bit of data. It’s notable that Tencent was the first company to do a billion dollars in virtual goods when the entire U.S. virtual goods market was less than that. So the next three to four years, you can see a backwards lift as developed countries will get used to paying for virtual goods. Right now, while the Philippines might have lower per capita, China might have the biggest if you take into account 3 to 400 million people.
CK: Why is it that the U.S. is less comfortable in spending or less aggressive in their monetization techniques. I try and think about what we can learn from APAC. EU also amazingly enough has pretty decent volumes. We’re seeing people experiment with different revenue streams on the mobile device. In-app payments is something that we’re seeing a rise on. Someone was saying that in-app payments maybe accelerating at a higher rate than actual paid apps. What we’re seeing with networks like PapayaMobile, it’s going to be interesting to watch.
EG: Can anyone add anything about mobile monetization?
DR: We have a mobile version of Bejeweled Blitz in addition to canvas app. Monetization per user is comparable to what we see on Facebook. It wasn’t at the beginning but it is now. It took 3 to 6 months.
EG: What made it work?
DR: Reliably? We were kind of pioneering among some other developers using mobilize. It’s different latency issues, getting the back-end right as well as the user experience. We have a lot of data. Just some interesting data. U.K. and U.S. is identical. Australia is higher. We recently deployed a localized German version and it has increased monetization dramatically, not equal to U.S. counterpart, but approaching.
GC: The key way we monetize is through brand advertising, reaching a 13 to 19 audience in one place. One third of our visits are on mobile devices.
EG: How do you deal with these users not having credit cards?
GC: We heavily emphasize our movie trailer option. The fastest growth is on the virtual currency side.
CK: One of the topics that doesn’t get enough attention is fraud prevention. In digital goods, you see a higher risk of fraud than other types of businesses that are done online. The risk and fraud models need to be different. We’ve seen a lot of well-intended spirited efforts. Unfortunately, their businesses dissolve. When choosing an SNS partner, a geographic element comes into play. You’ve got to consider that sooner than later. The second area. Dennis talked about consumer user behavior. What are you doing around data? What does the data infrastructure look like?
Audience question: Aside from lucking and going viral, what produces the best bang for your buck in terms of attracting users?
DK: The community and players the platform serves up to you.
GC: Effective use of the viral channel.
Audience: In the course of development, when you would recommend jumping to another SNS or localize?
DR: So you’ve been thinking about this problem? Later than you ideally might like. The answer through our lense. We address the broadest market and Facebook is our dominant platform. We tend to wait until we have confidence in the game until we deploy the integrated local version of the service.
EG: Can the panelists recommend SNSs that the developers should look at that aren’t Facebook, MyYearbook or MySpace?
MR: Mixee in Japan. They will be very powerful as well. I would definitely look at Japan. There’s a risk in being in Russia. But there are a couple sites including Vkontakte that are doing well.
GC: Instagram is interesting. It might be too early. I don’t know if beyond Japan and China there aren’t big dominant social networking players that are being taken over by Facebook.