As of tomorrow RockYou is cutting approximately 54% of its staff and is selling Playdemic back to its founders and disassociating from Cloudforest Expedition developer Loot Drop, Inside Social Games can confirm. We first heard rumors of impending layoffs immediately after now-ex SVP of Games Jonathan Knight left the company to join Zynga in September.
Speaking to us today, CEO Lisa Marino explains that the company is too big to be profitable at its current size and that certain intellectual property no longer lends itself to RockYou’s vision for profitable social games. By spinning out Playdemic, RockYou effectively culls 17 members of its central studio and 56 more are impacted in its Redwood City, CA office. It’s unclear from where the remaining 127 cuts will come.
“We made a lot of mistakes in the last 12 months,” she says. “We built up a central studio that looks a lot like EA or Zynga with 45 heads in it when we really only needed 10 or 12. We developed two large-scale sim games — Social Life and Cloudforest Expedition — and Social Life was [canceled] in May and Cloudforest is in the process of being kicked back to Loot Drop. [Playdemic’s] Gourmet Ranch is profitable, but [the developer] is not building the core content that we want.”
Marino says that in trying to introduce its new ad platform — where RockYou collects a stream of revenue unhindered by revenue share with Facebook — to existing titles, RockYou “screwed up” its leading Zoo World franchise and only repaired the damage in September. Our AppData traffic tracking service reflects a decline in the game’s monthly active and daily active users that began in August of this year. It currently has 1.9 million MAU and 270,000 DAU. Marino says that with these numbers, the average revenue per user doubled in the month of October and the newly launched Galactic Allies has an even higher ARPU than that.
“We don’t need 200 people to be a success,” Marino tells us. “We got away from running RockYou as a business and we relied very heavily on the creative side of the house. What we learned this year was that was a bad strategy. Cloudforest is a perfect example. We spent an awful lot developing that game and ultimately — as a power user — I couldn’t figure out how to spend more than $10 in it. It’s a beautiful frickin’ game, but it doesn’t monetize. If we can’t have a game that’s both really good and profitable, that doesn’t count as a good game to RockYou.”
As for future development plans, Marino says that RockYou is not backing off on its partners program, even though the two-game publishing contract with Loot Drop was officially terminated over the summer. At present, she confirms that Zoo World 2 is here to stay, a game called Hooked just entered closed beta on Facebook a week or so ago, and a third game from a publishing partner studio will be launching in January. Marino declined to elaborate on the game beyond saying it was in “the guy genre,” implying that Galactic Allies has sold RockYou on the value of the mid-to-hardcore male audience.
“The other lesson I learned this year is don’t talk about our games before they launch,” she says, referencing two times in the last 12 months that RockYou was beaten to market — most recently by Zynga’s Adventure World, which is in the same genre of exploration-based role-playing game that Cloudforest Expedition occupies. “We’re focusing on a content strategy — both for [owned and operated] or studio partners — for high replay value games that monetize well both with digital goods and ads.”
The ad platform RockYou has been implementing into its games is heavily reliant on video ads. Rather than working with a third party service, as Zynga does with SocialVibe, the publisher-developer built its own service so that it wouldn’t have to share revenues with anyone, including Facebook. Marino says their ad platform videos enjoy click-through rates (CTR) of 12% – 20% and its cost per one thousand impressions (CPM) is “compelling.”
“This has been the core of gaming strategy since 18 months ago,” she explains, “but we didn’t have the games to back it up. For a very long time, the social gaming space has always said we’re not a media industry. RockYou [has been saying] that’s not true fo years. Media is about superstar content. Media companies create their own content and well as [publish] content from others. [They then] distribute it and monetize that content. And we’ve finally proven the value of that dual monetization track.”
Marino says that RockYou expects to be profitable “for the first time” in Q4 of this fiscal year. Employees are being told about the layoffs today at 3:30 PST.