What's With The Secrecy Within Social Gaming Companies?

Why are social gaming companies shrouded in secrecy? British Island shell companies are created to deceive competitors and employees are sign contracts grounding them to secrecy. What's underneath the veil?

Why are social gaming companies shrouded in secrecy? British Island shell companies are created to deceive competitors and employees are sign contracts grounding them to secrecy. What’s underneath the veil?

We’re all aware of the story of Farm Town, Slashkey’s flagship game that reached roughly 19 MMAUs at its pinnacle in 2009. Farm Town itself was inspired by titles like myFarm but went beyond myFarm by adding avatar components. Gaining 300,000 users a day, FarmTown began touting its numbers, awakening the big fish in the process. Zynga, soon after, released a game called FarmVille, and Farm Town is now just a memory.

Game mechanics and concepts can’t really be defended – but companies can take efforts to protect their IPs. We recall the Zynga-Playdom conflict that arose during 2009 with Zynga accusing its ex-employees of stealing Zynga’s playbook. The lawsuit, encompassing violations such as misappropriation of trade secrets, breach of contract, breach of the duty of loyalty, tortuous interference with contracts, tortious interference with existing and prospective economic advantage and unfair competition, eventually settled in Nov of 2010.

Another example was Zynga’s Treasure Isle – which I can safely say was inspired by France based-zSlide’s Treasure Madness. Treasure Madness did quite well for it self and it’s a game I used to regularly play. Treasure Isle quickly grew to 4.3M users within a week of its announced launch. This is also at a time when Facebook’s virality was experiencing restrictions and Zynga was not explicitly cross promoting its titles.

Although the days of explicitly copying games have subsided, one can’t help but wonder that gaming corps with massive bank accounts are laying low in the trenches for the next innovative hit. Most titles companies the size of Zynga release are low risk, mass appeal titles. Many experts in the space now suggest to avoid going after the mass appeal games – instead aim for mid-core games the way Kabam has with Kingdoms of Camelot. Such games command decent ARPPUs and have a loyal user base albeit the numbers are less than mass appeal games.

Asides from risks associated with copying games, poaching of employees is also a vexatious issue that strikes fear in the heart of many gaming upstarts. Those armed with the knowledge of business models, game designs and other strategic knowledge can be valuable to competitors. These competitors may often probe potential candidates for valuable information so using cover up companies can help keep things covert.

Although steps can be taken to mitigate exposure, there are no foolproof systems. Working with various players in the social gaming space leads to divulging of information. The only companies you really see releasing information are monetization companies that hope to attract clients in the space. You don’t really hear about companies revealing their ARPU’s publicly, although you can hear about this from other experts in the space, so it’s best to avoid discussing revenues openly.

With social gaming and virtual goods heating up, the battle of information and secrecy is only beginning to heat up.