Live Notes from “Social Games for Social Platforms: Unleashing Viral Fun” at GSP East

We’re here at the 1:50pm session and this panel is covering the growing social gaming space. The panel: Justin Smith, InsideFacebook.com & Watercooler Siqi Chen, CEO of Serious Business Andrew Trader, Co-founder, Zynga Game Networks Robert Balahura, President at J2Play Ltd. TJ Murphy, Co-founder, SGN Justin: A lot of the conversations around social games have come from Facebook developers that are tracking the charts and seeing how games are engaging a lot of users. What is your definition of a social game? Siqi: A social game is something that leverages traditional game play dynamics. A social game is one in which interacting with your friends is a core piece of the game itself. Justin: How do you see social games as being different from web games? TJ: One difference we see is that having users' friends on hand adds a lot more to your application than we thought at first. Traditional web games have been very single player or anonymous oriented. What the social element adds is a context and incentive to really move on in the game. Andrew: For us, social gaming is about connection. Its about offering users a way to connect with their friends in ways in which users don't regularly make time to do. People are on social networks and are spending time on these networks and our games allow those users to use that time to connect with their friends. Justin: Do you see potential for social games to reach individuals that wouldn't otherwise play web games? Andrew: A lot of the social networks haven't had a way for users to interact adequately. In some of our apps we've borrowed some great examples of turn based elements from Scrabulous that often appeal to the more casual player. Justin: On your poker application, what proportion of users are playing with friends versus playing with random users? Andrew: We've found that users make poker buddies, but we also make it easy for users to play with their friends. The actual proportions are very app specific though. Robert: The interesting thing about what makes a game social is that users' social identities are a core part of the gaming experience. Additionally, if you don' have to sign up for a site you might just load up a game and have a try. The key piece of the entire environment is that all your friends will travel with you. Justin: There are game destinations that already have social elements built in. What value do you see long term in social networks as game platforms? Robert: We look as social networks themselves not as individual platforms but rather the social web in total is the platform. Our mandate is to help the existing game industry move their business to the social web. When you use our technology your game is immediately available across multiple social sites. We see this space as one of the platforms that we will take advantage of to help move the entire industry over. TJ: As you connect the platforms together it is interesting to see that people create social structures once they are in the game already, something we call the gaming graph. Justin: How do you evaluate the success of your social games? Siqi: There is not a single metric. We don't yet have a value for the lifetime of a user. The number we really care about is engagement which can ultimately inform you of the life span of your app. Average page views per visit is increasingly an important metric as well. TJ: Some games lend themselves to players that will come in every day briefly that will have a long lifetime as a user, and in other cases there are shorter life time users that spend on average much more time on site. Andrew: In the short term we are going to feel some pain from the upcoming Facebook profile changes. We do believe in the long run the changes will be great for the app economy. We measure engagement by time on site. For poker we average about 16-17 minutes on site. That is much more of our emphasis these days than on simply user acquisition. Justin: Where do you see the space going in terms of revenue, as different strategies focus on virtual goods, sponsorships, or banner ads? Siqi: I had this theory a year ago that display ad revenues were going to go up. Its obvious to me now that intent is everything. Making money through display ads is probably not going to be a good long term solution. One way we are monetizing is through virtual gift sponsorships. TJ: In the games context virtual goods is the up and coming business model that shows the most promise. We will be careful to adapt as the space changes and we are definitely not putting our eggs all in one basket. Justin: What percentage of your revenues are from virtual goods? Andrew: Every app is different, and we break them down by heavy, medium, and light engagement. There is no virtual bullet. We've built a sustainable monetization model with the poker app around CPI because we can incentive it. My advice is to test everything because one app may work differently than another Robert: We are testing more of a developer for developer model. We are more business to business in this regard with licensing etc. Justin: How much are you guys investing in tweaking the different variables within your game economies? Siqi: Virtual economies are a very complicated topic. We spend a lot of time looking at tax rates, velocity of money etc. The price of goods tends to never go down so what happens is that we have to regularly inflate our currency. Andrew: Linden Labs is a great example as on on Second Life you see a positive correlation between how much users spend and engagement. TJ: Its a very complicated topic. Even people in the traditional games world are trying to solve this problem. There is no overhead with selling virtual goods but I recommend you tread lightly. Justin: A lot of Facebook app developers attempt to create virtual currency economies, but this is one area where the social networking community has a lot to learn from the gaming community. TJ: there are a lot of big players out there that have a lot of money. The worry is that they will come in with multi million dollar budgets and try to put it on Facebok. We as developers and business people have found out through experience the things that have worked on Facebook. It will be interesting to see as we move forward what happens when the traditional games guys move into the social networks. Siqi: Overall the body of knowledge that traditional game developers have far exceeds our own experience. Andrew: I hope the traditional game developers enter the space as that will help drive growth, awareness and usage for social games which I think will translate to a larger mass market. This boils down to a traditional mass market opportunity for the traditional game industry. Justin: How would you characterize the different social networks and distribution networks that you've built for individual developers? TJ: Given the way Facebook has been changing things and the way we've seen Myspace restrict the viral channels it is a different environment for for new developers coming into the space. You can create a good game but success is not going to happen over night. Focus on gameplay and make games that are really fun and engaging. On the back end you are going to need some help to get the process jump started. Andrew: It depends. For example, if you have a great idea for a profile to profile game: launch it on Myspace. Although Fb has restricted a lot of its viral channels there are ways to gain distribution and explore your content to the Facebook user base without having to pay for installs. Q: Do you think that as the social gaming industry matures that derivative products will help engagement? TJ: I think the social gaming market lends itself really well to that. Having a game context and a social context as well really enables the virtual goods stuff to really take off.

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Live Notes from “Social Games for Social Platforms: Unleashing Viral Fun” at GSP East

Adam Lovallo

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