It wasn’t all that long ago that Facebook apps were thought of as another infinite repository of low value advertising inventory that would slowly erode to no one’s great concern. Now, 18 months later, just about every major media company is sniffing around the Facebook gaming leaderboards, evaluating how to get into the virtual goods-based games-as-a-service business.
For media companies interested in getting into the game, it’s not a matter of if, but rather a question of how. As execs and corp dev departments are working to fit together build vs. buy strategies, they’re also trying to figure out how to align all of the parts of the organization to move towards a structure necessary to run a social gaming operation.
Over the course of the last year, it’s become clear that many traditional media companies have gained increased regard for the role of social gaming in their future online monetization plans. Many of these companies have struggled to build significant revenue streams on the web, but now see virtual goods-based social games as one of their most promising opportunities.
As social gaming becomes increasingly mass-market in the US and throughout the west, the thesis basically goes that new IP can only take you so far; existing IP will become increasingly important in separating from the pack of developers vying for consumer attention. As a result, rights holders now want to find the top independent developers to pair with their IP portfolio.
For Facebook social gaming shops, that means good things.
“You would be surprised at the seniority of those with whom we have had regular conversations,” one social gaming executive said recently.
Indeed, we’ve been hearing continued rumors in recent months, the latest of which is News Corp’s interest in Playdom, one of the largest developers on the MySpace developer platform and an increasing presence on the Facebook Platform. Given Zynga’s size and Playfish’s recent acquisition by Electronic Arts, Playdom and fellow developer CrowdStar are two of the more likely acquisition candidates over the coming year. And Fox’s involvement would certainly make the dynamics between it and Facebook even more interesting.
Before Playfish was acquired by Electronic Arts last November, we heard that it had had discussions with multiple large media companies as well before the deal with EA was consummated. However, don’t be surprised to see more small shops being snapped up too, as several smaller developers are showing encouraging vital signs and may be more affordable options or better strategic fits than the bigger guys.
All in all, we expect to see more activity in the space over the coming year from the media companies. However, along with interest in social game developers from Chinese gaming giants, some are concerned that price expectations could be getting too high, slowing down potential deals.
We’ll be going in depth on the future of IP in social apps and games at our upcoming Inside Social Apps 2010, our first conference on the future of monetization on social platforms, on April 20th in San Francisco. We hope to see you there.
For Inside Network’s in-depth research on the social gaming market, check out Inside Virtual Goods: The Future of Social Gaming 2010