Tagged Looks to In-House Social Game Development for New Growth

Tagged may have lost the battle to become the predominate social network of the world back in 2007, but a shift in strategy combined virtual goods sales through its own virtual currency has the platform looking healthy in revenues and registered users. Now Tagged is looking to push growth even farther by formalizing its own internal social games studio led by vice president and general manager of social games, Andrew Pedersen, formerly of EA Pogo.

We knew Tagged was turning to in-house development last year when the platform launched its second game, Farm. By creating an actual in-house studio to manage the development, however, we see just how committed the platform is to the ideal of social games as a moneymaker. Tagged co-founder and CEO Greg Tseng explains the platform’s shift to social games as part of its goal set in introducing new people to one another through dating, interests, and games. The platform’s first game, Pets, launched in 2008 and began monetizing in 2009 when Tagged introduced its platform-specific virtual currency, Gold.

“Interestingly, [Pets] was just an experiment to see if games could make our site more engaging because social games had just started to take off on Facebook,” Tseng says. “And it did make the site more engaging […]. It’s a game where you can buy and sell other users as your pets. There are about 400,000 daily active users and they make 5 million trades or purchases every single day.”

Tagged judges its success as a platform both through revenue and through new “connections” users make as a result of mingling on the platform. Prior to 2009, Tagged was entirely ad supported; but after introducing virtual currency and a premium subscription service in 2009, ad revenues shrank significantly. Tseng reports that in 2010, Tagged had its third straight profitable year at $32.5 million in revenue. This year, the company is aiming for $50 million and to increase its staff up from 50 to 150 people. Its new games studio will soak up some of the hiring spree.

This is where Pedersen (pictured) comes in. In his role as VP and General Manager of EA’s Pogo division, he was responsible for launching a subscription model on the casual games portal that, Pedersen feels, transformed the business from advertising to a gamer-focused premium service.

“It really opened my eyes to what the potential can be.” he says, “and the idea of games as being the social catalyst to building a community and then being able to actually monetize those people by adding value added services.”

As the subscription model already exists at Tagged, Pedersen’s first task is getting more games onto the platform. Right now, there are only four “or five” games live on the platform, which each being a heavily user interface-driven experience like the one from Pets, pictured below.

“We’re planning on releasing three more titles this year,” Pedersen says. “We have one that’s in development that will be releasing in the middle of the summer [that’s] kind of team-based, events-driven social game where we’re trying to leverage collaboration and social connections as key drivers that fuels your progress in the game. It is still more of an interface driven game, but my intent is that as we move toward the end of the year, we start introducing [what visually look like] more traditional social games. Introducing more character, more personality into the game as opposed to have just controls.”

Even with a visual overhaul, Tagged puts social games in a slightly different context than Facebook on account of its intent to introduce new people to one another. Pedersen explains that as a result of that charter, we’re not going to see traditional video games “ported” to Tagged as most of those games do not lend themselves directly to social interaction. At Pogo, Pedersen says EA made “just about every kind of game” social merely by adding a chat function — but that there’s more to socialization than that.