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Five Reasons Facebook Games Are Not a Fad

As originally published at Games.com and later highlighted by Silicon Alley Insider.

No one questions whether sharing news or photos with friends and family is a fad, and when people get together to socialize, they often play games – from bridge to charades to Trivial Pursuit. As one of the largest social gathering spots on the web, Facebook is no different and here are five reasons why I don’t think Facebook games are a fad:

  1. Facebook Games are Recommended by Your Friends
    • Your social network is unquestionably the most trusted resource for making decisions – recommendations and word of mouth from trusted friends and family has always been the most influential factor in purchase decisions. In the past, we used to go to Google to search for something. Today, we ask our friends on Facebook and get the recommendations we need to make a decision.
    • Game portals have gone further and further in this direction, initially recommending games to play, then integrating user reviews. But it’s hard to beat a recommendation from someone’s personal network of friends and family, and this is where Facebook excels.
  2. Facebook Games Provide Hours of Play for Free
    • My favorite story is a friend who was at a local game store and overheard a family looking at different console games. The wife said, “No, put that down, I’m just going to play that farm game.” The fact that a game like FarmVille is now seen as an alternative to paying $35-$60 for a console game should strike fear into Electronic Arts (hence their purchase of Playfish).
    • The download game portals realize that demand for a $20 download game is drying up – just this year alone the price has come down from $19.99 to $9.99 when Amazon launched, to as low as $6.99 with some of the other portals. Likewise, how does a subscription model of $5 a month compete with free?
    • There will always be exceptions for really stellar content – I’m going to shell out $20 for great games like Pop Cap’s Plants vs. Zombies – but the days of paying for a knockoff or slight variation of a top game are disappearing.
  3. Facebook Games Don’t Require a Download
    • Why go through the hassle of downloading at all? Facebook games provide a robust game play all within the browser, eliminating one of the major impediments of getting a user to convert – the download process.
    • Flash games don’t require a download, but ultimately they aren’t nearly as engaging. Facebook games are living, breathing entities that are constantly being updated, expanded and made more interesting like a massively multiplayer online (MMO) game. Think of Facebook games as the dawn of an MMO without the eight hour download required of your typical MMO.
    • There are still some problems with games being able to run smoothly within the Facebook platform, as I noted in my blog earlier this week. But these are the early days of a new technology and infrastructure will definitely improve. When I was in the download business a little over four years ago, the rule of thumb was that a game that was over 11 MB would never sell because the download would take too long. Two years ago games were reaching the 100 MB level, so bandwidth definitely improved to support more robust download games. The same will happen with Facebook games.
  4. Facebook’s Potential of Reaching Over 350 million Users will Continue to Draw Developers
    • When developing for a single platform gives you the opportunity to reach 350 million people, even capturing 1% of that audience can provide dividends for a developer. It is still relatively easy to enter the market (although there is an increasing need to develop a robust infrastructure and analytics to scale and optimize) which should guarantee further innovation and great games…
  5. Facebook Games Haven’t Even Shown Their Full Potential Yet
    • …and with a bevy of developers being drawn to the space, there should be a great deal more innovation in games. You are already seeing more sophistication in the sim games – the sheer number of feature and item releases for FarmVille each week is staggering. But we haven’t even begun to really leverage the social network (beyond posting social spam to your friends’ walls) and create truly collaborative game play. That is where the next generation of games will cement Facebook games as a truly unique gaming experience.

Does Electronic Arts Know How to Leverage Playfish Acquisition?

Now that Electronic Arts has purchased Playfish for up to $400 million to help it hasten the transition from retail package dependency to a more digital focus, what can we expect? Looking at the quotes from COO Sebastian de Halleux in the press and today’s EA earnings call might provide some clues:

“I can say that we’ll be working first to take our own IP and share it across EA’s other platforms.” – de Halleux on PaidContent.org

You can definitely see IP like Pet Society and Restaurant City being extended to the Nintendo DS and possibly for the Wii – they nicely fit the demographics of these more “casual” platforms. These games also have core social components that could take advantage of the connectivity being introduced via these devices. But a first priority? That surprises me.

“The basics is that this is not going to change anything much for users, specifically — only that some of the franchises in the hardcore space will be looked at more seriously [in terms of social gaming]” – de Halleux on games.com.

Where the first quote talks about extending Playfish IP to the EA’s core platforms, this looks at EA leveraging Playfish knowhow to bring their games to the social space. But I’m puzzled by the focus on “Hardcore” titles like Madden, Tiger Woods, Battlefront for a couple reasons:

  • The audience for the “hard core” games is predominately male, while Facebook has become more and more female
  • Social activity in sports games is typically head-to-head and that usually is synchronous play – most of the big social games that reach the masses are at their core asynchronous. Madden has had difficulties in creating a great online head-to-head league-style playoffs in the past because you need to sustain 32 users for a considerable commitment of time (if someone in your league takes off on vacation, the whole playoff process is delayed). This year they finally introduced computer-controlled teams to try to alleviate the issue of people dropping out.
  • Sports/hard core games typically require a dedication of a chunk of time to play, whereas social games on Facebook are relatively short-play, ten to 15 minute games. The challenge on bringing Madden or Tiger Woods to a platform like Facebook is how to capture the essence of a sports match but break it down into a five to ten minutes of gameplay.

While there is no question there is a niche that is under-served, it would seem that the surer bet is to focus on bringing EA’s most successful casual content from the pogo.com brand on to Facebook – the casual player is migrating from the Pogos of the world to Facebook. Poppit, Word Whomp, Jungle Gin already have created socially engaging games where users work together to “rescue” fellow players and seem to be a natural extension for the Facebook platform.

But that wasn’t mentioned at all today during EA’s earning’s call. Instead, for guidance about the titles Playfish might work on, they suggested “looking at top mobile games that we have.” Those top titles? Pretty much the blockbusters:

  • Tetris and Bejeweled (not sure of the rights for Tetris and doubt PopCap is likely to give them rights for Facebook since they are already there with Bejeweld Blitz)
  • The Sims
  • Need for Speed
  • EA Sports titles: Madden, FIFA, Tiger Woods
  • Hasbro titles: Monopoly, Yahtzee and Scrabble

Today’s additional announcements (EA cutting 1,500 jobs for games below 2 million units in sales that wasn’t a Hasbro or Sims title) further refine the scope (they’re going from the mid-60 titles of two years ago to the mid-30 titles next year). Then listen to EA Games Label Presient Frank Gibeau from today’s call: “[Free to play] opens up new access points to experience the game and upsell [to the full game].”

The conclusion I’m drawn to is that the EA brass sees Playfish as a way to help port their quickly narrowing list of existing IP and to use the channel to sell the full-blown games. Publishers like PopCap have already learned you can’t take a download game like the aforementioned Bejeweled and just put it on Facebook – they’ve actually re-worked the IP and introduced Bejeweled Blitz, to create a game that organically works within the Facebook platform. And as I mentioned earlier, focus on sports titles have their own unique challenges.

So while I think EA made a great acquisition in Playfish, my concern is that they don’t totally understand what they’ve bought or where the synergies are. Yes, there is no question you can take existing blockbuster IP and figure out ways to make it social – but I wonder if already-social games from the Pogo.com platform are a better fit for Facebook. Further, if Playfish is focusing on figuring out how to port the blockbusters, will EA also give them the leeway to create new titles outside the quickly narrowing EA scope (or is that pretty much a greenlight for other developers to stake out their claim knowing Playfish won’t have the bandwidth to compete)?

I am certain the strong team at Playfish will help focus EA on how to really leverage Facebook, I just hope the team at EA listens.

More Signs of a Game Industry in Transition

One astute analyst during the call asked the EA team if they thought some of the decline in console retail market was because of time competition with Facebook (e.g. more users spending time on Facebook – and ostensibly playing games – instead of playing console games). John Shappert, COO, responded “I think the economy is impacting footfall at retail; people are still playing and buying, but they are being more selective; Playfish opens up doors to folks that aren’t console players.”

Once I tweeted that response, I immediately got back one from David Scott, Founder of Casual Collective: I was in my local Game store and this guy’s wife said to him “leave it, I’m just going to play that farm game.” (I kid you not).

Revisiting: Did Facebook Eat the Casual Game Market?

I spoke to the New York Chapter of the International Game Developers Association (IGDA) last week, touching on a previous blog post but updated with more data showing how:

  • Facebook is rapidly capturing the traditional casual game demographic that has been a mainstay of sites like Pogo.com (over 400% growth between February and September of this year)
  • Big Fish Games is continuing to watch it’s traffic decline
  • declining traffic, over-saturation of product is exerting downward price pressure and less margin for developers

There is no question that working with Facebook has its own challenges and requires a different level of investment, but it’s hard to ignore the macro trends when trying to figure out where to invest next.