Below is a list of the top 10 most searched-for consumer electronics in the UK courtesy of Hitwise.
Eight of 10 are gaming platforms, one is a gaming peripheral (Wii Fit), and one is the iPod Nano. Yes, the iPod plays games and so does the Nokia N96.
Just wanted to give thanks that I'm in an awesome industry with fantastic people. And in particular the great friends I've made since I started in this biz.
Note: image found on a random Myspace page. I think it's hilarious. Must be an L-Tryptophan overdose.
In this weekend's New York Times Magazine, Jennifer Aniston was asked about Facebook.
Here's her response:
It's not for me. I'd be opening myself up too much. I don't want to sound like a computer innocent - I've looked at things, of course....And I like to play Scrabble. And poker. I discovered Wii this weekend. I'm a late bloomer.Think about it this way. Female, early 40s. Plays online social games (poker, Scrabble), though not on Facebook. Considers herself behind the curve because she just discovered the Wii.
According to UK market research firm Verdict, videogames sales will outpace music and video sales in the UK this year. Sales of videogames is expected to grow 42%, to $7.5 billion, while sales of music and video combined will total $7.06 billion. (Thanks Digital Media Wire!)
Big trend: videogames sales have doubled over the past five years.
Hmm...so videogames are bigger than music and video combined.
There are some nuances here to extract.
1. Those projections include consoles sales. However, according the Entertainment Retailers Association, even taking that into account, videogames will still surpass video sales.
2. These projections only account for retail sales, so revenue from online games subscriptions and microtransactions are not counted.
Videogames are big people, aren't you glad you chose the right industry to be in during a recession. :)
A couple weeks ago I highlighted some bad financial reports from EA and THQ. Since then I've seen a few stories that cast a positive light. This week I'll highlight some of the positive trends. Today's post features insights in the traditional retail games sector courtesy of Acitivision most recent earnings call.
1. Activision projecting 2.2 billion in revenue for 4th quarter. Largely on the back of three franchises, World of Warcraft, Guitar Hero, and Call of Duty.
Here's a quote from their earnings call where Activision discusses their view of the holiday season in light of the current economic conditions (interesting bits bolded by me):
So to summarize, proven franchises win (shocker). Music games are growing the market (awesome). People are going to be buying videogames systems this year despite the bad economy (yay!).First, retailers are continuing to increase shelf-space allocated to the videogame sector, as games begin to take a larger share of consumer spending versus other forms of entertainment, and are viewed as a growth driver. Over the past year, global retailers have allocated up to 40% more in-store space to the videogame category at the expense of other categories.
Most of this increase has been dedicated to the music genre and Activision Blizzard of course is the largest beneficiary of the increase, given our strong market share in this category.
Second, we’ve all heard that foot traffic at retail is down but actually, the increased share of store in videogames appears to be mitigating this risk. Our survey samples at key retailers suggest that in September and October, while other categories were challenged, videogame software and hardware showed sell-through growth in the high-single-digits, helping to validate our market expectations.
And third, the cost per hour of entertainment of videogames provides a great return on investment for the consumer as they seek value. To illustrate this, last month NPD conducted a holiday shopping survey that found for most shopping categories, consumers’ intent to purchase were flat or slightly lower than in 2007. The most notable exception again was videogaming systems and games, where consumers’ intent to purchase rose seven points over the prior year, putting videogames in the top five holiday purchases for the first time ever.
With respect to retailer purchasing behavior, what we have heard is that retailers are ordering less up-front and are focusing on chasing the winners, and they are being more cautious with their open-to-buy dollars on second-tier titles. We do see some of this but much less so with top-performing titles where expectations remain high.
What this means is that publishers with top-selling titles will likely benefit disproportionately this holiday quarter. For the last three holiday seasons, on average 90% of the top 10 titles were based on proven properties and we couldn’t be better positioned with our strong lineup of proven properties like Call of Duty, Guitar Hero, James Bond, and Madagascar.
According to Edge Online, as part of its recent cuts, EA has shut down EA Blueprint.
From what I've read, EA Blueprint was set up to publish games on top of social networks, or as we like to call them, social games.
In its time, EA Blueprint released a Facebook version of Smarty Pants, developed by Context Optional, the apps-for hire company. It currently has a respectable 40,000 monthly users. For perspective, the cut-off for a hit game on Facebook is 1 million monthly users.
I'm guessing that EA will opt to focus on the other new games platform, the iPhone. It's already seeing success there, unsuprising since the iPhone is much closer to the traditional retail game environment to which larger players are accustomed.
Here's the big picture.
I learned recently from a brilliant guy that when companies fail to build something internally they usually opt to acquire a company with whom they have an existing relationship.
Social games are going to be huge. Eventually, EA is going to need to acquire a large social games company. They're going to want to either acquire the #1 or #2 player in the space, because that what big acquirers tend to do. Right now, that's Zynga and Playfish. I don't see anyone else challenging either company's dominance at the moment, but anything could happen. If nothing changes in the next 18-24 months, when EA is ready to acquire, I think they'll be TRYING to buy Zynga. Why? Cuz Bing Gordon, former Chief Creative Officer of EA is on Zynga's board and a key adviser. Relationships matter.
Note: while SGN is still a player, they've opted to turn their focus on iPhone games , a space in which EA is already competitive. An acquisition of SGN would be primarily to expand EA's mobile games portfolio - feels unlikely at the moment.
Let me know if I'm crazy or overlooking something in the comments.
UPDATE: Awesome Comments Aplenty. Lots of insight. Read them.
I'm sure many of my out of town readers missed the Virtual Goods Summit 2008 in San Francisco a month or so ago. I was there and missed most of the sessions due to intensely interesting lobby convos. So I suggest we both watch them. Believe me, no matter what it'll be more entertaining then this season of Heroes.
Check out the Virtual Goods Summit videos here.
And my notes from the summit (previously published) here.
BTW, just found out my parents finally discovered that I have a blog (I blame Google).
Hi Mom! Hi Dad!
A special treat today, I actually liveblogged (kinda) the Level Up: What's Next for Gaming? session at the >Play conference on Saturday. It's not word for word, because frankly some discussion points weren't interesting enough for me to write down. You'll notice that Mitch Lasky is quoted a lot. It's basically because I developed a mancrush on him as the session went on. You'll see why. What follows is a best-of. Enjoy.
Moderator: Dean Takahashi - Lead Writer on Digital Media, Venturebeat
Panelists:
Rajat Paharia - Bunchball - Founder, CEO Frederic Deschamp - Trion - Marketing Guy Mitch Lasky - Benchmark Capital - General Partner Manuel Bronstein - Microsoft Interactive Entertainment Business - Director, Xbox LIVE Primetime Kevin Bruner - Telltale Games - CTO, Co-founder |
Another question I get from developers all the time: how much money can I make on Facebook?
Shocking, I know that some people care about money when it comes to Facebook apps. <cynicism>Wait...I think that's all most developers care about. </cynicism>
At the moment, there's only one publicly traded app developer, SNAP Interactive. <cynicism>Keep your fingers Max Levchin (Slide), it'll happen for you too one day, I'm sure of it!</cynicism>
Fortunately for us, SNAP Interactive has to publish their revenues, which currently comes exclusively from advertising on the dating apps on Facebook. Those apps: Are You Interested? (#1 dating app on Facebook), Meet New People, and Flirt With Me.
Here's the numbers from the SEC filing:
Revenue increased from $286 for the six months ended June 30, 2007 to $1,053,159 for the six months ended June 30, 2008, an increase of $1,052,873.That's right, zero to a million in revenue in one year. Not bad. Especially, if you look at the expense side.
Operating Expenses for the six months ended June 30, 2008 increased to $717,349 from $277,634 for the six months ended June 30, 2007, representing an increase of $439,715.
Hosting Expense for the six months ended June 30, 2008 increased to $87,512 from $0, representing an increase of $87,512. These increases are attributable to the need for substantial hosting infrastructure and server capacity to handle the high volume of traffic that our applications receive. Our need for a customized hosting solution was minimal at this time last year.
David Perry, super awesome developer and games industry thought leader, and if you ask me the most honest panelist ever, has a great site compiling data on the games industry.
Here's some highlights:
A list of every known MMO out there. Around 650 MMOs and counting.
A list of all games industry acquisitions and investments.
And the venerable games industry map, which shows the location of 1000+ game development studios worldwide.
It's fueled by users, so if you notice some missing info, submit it.
I'm excited. It doesn't happen much any more, perhaps I've been in the social gaming space for too long to be impressed by the new entrants rehashing the same game mechanics over and over again. And for business models, we've settled into virtual currency sales via CPA offers from companies like Offerpal and Superrewards for monetization.
Since I got into social games about two years ago, my vision has always been this:
Zynga Launches "Live Poker" for the iPhone; First Live Game Turns iPhone into a Social Gaming Platform
San Francisco – Nov. 13, 2008 – Zynga, the largest social gaming network, announced today the launch of "Live Poker," the first truly live game on the iPhone. The game, a mobile version of Zynga's popular Texas Hold'Em game, turns the iPhone into an always-on social gaming device.
"Live Poker" allows iPhone users to compete with 1.4 million daily players in the web's largest free poker game. The game makes it easy for users to play with their real friends from Facebook, MySpace, Bebo and Hi5 as well as make new poker buddies. Players can easily see which of their friends are online, and join them with just one click. Since the casino is always open, users have people to play with at all levels.
Zynga's new application turns the iPhone into a social gaming platform. "Live Poker" is the first application to leverage Facebook Connect, delivering the first social game to the platform. Using Facebook Connect, "Live Poker" allows social information such as real photos to be displayed.
"We have just seen the creation of the next important social gaming platform, thanks to 'Live Poker,'" said Mark Pincus, CEO, Zynga. "Delivering the first social game on the iPhone is a logical extension for us. Social gaming continues to grow, and this is another giant step towards taking it to the mass market."
"Live Poker" is available on any iPhone with 3G or Wi-Fi access, and will also work on the iPod Touch. "Live Poker" is free, and an upgraded version giving players a larger chip package and access to tournaments is also available for $9.99. The application is offered in the iTunes store at: http://itunes.apple.com/WebObjects/MZStore.woa/wa/viewSoftware?id=295913419.
About Zynga
Zynga is the largest social gaming network with more than 5.4 million daily users. Zynga's games are available on Facebook, MySpace, Bebo, Hi5 and Friendster and include Texas Hold'em Poker, Mafia Wars, YoVille, Vampires, Street Racing, Scramble and Word Twist. The company is funded by Kleiner Perkins Caufield & Byers, IVP, Union Square Ventures, Foundry Group and Avalon Ventures. Zynga is headquartered at the Chip Factory in San Francisco . For more information, please visit www.zynga.com
# # #
So what if I told you the following:
One of the most frequent questions I get is whether to build games in Java or Flash. It's a debate that's been going for some time. The early entrants into the casual games biz opted for Java, which overall was a better language for quality game development. Back then, Flash was pretty terrible for game development.
Since then, Flash has improved significantly with the most recent version Flash 10 offering improved 3D support (whether it's any good for 3D games, you'll have to tell me, I haven't played with it yet).
I think Flash is the clear winner, and I'm not the only one. Sharendipity, a company that's spend over a year building a game creation tools platform for user-created games recently announced that they're abandoning the Java for Flash. It's a significant move that's requiring them to port over 60,000 lines of code.
Here's their reasoning (from their blog):
Daniel James, CEO of Three Rings, has been advocating the move to Flash for years now. He estimated that Puzzle Pirates, his company's Java-based casual MMO, while successful, suffered from an extremely low conversion mainly because it was in Java.Up front, I’ll say that the reason we are moving to Flash is because of Java’s adoption rates. It is not, in fact, because of the language itself but because of Java’s deployment model. We suspect that we lose somewhere between thirty and fifty percent of users due simply to the fact that we are in Java.
This isn’t pure speculation, but backed up by a significant amount of internal data. There are also other game companies that have experienced the same thing.
Screenshot from Slide's Top Friends app
This weekend (or earlier - hard to tell since I don't use Top Friends regularly), Slide added a game element to Top Friends. It's called Ownd. The name might sound familiar, since it's one letter off from the name of a very successful game on Facebook called Owned. Like Owned, Ownd is a game where you call buy and sell friends.
I think gameifying Top Friends is a great move on Slide's part. They've finally jumped on the games bandwagon after sitting on the sidelines for the last year. However, I don't think this signals a major push into social games by Slide. It feels more like an experiment.
And I don't think it will impact the popularity of existing friend exchange games on Facebook, Owned! and Friends For Sale. Ownd will simply makes existing users of Top Friends more engaged.
Looking at Top Friends for the first time in a while, I realized that had recreated the old Facebook profile design. Perhaps that's why Top Friends grew 13% since the redesign, according to Developer Analytics.
I've always thought that Slide's strategy with Top Friends was to create a social network within Facebook under Slide's control so Slide could collect data on users.
Ownd doesn't help with that goal as far as I can see. But Ownd does open up another avenue for monetization. After all, for the moment games do monetization better than anyone, and Slide famously needs help with that. Hey, we might see them end up in social games, after all. :)
Many, including myself, have touted the fact that games are a recession-proof industry.
Together, THQ and EA have posted hundreds of millions of dollars in losses and laid off over 750 people in the last two weeks.
Doesn't sound very recession-proof.
Meanwhile Zynga is still hiring like mad (check out their open jobs here).
I'm not surprised. I expect social games companies to do better than traditional games companies in the recession.
Here's why:
Traditional games - $30-80 upfront.
Social Games - $0 upfront.
If you don't have a job, which one is more appealing to you?
Rockyou. $17 million. From Softbank (Japan) and SK Telecom (Korea). While Rockyou is not a social gaming company, they are a social entertainment company with quite a few gaming properties. Apparently, the fresh cash is for expansion into the Asian markets, most notably the Chinese socnet, Xiaonei, which btw, already has a virtual currency system. Since China already has a robust virtual goods market, it will be interesting to see how Rockyou fares. Oh, and Xiaonei already has clones of the most successful games on Facebook, so don't get too excited.
Playfish. $17 million. Series B. From Accel Partners and Index Ventures. With 10 million monthly actives, 4 of the top ten games on Facebook, and this round of funding, Playfish has cemented their place as the number 2 social gaming company behind Zynga. According to Playfish CEO, Kristian Segerstrale, the cash is to be used to expand into other platforms, notably Myspace. I suspect they'll be launching mobile games sooner than later, Kristian did run a successful mobile games company for six years, after all.
Crispy Gamer. $8.5 million. Series A. From Constellation Ventures. For a Games Review site. Yes, a games review site. That had 1 million uniques AT LAUNCH. I mention this funding because it's further evidence that games are HOT.
I've been following Adam Martin's commentary over at his blog T-Machine for a long time. He covered the Virtual Goods Summit for Free to Play and his insights are awesome. Unadulterated, opinionated goodness. His posts came a week after the initial burst of coverage, so if you missed them, here they are.
Virtual Goods and Social Networks
Making Virtual Economies Work
Branded and User-Generated Virtual Goods
Here's some choice quotes from the coverage (bolding by me):
Outspark - Susan Choe
At the end of the day the gameplay will keep some of the users, but not all of them. Half the gamers in our ecosystem come because of social interactions; the gameplay is good, but really the events and social activities is what gets them to come back, even in monster-killing games.
Meez - Sean Ryan
we start with the holiday theme. Then look at what the advertisers want to see. Then we look at the upcoming features, and make sure we have compelling items there. A lot of our prod dev driven by trends/fads in the userbase - pop culture influences etc.
Meez - Sean Ryan - what is a VG? We all talk about it like they’re just clothes, but that’s just one third. Another third is world-features (can I levitate, can I glow like a lightbulb), and final third is privileges, access - “can I sit in a special seat in a public space?” etc. [Adam Martin - think this is the future - VGs that open up new activities, as opposed to merely being about status etc.]I agree with Sean and Adam. When we designed our virtual goods economy at Tenuki, it was based on Legend of Zelda, i.e. acquiring items that unlocked abilities that opened new areas of the world or new functionality. Players could customize those special items, so functional was tied to decorative. (We had the problem of trying to innovate everything we touched - don't make that mistake. Honestly though, basing all our game design decisions on Nintendo games is probably the smartest thing we could have done.)
Obama has already invested in the games industry.
According to Gamespot, he's spent $44,465.78 on in-game advertising. Meanwhile, John McCain passed on the chance to advertise in games. Here's the text of the article:
Honestly, I'm more impressive with Obama's grasp of the startup ecosystem and its importance to the U.S. than a nominal ad spent on games, but hey at least some money is coming our way. :)For weeks now, Obama has been running in-game ads in games such as Burnout Paradise for the Xbox 360 across 10 battleground states. The full campaign started on October 6, runs through November 3, and spans a reported 18 games. According to the Obama campaign's pre-general-election filing with the Federal Election Commission, the Democratic challenger paid Massive Incorporated $44,465.78 for online advertising in early October.
Massive has previously said that it also approached Republican presidential candidate John McCain about advertising in games, but the senator from Arizona passed on the offer. As of press time, Massive representatives had not returned GameSpot's request for clarification as to how much of the ad campaign that payment covered.
"Facebook itself fully understood the pain the redesign would cause third parties. It consciously made painful-to-app changes, like pushing apps off of user profile pages and onto a sub-tab called “Boxes” that users have had a hard time finding. The changes, it believes, reward the most meaningful apps while punishing the trivial ones."If you agree with Eric, and I do, then here's the question: does Facebook consider social games to be trivial?- Eric Eldon, Venturebeat
