Shanti Bergel is a social gaming entrepreneur based in San Francisco.
To discuss potential business development or speaking opportunities, please get in touch by email at sbergel at gee mail dot com.
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“Beyond the age of information is the age of choices”
-Charles Eames
The legendary design thinker almost certainly did not have virtual goods in mind when he made that statement but, in my opinion, it informs our industry all the same. For, like the consumer staples sector, ours is a business based on consumer choice. The work of Howard Moskowitz (see video) is extremely inspirational to me in this regard.
With its recently announced acquisition of Playfish, Electronic Arts is now the first traditional video game publisher to make a serious play in the quickly evolving world of social games. In addition to over $2B cash on hand, EA also holds a treasure trove of extremely valuable franchises and brand relationships. While it has been argued that brands matter less in social gaming, I think that is a characteristic of where the space has been rather than where it is headed.
Not only does today’s acquisition serve to validate the space, it marks an inflection point in the development of the social games industry and has very definite implications for how to succeed going forward. This quote from Playfish’s COO gets at it pretty cleanly:
“Lets face it, there’s only so many people on earth, and at some point you move out of hypergrowth and into how well you nurture your audience and take care of them.” - Sebastien de Halleux
In short, even cheap distribution can only take you so far. A very nice bit of the way up the S curve in this case but, over the long term as viral channels fatigue and platform growth slows, the focus of the maturing business will necessarily shift to fighting churn by creating experiences of lasting value as measured by customers’ propensity to stick around and pay for them. This not only implies higher production values and deeper designs but an increased focus on service and customer satisfaction. By agreeing to be acquired now, Playfish would appear to be betting that the tectonic priority shift from raw acquisition to retention is underway.
Customer acquisition still matters a great deal of course but, the tactics and priorities at play do look to be growing more conservative. Perhaps the land grab era is drawing to a close. Recent changes in the Facebook platform are helping to drive developers toward the use of smarter viral loops based less on app spam and more on actual player benefits. This means of course that the other two big methods of customers acquisition, ads and cross-promotion, are about to get a lot more time on the field. In fact, within hours of the announcement, cross-promo for EA titles were already being shown in Playfish games. Over the upcoming holiday season, I would expect that eCPMs for game-related ads on Facebook will rise as the major players compete for prime inventory.
The big question hanging in the post-acquisition air however is just how valuable brands will turn out to be in social games. In an environment where cloning is becoming quite commonplace, brands may offer some defensibility. Social media could also serve as the crucible from which evergreen, next-gen casual brands are born and launched across multiple platforms (iPhone, DS, Wii, XBLA, etc.). Hybrid models will likely be explored; as will an very wide variety of cross-promotional techniques seeking to leverage all the combined touch points big brands have at their command. It will be interesting to see what works.
Overall however, it is clear that new ground is about to be broken and that Act II of the social gaming story will not look the same as Act I.
-Shanti
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