Industry Insights

As it becomes more difficult and expensive to attract new users to games on Facebook, distributing social games on other social networks is becoming more attractive every day. Game producers can see much better margins, better pricing power and closer-knit communities on these smaller, more focused destinations. These destinations tend to concentrate on a particular community, whether focused on geography (StudiVZ, Tuenti, Nasza Klasa), ethnicity (QuePasa, Black Planet) or interests (Gaia, Smallworlds). The differences between these cozier specialty networks and Facebook do not stop at these areas of focus. Players have different expectations of service level and interaction with other players. The companies and technologies underlying these specialty communities also have their own assumptions and special needs. Knowing and leveraging the advantages of these sites can make your launch into this rich set of users pay back handsomely.

Specialty sites have tight communities of dedicated players. The gamers all know each other and have healthy (and sometimes unhealthy!) rivalries that span multiple games. Part of the reason for this is there are tens of games on these sites, not the thousands of games that are on Facebook.  Gamers talk on game-dedicated forums across forums on the site. Heavy users on these sites often know the sites’ customer service people by name, and vice-versa. They tend to get personal service from staff. This expectation is especially true for the “whales” - big spenders - on games on the site. This is a great advantage, since these big spending players tend to play several games, and represent a potential audience for any new games launched on these sites.

One upshot of this closeness of community is that the user bases of specialty sites insist on “fairness”. Cheaters are called out by name on support tickets and user forums. It is expected that the site or the game will punish or ban misbehaving users. Also, this close-knit community makes certain practices that treat different users in different ways, like A/B testing price or item award behaviors more difficult. This is because users share this information freely, and in a very closed community.

Specialty sites can represent a great value in terms of price of user acquisition. Often the per-user acquisition cost is a fraction of the Facebook rate, if not in some cases free. Given the smaller total number of games, cross-promotion works much better, since the number of possible other games to play is smaller. The price for this dramatically different acquisition cost is significant coordination with the site itself.  These sites need high-touch support for promotions, game launch timing, featured game placement, etc. While there is the possibility of buying ads on these sites, timing and availability vary much more widely.

There are also significant differences in the underlying integration technology of these sites. Off-Facebook sites have very different integration APIs for the game canvas, viral channel distribution formats, timing and permissions on notifications. There is even a wide range of API formats and features within the “standardized” OpenSocial-based sites. A big advantage here is that many of these sites not only LOVE viral messages, but base in-site reward systems on notifications, leaderboard achievements, etc. So they need to work almost as well as your currency system. Specialty sites have very different security rules about friend graph access and other user information, particularly when EU privacy laws are in effect. There is also a dizzying array of payment options, pre-existing in-site currencies, based on user demographics, country, site policy and other factors. Users on many of the most lucrative culturally- or geographically-focused sites also have an expectation to play in their native language, which implies its own complex set of issues to manage for existing and updated content. Stay tuned for posts dedicated exclusively to game currency and localization coming soon!

There is a lot of opportunity to get high-margin, engaged users on specialty social networks. To take advantage of this very rich vein of opportunity requires adapting to the very specific needs of these focused networks. Viximo helps our game development partners address and exploit these differences by handling them ourselves, shielding the game team from the vast majority of the work involved. Viximo consolidates customer service requests within and across sites and passes just the root-cause issues to the game partner. We answer most game play questions, maintaining site-specific and game-specific FAQs and all payments-related requests. Viximo coordinates with each of the Publishers’ Support and Forum organizations to communicate with the user base in a way that is specific to that specific community. We assign a dedicated Product Manager to every publisher who focuses on all Viximo-distributed game support. These Product Managers also work directly with the business people at publisher sites to optimize launch dates, promotions and leverage cross-promotion across games on a site. We become a trusted partner on these sites, as a continuing source of high-quality games, and get preferential placement and pricing of promotions. ...

5 Lessons Learned

Let’s face it. We all love getting a deal. It’s a well-known fact that many retailers just mark up their prices so they can reduce them later on, but I’ll admit I get a small thrill out of seeing that “40% off!” sticker on a price tag. Even the message on my grocery receipt that tells me I saved 23% for being a “member” makes me feel like a smart, savvy shopper.

Well, social games are no different. Since only a small percentage of social gamers will ever spend money on a particular game, sales can be a great way to drive more paying users. Here at Viximo, we’ve developed a variety of tools to help us run sales and promotions in a fun and engaging way. This is a short list of what we’ve learned along the way.

1. Create a sense of urgency.  

We’ve experimented with various timeframes for sales, ranging from minutes to days. The result? We’ve shown we can create just as much - or more - lift during a 15-minute sale than a full day or even multi-day promotion. The reason? Social games are played in short increments (a typical session lasts just 2-5 minutes), so there is a relatively small window in which players make purchase decisions. A discount that’s only available for 15 minutes can therefore drive more of these impulse buys. If a player sees that something will be available all week, they’re much more likely to enter into the “Oh, I’ll do it later” mindset.

2. Mix it up.

While we try to run sales with some regularity, we’ve found that you can’t be too predictable. If you start doing special discounts every Friday starting at 5:00, chances are your players will catch on and wait until the end of the week to spend their money. With this in mind, we’ve developed a number of different ways to run sales, and try to make each one unique. Just a couple examples:

• Collectible sales - These multi-day sales reward players for coming back to a game each day with a higher discount on their purchases. Each day they also receive a special prize that they “collect” in a banner above the game. 
• Flash sales - These minutes-long sales can happen at any time throughout the day, with little advanced warning. 

3. Be relevant.

By far, we’ve seen the most success when we run sales tied to holidays or events. And because we treat every site in our network separately, we can make it relevant to the local culture. For instance, this spring we’ve done promotions for Carnival on Orkut (Brazil), St. Patrick’s Day on Yahoo (US), and Easter on VZNet (Europe).

4. Test your limits.

It’s funny how sometimes you can get more people to buy something when you have a low discount vs. a high one. Without getting too much into the psychology of purchase decisions, I’d say it’s all about the perceived value. Sometimes, “75% off” means “Please, take this crap off my hands”, while “40% off” means “Wow, that’s a bargain”. We’ve tirelessly tested different combinations of discount, messaging, and timing on each of our games and sites to maximize conversion rate and overall revenue.

5. Make it personal.

We’ve built a robust targeting engine to help us run specific promotions to a selected portion of our audience, based on behavioral data. Why? For starters, we can drive the behaviors we want without giving money away - after all, why offer a discount to someone who was probably going to buy anyway? We can also get specific with our messaging when we’re talking to a small group of similar users, driving a higher CTR (up to 60% higher!) on behaviorally-targeted promotions.

Sales are just another example of how we add value to our partners’ already kick-ass games. And through a process of development, marketing, and constant testing, we’re learning more every day. ...

We had a chance to connect with a number of mobile app developers at the local Meetup hosted by RaizLabs last night at Microsoft's NERD center in Cambridge.  There's clearly a buzz around Mobile app dev happening in Boston and I really like this city because it's compact and the developers who come to learn about the tech have become a tight group.  So tight, in fact that I was hit up by several folks after we demo'd our sample app and they all asked the same question: "I liked the demo, but what do you guys do?".

I'll take the hit for that because I've been demoing a sample app that showcases the capabilities of our Social Zone SDK for Android and iOS but eyes focus on the demo, not the technology behind it.  The lesson here is to focus on what the dev's care about most: time.  I know that mobile app developers can connect their games and apps to preferred social networks like Facebook, Tuenti, or Google+ to expand their product reach and improve discovery with a single line of code from our SDK, but the message got away from me and I’m seeing it in other demos (and webinars) too.

That's "my bad" for falling into an age old demo trap and a reminder to all that it's too easy to do.  We built a slick app to showcase capabilities of our SDK, but what we offer is a white label solution so the slick demo app is really irrelevant to developers.  Now, in answer to the folks who stopped me after DrinkOnTap last night and any others who have stayed up late to add a social graph to their apps, I'll just say this: "We provide social hooks for mobile apps, and you can pop that in with a single line of code. Bang. Done."

Add another line of code for presence detection, another for optimized messaging, and another to provide in-app recommendations for other apps your company provides.  Single lines of code that allow mobile app dev's to spend their time building better games and apps, not banging their heads doing user authentication and messaging to Facebook and similar social network APIs. As I said in my last blog, "let us do that". ...

You're reading this copy because it spilled out of my head, I popped it into a doc and pressed a few buttons that served it up for you in whatever device or medium you have handy.  Your car may be reading it to you as you drive, you may be scanning it on your phone on the metro, or at your desk as you sip your soup.  What's cool is that you no longer wonder or care what happened between my writing it and your uptake.  Someone, or something else is responsible to make sure the bits were posted, a network moved it, your device could find it and give it to you, and someone actually got paid to enable that process.

At our upcoming Hackathon in Boston, we'll be sharing a first glimpse of our Android SDK for mobile app developers who want to add social hooks to their apps and games.  Sure, some Android games can connect to your personal network of friends on Facebook now, but how does that happen?  What the players don't see or likely care about is how much time the app developers need to spend keeping their apps updated to take advantage of the back-end services that the social networks provide.  That's where Viximo shines.

By leveraging this newest SDK, mobile app developers can write their social network integrations once, and we'll take care of the heavy lifting and updates when they're ready to open their games up to the world of users on multiple social networks.  Heck, we'll even take care of native messaging, real time presence detection, recommendations and tracking requirements for those platforms too.  We've been doing it on the web for years, and now we're going mobile.  Learn more at the Hackathon and watch for detailed resources posted to the site coming soon.

  ...

To follow up on my last post, I decided to take a look at how men and women use social notifications on our platform. For the uninitiated, notifications come in three flavors:

●     Invites, which are sent from one user to another, encouraging new users to come play the game
●     Messages, also sent from one user to another, often used for sending gifts or other specific items
●     Activities, which are posted to a users’ wall or other social feed, highlighting an achievement, mission accomplished, level-up, etc.

Looking at behavior over the past 6 months, activities by far are the most utilized form of social sharing on the Viximo platform. Nearly twice as many people have posted an activity than have sent an invite. That doesn’t mean that activities are more efficient for viral growth; the conversion rates from invites and messages are higher than from activities. In other words, users are more likely to click on a private message from a friend, rather than an activity post that is likely to get lost in their social feed.

What about gender differences? On average, men on our platform are 10% more likely to post activities to their social feeds. Women, on the other hand, are nearly 20% more likely than males to send invites. They also tend to invite more friends (22 on average, vs. 18 for men). Both genders are equally likely to send messages, but women send nearly 50% more messages per user.

Is it any surprise that guys like to blast their entire friend group with posts about their accomplishments within social games, while gals prefer one-on-one interactions? Maybe not. But considering the long-held stereotype that social games are made for bored housewives, I wasn’t expecting men to be big social sharers when it comes to game activity (at least not publicly).

Notifications are an important component of social game play (they put the “social” in social gaming). Obviously, they are key to growing your user base, but can also contribute to retention. It can be a challenge for both game developers and social networks to make the most of viral channels. Knowing how men and women use different types of notifications can be a key part of the optimization process. After all, viral channels are free, and who doesn’t want to reduce their marketing costs?

Anyone else out there surprised by these results? ...

Now that social games have evolved past simple farming games to a full-fledged multibillion dollar industry, does anyone still believe that the typical social gamer is a 43-year-old woman? While most of the initial games on Facebook appealed to this demographic, social game content has grown in both volume and variety. Sure, there are still a lot of clones out there - look at the sheer number of farming games - but new genres and game mechanics have emerged that pull in a much wider audience.

To demonstrate this, I took a look at three of the most popular games across the Viximo network, focusing on gender.

GAME 1 - Big Business. This graph is probably what we would typically associate with a social game. Females account for about 60% of the users, views, and revenue for the game across our network:

GAME 2 - Ravenwood Fair. This game, deployed on similar sites as Big Business, has a slightly different pattern. Males make up half of the audience, but are much less engaged and certainly don’t monetize as well as females:

GAME 3 - Backyard Monsters. On the other end of the spectrum, this game blows the whole “housewives are the only ones playing social games” theory completely out of the water.

As these data show, social games aren't just for women in their 30's (despite what your core gamer friends might have you believe). As with traditional games, social games can appeal to many different demographic groups by providing carefully tailored content and functionality. Each segment of users has different - and potentially advantageous - usage habits and spending patterns. This is where Viximo comes in.

As a social game distributor, we use a game’s demographic data (among other things) to inform our approach to advertising, cross-promotion, community messaging, sales and incentives, and more. Making a great game is a big part of success, but getting it into the hands of the right users is even more important. ...

Read an interview with Viximo's CEO

Wondering what the opportunity is for social game developers beyond Facebook? Our CEO, Dale Strang, sat down with Gamasutra to enlighten them on the subject. Some of the highlights:

• Many developers either think the off-Facebook opportunity isn't there, or is too difficult to take advantage of.
• While Facebook may be the single dominant global player, there are a number of high-quality, regionally targeted social networks with engaged audiences across the globe.
• Understanding these markets can be a difficult task for developers (this is where Viximo comes in).

While the freemium model originated in Asia, the North American social gaming industry has so far been evolving in an inward-looking fashion, focused on consolidating products and users in America or, generally, the Western hemisphere. However, recent trends suggest that the industry will begin to see some transpacific activity; there will be a push in Silicon Valley towards moving into other markets – especially to Asia where there is an existing history of and demand for social games – and an equal level of incoming interest from Southeast Asian developers looking to expand into the U.S. market and cross pollinate their offices, products and personnel.

Zynga acquired XPD media in China and Unoh games in Japan, a clear indication that the company has plans to grow eastwards. Zynga would need to localize its games for the Asian market but with such strong partnerships, the expertise is likely to benefit them greatly. Indeed, Zynga just launched its public beta for its first international title, Zynga Texas Poker, in traditional Chinese, catering to local cultural norms by offering prizes in denominations of the lucky number 8, such as 8,888 poker chips.

Other stateside game developers are also expressing an interest in distributing to Asian social networking sites. Earlier this year, Viximo conducted a survey of the industry’s top independent social game developers, and 35% indicated that they plan to distribute their games on RenRen in the next 12 months, while 32% plan to be on Mixi.jp by next year.

Interest from Asian side has also been strong: SoftBank Japan invested $150 million in Zynga and $10 million in RockYou, while Japanese mobile and social game developer DeNA is on an investment spree in the U.S. and having acquired or invested in four American gaming companies this past year, appear to be aiming to become a household name in the U.S. gaming market, particularly in the mobile realm.

Additionally, traditional video game makers in Japan are facing with a shrinking home market demand as the social games sector explodes. Following a fiscal year net loss of $316 million, Namco Bandai is preparing to supply two games to Facebook, and it is very likely that Capcom, developer of Street Fighter and Resident Evil, will also begin to offer social versions of these games on Facebook and other U.S. based social networks. China’s social networks tend to create their own games and have otherwise closed platforms and sites that are experimenting with open platforms are often accused of promoting their own games with more viral notifications than those created by third parties; thus, they are more likely to find success distributing on American social networks that are more open and third party friendly. ...

It took a while for social gaming to become accepted as a legitimate genre by the gaming giants, but major game publishers are now embracing virtual goods and the industry is heating up with activity.  Big software players like Electronic Arts and THQ are getting their feet wet in social games through acquisitions of independent studios and by launching free-to-play versions of popular console games. Ubisoft has entered the arena already, launching games like Tick Tock, Horse Gaga and Vineyard Country on Facebook, but has not seen much success with those titles.

On the console side, Microsoft is estimated to have earned over $600 million through virtual goods on Xbox Live, and Playstation is looking to social games to breathe life into its barren Home virtual world. We expect that these companies will inject huge amounts of production and marketing dollars to support these new ventures, especially as they compete with Zynga and Playdom, and many are heralding this as the inevitable end of the independent game studio. However, we believe that the “little guy” will actually continue to thrive in the social gaming sphere, particularly because the big players’ strategies will be lacking in three critical areas:

1. User Acquisition

Software gaming giants are used to traditional distribution models of in-store purchases or direct downloads. In contrast, social games have a very different purchase funnel: purchase intention is flexible and highly influenced by viral factors; commitment cannot be guaranteed because the games are free to play; and conversion to a paying user involves providing just the right kind of incentive at just the right time. Moving a player through the funnel and monetizing their activity require an intimate understanding of how social game mechanics tie in with their respective distribution platforms, and over the past year, social game studios have invested a lot of money and energy into learning these nuances. The big software developers who are just entering the space will pump marketing dollars into the social game sphere, but without knowledge of how to properly monetize users, their user acquisition costs will end up exceeding the lifetime value of the user. Instead, smaller social game developers will have a treasure trove of knowledge about how to aggressively monetize a smaller audience, and will succeed in cultivating a more profitable user base, through better game design and improved use of the social graph and viral notifications.

2. Distribution

Major game publishers entering the social space will play it safe and look to follow Zynga’s lead by distributing on Facebook – we have already seen Ubisoft launch three Facebook games. Facebook is attractive to game publishers because of its ability to deliver large audiences and because it is the only place where they can leverage their marketing budget, as no other platform has an advertising platform that they can utilize so effectively. But as described earlier, Facebook is oversaturated – there are over 550,000 active apps on the platform – and the big software players will fail to take advantage of the opportunity represented by so many other distribution channels because they will be so focused on Facebook. Instead, smaller developers will innovate in the way their games are distributed and see greater success this way.

3. Content

The online gaming industry operates like the Hollywood studio model: find a formula that works and create one mega hit that recoups all costs; after all, a large share of the gaming industry’s software revenues are generated just by the Grand Theft Auto franchise. Major game companies will take a similar cookie-cutter approach to social gaming and this will be a big flaw in their strategy. It’s no secret that current social games are all variations of the same theme – the numerous lawsuits between social game companies point to the lack of creativity – and users are starting to get worn out with the simplistic, repetitive game play dynamics of first generation of social games. And while the big players will be improve production values through larger budgets (including leading the march towards 3D social games), true innovation will be hard to come by in their offerings since many social gaming hits have come from acquired IP. As Zynga’s and Playfish’s acquisition spree slows down, its growth and innovation will also stagnate.

Instead, smaller, independent game developers will lead the process of improving game design and understanding how to convert players to payers during different trigger points within the game. They will also lead the way with game play innovation and making social games more social by adding text and voice chat functionalities between avatars, combined activities, tournaments and shared goals, and more interactivity between individual user environments.

Like our predictions for the future? Let us know what you think in the comments. ...