Although there are compelling changes in the gaming ecosystem described in the article, there's a pet theory of mine I wish to forward: people can become resistant to skinner box addiction. We get bored with just simple mechanics, eventually.
I see this with my kids (all under 12), they crave more interesting gaming than they did a few years ago; they do still play skinner type games occasionally, but more often they are searching for higher quality content.
This only downside here is that your sample size is maturing and we'd expect them to crave more interesting, complex games. So not sure we can agree with your conclusion based on your data set. Not saying you're wrong......
(overheard in a recent interview with Alan Kay on testing out new interfaces with users, which is problematic because they get keep getting familiar with it! The remark was by the interviewer, actually)
On the other hand, if the endorphin hit is too big people can absolutely become hopelessly addicted to skinner boxes. Just look at the slot machines at any major casino.
Slot machines are a whole different beast. You are drawn in by the hope of winning big, and constantly fed small wins to convince you the big one is going to come up next. The lights and sounds are to distract you from the fact you are spending money.
Math. I don't think it means what he thinks it means. All I see here is "proof by picture" with some stretched definition of "proof". The only relevant part of this entire piece was this:
>Because when something is easy to build and sell — and appears to make money — a lot of people are going to gold rush the market and drive your margins into the ground. Now there are a million alternatives.
The low-cost gaming industry makes money off one-hit-wonders. You can't consistently manufacture one-hit-wonders.
You can't consistently manufacture one-hit-wonders.
You don't need to consistently manufacture one-hit-wonders, just enough to make up for the losers. A lot of businesses are like this. Investing in startups, producing movies, etc, etc. And there are stars in each industry that do seem to magically consistently manufacture one-hit-wonders.
My initial reaction is that this is the same kind of knee-jerk reaction that says Facebook is somehow doomed and irrelevant.
I think this is good and worth reading, but the title is hyperbole, and if they're actually concluding that Zynga is done, it's premature. The term "right-sizing," used in another article quoted here, is at best manager bullshit; however, it's not necessarily wrong in this case.
I dislike many of the things they do and have done, but "napkin math," particularly prefaced by "basic," is pretty much Tarot card valid. Like so many unsavory companies and ventures of questionable value before them, Zynga has a serious user/cash/revenue base, and it entirely remains to be seen whether they're just hemorrhaging value or whether they're actually making moves that will keep them solvent and push their business forward.
Title is link bait, but he never claims Zynga is dying.
> I don’t think Zynga fades into the sunset. They are going through tough times, but they’re not done. Zynga still makes money. (In fact, they could do a smart pivot and get into the data center game, though that is another race to the bottom.)
I read all the knee-jerk reactions to Facebook and Zynga as the next IBM/Yahoo/etc. They not the monsters they used to be. Now they have to find a way to exist in a world that no longer revolves around them.
I think this misses the point entirely. Zynga is not failing because their products are cheap to recreate. Plenty of companies, in tech and beyond, have easily recreatable products but do just fine. Zynga is "failing" (if you can call it that) because they depended on cheap user traffic from Facebook - both through free virality and later cheap ad buys. Facebook is maturing as a business and ad prices are going up. And Facebook realized that all that game spam was just not worth the 30% vig they charged (probably the hard way - through testing for user engagement). Take away those temporary advantages and Zynga is just like any other gaming company.
This is a right sizing of the company and its revenues to reflect the games they own, once you take away the cheap/free traffic.
I don't know that it's so much Facebook ad prices going up (they haven't gone up much really) as it is Zynga having burned through all of the potential cow clickers. When you run a Facebook ad, the price per user increases as you saturate the market, even if the overall network's prices remain steady, due to clickthroughs dropping.
Zynga games are typically low-RPU, mass appeal, which as you mentioned relies on cheap traffic (mostly from other Zynga games.) You can only keep shuffling people internally from one game to another for so long until they all leave for Candy Crush Saga.
You're probably right, FB prices went up for Zynga more so than others because they saturated their market (which just took longer cause it was bigger). However, anecdotally, I've seen FB prices rise 25 - 35% over the last 18 months.
Supercell makes two social games that generate more revenue than all of Zynga. Had Zynga created these hits (or bought Supercell early), then the story would completely opposite.
I am not sure why Zynga is struggling, but I am certain it is not because social+in-app games is a failing business model.
It's not that social games is a failing business model - although I can see it dying out - but that it's a failing business model for Zynga. The barrier to entries is so low, that the market which used to be dominated by Zynga is now getting divided up among a million developers, including Supercell.
One issue with Zynga that I haven't seen explored enough is that the cost of making a Zynga Facebook game has increased dramatically, while the potential revenue from the same Facebook game has not. Zynga tried to apply their own version of AAA quality to games like CastleVille, and the result was that they spent a ton of money and still didn't make as much as they did with FarmVille (a game which took six weeks to create). Same problem with Mafia Wars 2 and FarmVille 2.
None of the surprisingly profitable breakout games mentioned here have been particularly expensive to make - Kixeye's three released games were supposedly built with very small teams, same with Supercells' enormously successful Clash of Clans and Hay Day.
Zynga is still making money. Lots of it. They just got too big too fast and had unrealistic expectations of their market's ability to sustain their games. Granted, user acquisition costs are much higher than they were before, partially as a result of Facebook making their viral channels more difficult to use... but IMO Zynga would have had these problems regardless.
I think the key point is that the Zynga formula was easy to recreate, and so competition entered and started to splinter the market pie up. Basic market economics principle.
Except that's not what happened here. Zynga dominates the facebook games market and always has. Everybody else, including any newcomers looking to become "the next Zynga" all fight over the small piece of the pie left by Zynga. I can't remember who here said it, but nobody's going to be a better Zynga than Zynga.
The problem is the market itself was never as lucrative as it was made to seem and it's shrinking fast. I can't say a whole lot about that last part, but let's just say Zynga isn't the only social gaming company laying off staff to refocus on mobile...
Part of the point of the article was that maybe everyone doesn't want to be the next Zynga. If you are a two-man development studio, a tiny piece of the pie goes a lot further than if you're 3000-employee Zynga. And there are a lot of two-to-ten-man studios to take a lot of small pieces of pie...
Zynga does not dominate the Facebook game market any longer. The #1 game is Candy Crush Saga and is from King.com. If you look down the top apps, you see King.com is quite competitive, and a few other people are in there.
And because top apps are listed by MAU, rather than revenue, you miss the mid to hardcore segment that is very profitable. Kixeye and Kabam are in the 9 figures range and growing.
The market is wide open. That's not why Zynga is strugglign though.
Exactly the opposite. None of Zynga's games are original. They wait until a new type of game becomes popular, make a copy, promote the hell out of it and then dominate the competition.
I think they're just too damn big. Zynga should be a 100 or 200 person company. They'd be a very successful company with that kind of overhead. They simply scaled up far in excess of what their long-term business could support.
"Social games didn’t cost much to build. In fact, once you had the underlying code and frameworks — provided the game’s play and goals were roughly the same; earn points/money/whatever — you could turn “Sorority Life” into “Mafia Battles” by just switching the graphics and text, a staggeringly cheap process called “reskinning.” (Doable in a weekend) Bam, another product to push. "
I love it when non-technical people underestimates the task of pushing / building a new product. (or technical people who consistently super underestimate the tasks in hand).
This is just plain wrong anyway. Creating a social game is much more expensive than a iOS title for example. Sure it's still cheaper than most AAA console games but really cheap game making is thriving - in indie companies and actually interesting new products they make.
In a social game, the back-end has to scale for insane growth, your users might be going from 100 users to millions of users in days.
Drives me absolutely nuts. My CFO jokingly refers to my development of a highly dynamic and complex UI that synchronizes with an even more complex backend as "plumbing".
Zynga had always felt like a fad to me. I just never saw any long term value. Oculus Rift though, there's a gaming company i'd actually put some money in. They have creative people, some kind of barrier to entry, and a real passion for the industry as opposed to a pirate mentality Zynga always seemed to exhibit.
I wonder what the corporate culture is like at Zynga, and if it promotes creativity and innovation with its developers. I suspect it doesn't, and that that is the real reason it is failing at creating good new casual games.
Hmmm...I don't know. I look at Zynga and feel like it is/was in a position to really continue succeeding. Games may be easier to build but it's still difficult to get users. Zynga should have been the best at building cross-platform. Zynga should have moved much more forcefully off Facebook (I never really understood the idea of going to Facebook to play Farmville). Zynga should have been snapping up/copying cool new games before they got too big. True, it is a hits business to some extent but there is a lot more you can do with data and an installed base/captive audience.
Virtual goods are a small byproduct of the gaming industry. You can’t expect to make serious money from them. Even World of Warcraft with tens of millions of dedicated hardcore gamers makes little money from virtual goods. And those are people who pay to buy the game and also pay for a monthly subscription, not the average freetard user of Zynga.
If they had created an MMORPG or something like Eve Online which would evolve through time then maybe they would stand a chance with this model of income. But then again you can’t make that kind of games on Flash.
What makes you so sure about that? Until recently I used to work on mobile games with in-app-purchases. There are a small number of users who pay absurd amounts for virtual goods. Making your game free increases your downloads such that even if only 1-5% users pay anything you could be making a lot.
This opinion is pretty behind the times. Like, two or three years behind the times.
Just a few examples of games that make the majority of their funds from virtual goods:
League of Legends(the most played game worldwide right now)
DotA 2/Team Fortress 2
Maple Story
Planetside 2
It's actually generating a huge amount of cash. WoW just wasn't ever set up for it, and still to this day sells around a total of 15-20 virtual goods products IN TOTAL. Most services that rely on it for revenue have that many at release, let alone years down the road and long into maturity.
Riot games is making over $100m/year off virtual goods.
WoW never had tens of millions of subs. They peaked at 12m.
They made over 100k in the first day of selling their first virtual good (the infamous star pony). Their next MMO is rumored to be virtual good based model, based on the success they have seen in WoW and DIII.
Social gaming still has plenty of life in it, with Pocket Gems games, Puzzle and Dragons, and other games continuing to do well.
Until the entire category of social games dies globally, I'm not going to entirely count Zynga out (as much as the misanthrope in me would love to see Pincus bite the dust).
Besides, Zynga still has the online gambling play coming up for them, which could be a serious game changer if adopted in the States.
I think Zynga will continue failing simply because they were wrong about human nature and user needs.
I've seen my acquaintances on Facebook, playing less and less games, sending less and less invites. I'm connected to a lot of regular non-technical folks on Facebook and I barely see any traces of games in my feed, whereas 1 or 2 years ago, my stream was chocked by games.
Zynga games seemed like fun. Users stayed for a while for whatever reason. However advancing the game by pressing buttons to increment counters is simply not fun. Once the novelty passes, you start realizing what a stupid game it is.
There's also a new breed of games on iTunes. Games that require slightly more skill, but after the first level or 2, they become next to impossible to advance unless you pay up or spam dozens of your friends. Again, at some point users realize that the game is not at all about skill or fun, but about willingness to pay up.
Basically this new breed of games is depending on new users for survival. At some point the market will get saturated by people that tried these games out and that have grown tired of them.
Also, what the hell does social mean anyway? 10 years ago, social meant to play CounterStrike or StarCraft with your high-school buddies, games that are still played by groups to this very day. Does social mean spamming your friends with annoying invitations? Or does it mean multi-player games where you and your friends can have fun together? I'm asking because I'm seeing a lot of the former and not much of the later ;-)
Facebook also re-tooled how they display in-game sharing and such in response to Zynga and many other app companies that constantly spammed Facebook's user base. My suspicion is that this led to a precipitous decrease in Zynga's ability to acquire new customers.
I don't think your acquaintances are a good representation. Social games are still doing well. Maybe not the Zynga-style games, but check out http://www.appdata.com/. #1 is Candy Crush Saga, which is kinda like a social Bejeweled. I'm getting requests from people I didn't even knew played games. King seems to be doing well lately. But note that Zynga's games still reach 171 million users per month. That's huge.
Zynga may have too many games, employees, and expenses, but the category has plenty of life yet.
"Social" in the context of games basically means "multiplayer for everyone". This aspect of the game can be approached in many ways, just like "platformer" may mean Rayman, Mario, Sonic or even Temple Run. Some examples:
- spam your friends or pay
- asynchronous trade
- visiting each other
- multiplayer features introduced slowly over time
- promoting the creation of groups and structured relationships among players
- automatic interaction with other players
- any combination of these
It normally does mean avoiding things like these:
- synchronous play
- highly competitive or highly skilled play
The above should cover 90%+ of the social gaming spectrum without entering value judgements.
Unfortunately the current crop of "social" games preferred social/psychological gimmicks, over having fun. But in the end, the need for fun always wins.
Spamming your friends, buying FB gold, visiting your friend's stupid farm, these are not fun activities, these are just actives required to advance in a stupid game that involves incrementing counters.
When I'm thinking of what social should be, I'm thinking of chess, or strategy games, or Monopoly, or whatever that involves playing against other users, instead of a computer. It doesn't even have to be synchronous multiplayer. Chess doesn't have to be synchronous. You can have turn-based strategies or RPGs (as in Heroes of Might and Magic, which used to be pretty fun). You can have games where the users themselves establish what the game is.
But companies like Zynga went the other way around, focusing on the virality aspects, instead of those aspects being a side-effects or an add-on to a fun game. These games are broken by design.
Just like with any new industry, there's the concept of user saturation and quality bar being raised. Pong was revolutionary and industry-formative in 70s.
I work in this field and when we say "social" games, we really mean flash-based facebook-hosted games. The games you mentioned, while they do have social components, are classified as "mobile" games. The former is dying quickly, and will completely die out, it's just a matter of time. The latter is still going strong, growing even. Which is why Zynga (and every other social game company) is focusing mostly on "mobile" right now.
Upvote for Puzzle and Dragons. I looked down on gaming on smartphones before, but its a great game. I hesitate to call it social gaming because there is minimal interaction.
You don't have to pay to win, and there are many videos of people beating the most difficult dungeons with thought out party compositions.
Articles like this are generally useless. Once and event has happened people can come up with all kind of explanations citing why the product failed. There is no wisdom in it.
This is not to say the article has nay false assertions but liking them to Zynga's failure may not have any lessons for you and me.
Zynga did not steal away casual gamers from other platforms. They tapped the endless realm of social dynamics. As soon as facebook's growth started stalling, they should have created their own gaming network.
I see this with my kids (all under 12), they crave more interesting gaming than they did a few years ago; they do still play skinner type games occasionally, but more often they are searching for higher quality content.
This is cool! It makes me hopeful for gaming.