Social gaming — what the real players say
Social gaming is just barely old enough to be called an industry, but already the battle lines are emerging between major players Zynga, Playdom and Playfish.
Playdom and Playfish, since their acquisitions by the Walt Disney Co and Electronic Arts Inc respectively, have focused on bringing their branded intellectual property to the social gaming world. That could include a possible Playdom game with Marvel superhero characters, or the Playfish version of Monopoly now in the works (EA owns the digital rights to the board game).
Zynga is by far the industry leader in revenue and size, but it lacks the deep vaults of intellectual property that come with being part of a conglomerate such as Disney. So it has taken a different tack by focusing on marketing tie-ins with the likes of McDonald’s and convenience store chain 7-11. “One of the things that we really believe is going to happen is we think there is going to be much more connection between the virtual world and the real world,” Cadir Lee, chief technology officer for Zynga, told Reuters.
As Reuters reported on Sunday, the social gaming sector is bracing for a new wave of acquisitions.
With that development in the works, competition in social gaming continues apace.
Playfish, which was acquired by Electronic Arts in November 2009 in a deal valued at up to $400 million, has already rolled out social gaming versions of the popular EA sports games “FIFA Soccer” and “Madden NFL.” The company also has high hopes for its version of Monopoly due out later this year on Facebook, and it seems to be gunning for Zynga, which so far dominates the sector with its virtual harvest game Farmvilleplayed by 60 million users a month, according to Inside Network.
“If you look at games like Farmville for example by Zynga, they’ve dropped a third of their audience since their peak, and it shows that although those games have been highly successful, people do get tired of those games,” Sebastien de Halleux, Playfish’s co-founder, told Reuters. “If you’re looking at creating (game) categories, you’re looking for more than a one hit wonder,” he said.
Right now, EA through its Playfish division ranks third among social gaming companies in number of users, with 40.7 million players of its games, behind Zynga and Crowdstar, according to Inside Network. Playfish sees the use of well-known franchises and brands, such as Monopoly, as a way to build its customer base over time, said de Halleux
“The companies that do not currently have a strong franchise pool to draw on and are working actively on this, are basically at a disadvantage, and that leaves companies like Zynga and Crowdstar pretty much out there versus Playdom’s participation with Disney and EA/Playfish, which are starting to shape into what I think are going to be the winning companies,” he said.
As for Playdom, Christa Quarles, the company’s chief financial officer, said that she does not anticipate her company to rely on Disney characters and franchises for all of its content. But she mentioned the possibility of using the Disney-owned Marvel characters, and the use of sports content in its social games through a partnership with Disney-owned ESPN. She told Reuters that using Disney content is not all it takes to succeed, but that it “helps ease the marketing burden because people already know and love the characters.”
Zynga’s CTO Cadir Lee said that despite the competition his company faces from the likes of Playdom and Playfish, social games with branded intellectual property, such as Playfish’s Madden and FIFA titles, have so far failed to attract a big audience. “They’re much smaller than many of the other games on Facebook, so it remains to be seen whether users are going to care about that, at a level that is significant or not,” Lee said. “So far, there hasn’t been a game that was built on some sort of existing IP that has become a big game. None of the top 10 games are based on existing IP.”
What has succeeded for Zynga is deals such as its cross-promotion partnership with 7-11, which was unveiled earlier this year and involved 6,000 stores, and a similar cross-promotion with McDonald’s unveiled last week where for one day where the restaurant chain had its own virtual farm — with prizes to boot — embedded in the Farmville game. Lou Kerner, an analyst with Wedbush Securities, called the McDonald’s announcement “the most interesting deal in history” for social gaming, and he highlighted the potential it presents to use social gaming for advertising.