With Electronic Arts' recent $400 million purchase of Playfish, social games are all the rage in today's tech industry. That's no surprise: lightweight games on social networks (which people usually play while they're goofing off at work) and social games have attracted huge player numbers with the biggest titles boasting 20 million to 60 million regular players.
City of Eternals.
(Credit: Ohai)But here's the worst kept secret about the genre: most social games aren't very, well, fun. They offer limited interactivity, game play challenge, and graphics. Consequently, players aren't invested enough to spend much money on them, especially compared to "hard-core" massively multiplayer-online (MMO) games. Even with the better social games, average revenue per users is less than a $1 per person.
By contrast, millions of World of Warcraft players willingly pay $15 a month in subscription fees alone. But, what MMOs like WoW have in revenue, they lack in growth due to the high technical hurdles and subject matter. WoW seems to have tapped out at around 12 million players, far less than the largest social games. And while the sustained revenue is great, attracting new players remains a challenge.
Enter City of Eternals, a Web-based MMO with a modern vampire theme from a new start-up called Ohai. After a long conversation with company CEO Susan Wu, a pioneer in the online gaming and virtual goods space, there are a number of reasons I think Ohai has the potential to succeed in the sweet spot between social games and hard-core gamer MMOs, and why the shift to social connection could become gaming's next big thing.
Ease of play
The biggest game platform isn't the Nintendo Wii or the iPhone, it's Flash, a browser plug-in installed on more than 99 percent of the world's PCs. An estimated 200 million people already play casual Flash-based games.
And while most MMOs require a huge client install, Ohai CTO and game industry veteran Don Neufeld (Everquest II, PlanetSide), and his development team (Free Realms, Lord of the Rings Online, Star Wars Galaxies, Dungeons and Dragons Online) have re-engineered Flash into an MMO platform that pretty much anyone can play, without having to install additional software or hardware upgrades. As Wu put it, this means Ohai can build "Games for your aunt who plays FarmVille on Facebook and your cousin who can't play World of Warcraft on his school PC."
Deep social network integration
City of Eternals is fully integrated with Facebook and soon Twitter, but that doesn't mean the game is only playable within the social network. Players' Facebook profiles follow them into the vampire world, so whenever you're curious, you can click on a fellow vampire, and check their Facebook profile. This is the first time I've seen this feature in any MMO, and it brings in some new possibilities--making it much easier to socialize (and of course flirt) within the game. Wu told me City of Eternals' gender spread is 50-50 (extremely rare, compared with male-dominated MMOs), so I wouldn't be surprised if it became a major online hotspot for socializing. Especially since the game isn't about geeky elves and orcs, but far more popular vampires--see below.
Subject matter
The Twilight book series has sold more than 85 million copies worldwide; the Underworld movie franchise has brought in more than $300 million in theatrical sales; and TV's True Blood and Vampire Diaries both have huge cult followings. Vampires are obviously pervasive throughout popular culture, but there's yet to be a full-fledged vampire MMO.
Still in Alpha stage, Wu told me that players average 12 logins per day in the game, with an average session length of 5 to 6 minutes, fulfilling one of the company's goals of making a "bite-sized MMO."
City of Eternals is Ohai's first of many of what they call "MMOs for everyone." Of course, there's still a lot of unknown variables. The vampire craze may wane too soon, and as the Electronic Arts purchase suggests, the competition is huge. Maybe I'm crazy, but by next year, I think there's a good chance the most popular MMO on the market won't be World of Warcraft, but City of Eternals, or another game that crosses the boundaries between MMO and socialized gaming.
Beverage brand Vitaminwater, known for both tasty thirst quenchers and creative marketing, on Tuesday launched "Flavorcreator" a Facebook application designed to crowdsource ideas for new beverage flavors. The company plans to announce the new flavor in December, with the product slated to hit shelves next March.
In addition to voting on new flavors, Flavorcreator lets users play games and win prizes while providing the company with valuable market research and building brand awareness.
Although I still don't personally enjoy Facebook, I do think that it has potential as a marketing tool. There is clear value in targeting and defining a target audience segment in this way, provided that the application is attractive and well-designed (Flavorcreator is both), presumably leading to higher levels of interest and user interaction.
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Funding for virtual worlds has grown dramatically over the last year and companies need to find sustainable revenue models. Transactions of virtual goods allow for new cash flow into both subscription and nonsubscription sites.
But some users don't like the idea that you can simply buy something to affect the game in your favor. Accordingly, games need to be very clear about the purchased goods unfold into the game.
The team at Champions Online have outlined how microtransactions will surface in the game in their State of the Game blog post.
... Read moreWidgets, portable pieces of Web code, have become synonymous with interactive Web page components, often Flash-based games and ads can stick out like a sore thumb. Functions are great, but they need to be seamless.
Instead of just offering a page function, the widget technology is turning out native applications that blend seamlessly with newsfeeds and spread virally through friend lists. Accordingly, the w-word had to go and this morning iWidgets became Transpond. Transpond, a word that actually doesn't mean anything, calls to mind words like "translate" and "respond," more positive connotations than the has-been widget.
Widgets have moved to the wrong side of the hype cycle while apps have their own catch phrase ("There's an app for that.") Meanwhile, the underlying trend that powers what Transpond founder Peter Yared calls the "the atomization of the Web" remains strong.
Transpond offers an easy-to-use platform for creating native applications for Facebook, MySpace, and iGoogle and it's been humming along since its launch (as iWidgets) last summer. The company has big-name customers including CBS, CNN, Lifetime Television, and Revision3, all of whom had turned to the platform to get their content onto social networks.
Content publishers, marketers, and businesses can no longer slap up a Web site and expect to have an audience. Content has to find its audience wherever they happen to be, whether it's hanging out on Facebook or fiddling with their iPhone. Be it via widget or app, delivering the right content in the right way (with a bonus for interactivity) is the only thing that really matters.
Follow me on Twitter @daveofdoom.
Using Facebook Connect, visitors can play directly on the Petsociety.com Web site, removing the the forced interaction with Facebook itself. You do still have to login, but you aren't forced to play games as part of the Facebook "experience"--rather you can interact with the game and other players through the API.
I've struggled with the idea that an application/game/what-have-you can ever become hugely profitable if it's locked into the Facebook platform. Ultimately, Facebook makes the rules and companies have to abide by their methodology. And limiting your user base strictly to Facebook seems like a risk. Sooner or later you'll need to break out of the Facebook walls and onto the internet itself.
The very positive aspect of this is that Facebook realizes that openness equals more users and theoretically more revenue. It's in their best interest to make Facebook Connect the most prevalent platform for games and applications to flourish online--a realization that many companies have yet to make.
Follow me on Twitter @daveofdoom
Some interesting data from Nielsen suggests that Twitter, despite the hype and meteoric growth, appears to have a user loyalty problem, an issue not suffered by Facebook or MySpace, the two behemoths of social networking.
Considering the viral nature of Twitter, I was a bit surprised to see that users weren't more loyal. On the other hand, sites like Facebook and MySpace offer a lot more functions that facilitate communication on many levels, not just through messaging.
Currently, more than 60 percent of Twitter users fail to return the following month, or in other words, Twitter's audience retention rate, or the percentage of a given month's users who come back the following month, is currently about 40 percent. For most of the past 12 months, pre-Oprah, Twitter has languished below 30 percent retention.
Is this Twitter's Achilles' heel, where there aren't enough reasons to come back to the service, or, is audience retention naturally lower because Twitter only offers one thing to do in comparison to the other services?
The chart below shows that MySpace and Facebook both had higher loyalty levels at the same reach.
I think it's an easy argument in Twitter's favor that it has significant reach with significantly fewer features than the comparative sites. Of course, loyalty matters a great deal if and when the company ever decides to monetize the user base.
With the rise of cloud computing and Web applications, monitoring and management complexity has crossed the line from the network deep into applications. Businesses that are dependent on the web (companies like Facebook, Twitter and Salesforce.com) are concerned with more than just the red light/green light mentality of the client/server days.
Monitoring has evolved from "Am I alive?" to "How well is everything running?" and "Is my performance maximized?" It follows that businesses need performance data from applications, not just infrastructure, to ensure proper delivery and function (and, down the line, good user experience).
Web apps present a new set of monitoring and management challenges. I asked Hyperic CEO Javier Soltero to give me some thoughts on the evolution of monitoring networks, applications and the Cloud.
1. Frequent Innovation and Rapid Change
Web application companies deal with change hourly. The more pieces that change and the faster the changes occur, the higher the likelihood of new problems being introduced into what is already a dynamic environment.
This can happen at the largest shops, as witnessed recently when Google claimed every site on the internet was malware.
The challenge becomes keeping track of all of the changes and knowing what change resulted in what improvement (or degradation) to applications. This data is crucial to ensuring application health, but keeping pace with changes and the varied impact is a complicated process that legacy monitoring tools like HP OpenView and IBM Tivoli by design are not designed to handle.
2. Specialized Technology
Web platforms that include LAMP, Java, and J2EE applications require specialized, cohesive metric collection to correlate application performance up and down the stack. This includes visibility into all the technologies that matter in Web application environments - from operating systems, Web servers, application servers, databases and virtualization - is critical.
3. Small Staff, Large Responsibility
The web ops people at any business wear many hats: monitoring 24/7, capacity planning, SLA compliance reporting, business metrics delivery to the rest of the company to name a few.
The aforementioned "rapid change" adds fuel to an already roaring (and hectic) fire. Shrinking budgets mean smaller web ops teams, and the fewer people to spread out across those tasks, the harder monitoring becomes.
Finding a solution designed to fill that gap means the difference between a band-aid (restarting an already- dead server) and avoiding cutting yourself in the first place (a diagnostic process to prevent and/or manage around a problem).
You can follow me on Twitter @daveofdoom
Social games company Playfish just launched a new premium in-game ad campaign with Procter & Gamble and Herbal Essences via the Geo Challenge Facebook game in the UK.
In April Playfish launched in-game advertising with Google and in July launched in-game transactions with Paypal. The launch of this new premium game shows some of the advertising possibilities available during this economic downturn.
The upside? An audience that already likes the Geo Challenge game who are likely willing to experiment with this new module resulting in increased brand awareness. The downside? This doesn't seem easy to do as Playfish basically had to create a new game, which takes time and effort.
... Read moreThe buying and selling of virtual goods is an extremely nascent market that seems to be heating up dramatically. Almost daily there are announcements pronouncing large virtual good revenues on the horizon and new forms of payments and rewards for the intrepid user.
Just today social network Hi5 introduced multicultural holiday gifts along with a new payment system. Virtual world Habbo also introduced a new type of currency and reward program for loyal users.
With all of this interest and efforts toward monetization, is this a bubble waiting to burst?
So far, my answer is no.
Virtual goods are part of the walled garden in which they are purchased and consumed. If they fail, they only fail within that specific environment and don't take down the ecosystem because there really isn't one.
There is no portability of the goods between social networks or virtual worlds due to technical and business reasons and therefore there are limited opportunities for outside providers to base their businesses in other-world environments. That insulates others (meaning not the base site) from going down with ship.
For example, I can't start a company to sell virtual cookies on Facebook (though I can use Viximo, which takes the lion's share of the revenue) and even if I could sell on Facebook the virtual cookies wouldn't transfer to other sites Gaia or Habbo. I also can't take the sword I purchased in WoW and use it in IMVU. And while that might be nice, it probably doesn't matter.
It's not clear just how big the virtual goods market is, nor have we seen it become completely bastardized as we eventually will when marketers try to sell anything and everything. In the mean time, it's nice to see any economy flourishing.
Facebook delayed a plan to let employees sell some of their stock. The plan seemed like a big win for the employees there but with the recession underway and no clear liquidity event in sight, I can't see why or how the company could move forward.
VentureBeat got the low-down:
The global economy is in the midst of an incredibly difficult period, and all companies have been affected in some way. After carefully considering the current environment, we've decided to establish an open-ended timetable for an employee stock sale program. Despite the turbulence in the financial markets and resulting challenges, we believe the company is very well positioned to handle this economic downturn. We have the means to go after big opportunities that will help solidify our position as the platform that everyone uses to share while building a fundamentally strong business.
I could never make sense of how Facebook was going to cash out employees of their stock options. Valuations are too variable and unless the payout were to occur at the exact moment of a financing event it seemed too good to be true--especially considering the hefty Microsoft valuation of $15 billion versus the internal valuation of $4 billion.
I certainly hope that the staff over there get some money out ASAP.
