The tractors, fuzzy pets, and mobster ambushes might be virtual, but the past few weeks have shown that the battle for social-gaming market share is very, very real.
Monday saw the long-rumored announcement of gamemaker Playfish's big-ticket sale to Electronic Arts, a big win for a product niche some had dismissed early on as faddish and silly. But it comes at a time when there's ongoing press blitz over how much social-gaming companies rely on lucrative but potentially misleading means of advertising in the form of lead-generating offers.
Both of these developments have changed the course of an industry moving at hyperspeed--but was anybody really sure where it was going in the first place? Playfish, arguably, was the safest buy in the space. Headquartered in the U.K., its revenues were solid--one analyst estimates it'll pull in $100 million this year--and it was less reliant on controversial third-party offer companies than many of its competitors.
Social-game manufacturer Playfish announced its acquisition by Electronic Arts on Monday.
(Credit: Playfish)"I'd say hats off to EA," said Jeremy Liew of Lightspeed Venture Partners, which has invested in social-gaming firms like Serious Business and RockYou. "It's a much lower-fidelity product (meaning cheaper to produce) that appeals to a much simpler consumer (than the traditional gamer), but they recognized the risk that it poses to their business and they were willing to take a decisive action."
Playfish had a great exit, as they say in the venture capital world. Things might not go quite as smoothly for other social-gaming companies.
Here's some background. The social gaming craze grew out of an array of new time-wasters that involved neither a significant commitment nor a complicated set of rules. Companies like Zynga, Playdom, and SGN attracted millions of investor dollars, and word has it that former MySpace CEO Chris DeWolfe wants to roll up a bunch of smaller companies into another powerhouse. And now that EA has a big social-gaming company in its arsenal, other older video game manufacturers might push fast-forward on investments or acquisitions in the space.
Playfish, manufacturer of games like Pet Society and Restaurant City, was at the time of its buy either the second or third biggest company in the space--behind Zynga, but neck-and-neck with Playdom. Like most of its competitors, it makes money through a combination of advertising and the sale of virtual goods, which players can either purchase with real-world cash or can earn by completing offers and surveys from third-party companies like Offerpal Media or Super Rewards.
The industry common wisdom is that Playfish's revenue is less reliant on those offer companies than some other social-network gamemakers. That's a good thing, considering the bad press the likes of Offerpal have been pulling in recently. In a highly-publicized confrontation with Offerpal CEO Anu Shukla (who resigned from her post in a matter of days), TechCrunch blogger Michael Arrington launched a full-on assault against the business of social-game offers. They're no more than scams, he alleged, since many offers actually have hidden costs attached for consumers: entering your cell phone number to receive the results of a quiz you took, for example, may actually tack a charge onto your phone bill.
"The industry hasn't done, in general, as good a job as it could have of maintaining the offers' integrity to users," Jason Oberfest, a former MySpace executive who recently joined the executive team of iPhone and social-network gaming company Ngmoco. "(Playfish was) way more conservative in how they've used offers, and I'm sure, frankly, that their revenue per user has probably suffered a little as a result, but it's clearly played out well for them."
Even without the offers controversy, social gaming is a volatile industry: few if any of the companies in the space are older than five years. It's a hit-driven business, with companies needing to work around the clock to keep audiences playing and push out new games lest the current sensations grow stale. There's already a history of lawsuits and legal threats, often over rival gamemakers' extremely similar products. When bloggers started their keyboard assault on the likes of Offerpal, it was only adding to the sector's reputation for fast money, cutthroat competition, and occasionally shady business practices.
Playfish may have exited just in time. Some of the small to medium-size social-gaming companies are undoubtedly hunting for buyers, and Zynga has gotten so big that rumors suggest it may be looking to file for an IPO. With all the controversy over offers and whether social-gaming companies' revenues were inflated by misleading ads, there's a chance that their profits--and hence, their valuations to prospective investors or buyers--may take a significant hit.
Still, venture capitalist Liew doesn't think that will make a huge difference. "Zynga said 30 percent of their revenue comes from offers, and I think that's pretty representative of the industry," he estimated. "Let's say 20 percent of the offers are scammy, so that's 6 percent of the revenue of these companies that's at risk. It doesn't change the answer as to whether this is a valuable company."
Maybe so, but there are other complications. Facebook, the biggest destination for social games, continues to make alterations to its developer platform. Most recently, the massive social network announced some changes that limit games' and other applications' appearance in members' news feeds, a move that may make it more difficult for start-ups to enter the space as well as drive already-big companies to purchase more advertising space in order to get the word out about their latest games and keep acquiring new customers.
Social-gaming companies are already some of the biggest advertisers on Facebook, with the biggest one, Zynga, spending as much as $50 million this year on Facebook ads alone, according to estimates from industry insiders. If revenues are potentially going to decline (and no one can quite agree on how much) as a result of a crackdown on offers, but advertising costs may go up as companies attempt to increase their reach on Facebook, that makes their balance sheets look less sunny.
For all the ugliness of the Offerpal mess, it could have been much less pleasant if the scrutiny was coming from lawmakers rather than industry bloggers--like the several state attorneys general who were particularly vocal about stamping out misleading offers in display ads, but haven't yet targeted social networks. And changes appear to be imminent. Zynga CEO Mark Pincus announced Sunday that the company has blocked all cost-per-action offers until the situation calms down and it's easier to weed out scams. Playdom, too, says it is continuing to make its business less reliant on offers.
"Offers are an important industry issue, and particularly important for our players," CEO John Pleasants, a former high-ranking EA exec who left for the fast-growing company this summer, said of Playdom in an e-mail to CNET News. "When I joined as CEO, Playdom began a company-wide effort to deliver a quality user experience on our offer walls...We've dropped more than 1,500 offers that don't meet our standards. In tandem with these efforts, we have actively grown the direct payment portion of our business; offers, otherwise known as CPA advertising, currently account for less than 20 percent of our revenue and continue to shrink."
Social-gaming companies don't want to look like criminal operations, nor do they want to look like they're turning a blind eye to questionable third-party activity. While Zynga and Playdom are big enough to sacrifice that revenue, some other companies that are likely hunting for buyers might not fare so well. As a result, future acquisitions in the space could easily be much smaller. Price tags could be lower if revenues deflate, and now that EA's made its buy, the list of potential buyers who could actually pay $300 million is now one company shorter. There's a legitimate question as to who would actually be buying; even optimistic insiders say that this could get in the way of another Playfish-like exit.
"I think the more important question is who can pay. Because if you want to buy Zynga, it's way more than Playfish. If you want to buy Playdom, I think it's going to be equivalent, if not a little bit more than Playfish," Liew said. "There are a lot of people who want to get into social gaming that don't have the ability to write a check of that size, and so they are going to be looking at the next tier of companies. That's where I think we're going to see some action."
In other words, we still don't know who the next real winner will be.
The Spore Creature Creator.
(Credit: Spore/Electronic Arts)With all this hysteria about the pig sniffles, you'd think that an announcement about 100 million strange little organisms would be cause for alarm. That's not the case, however, when we're talking about the oddball life forms that players grow and control as part of video game Spore. The game created by industry legend Will Wright announced Monday that 100 million creatures have been created, far outrunning the number of species on Earth.
The game publisher, Electronic Arts, started counting last June. That's when it first released its Spore Creature Creator, several months ahead of the full Spore game itself.
There's more Spore on the way. Electronic Arts' Maxis studio is releasing the Spore Galactic Adventures expansion pack for PC and Mac players, Spore Hero for the Wii, and Spore Hero Arena for the Nintendo DS. The player who created the 100 millionth Spore creature now has a chance to win a copy of Spore Galactic Adventures as well as a souped-up PC graphics card.
Last month, Will Wright announced his departure from Electronic Arts. Wright, who soared to the heights of video game fame with Sim City and The Sims, has said that his new project is an "electronic think tank" that goes by the interesting name of Stupid Fun Club.
When Scrabulous, a popular game on Facebook's developer platform, was shut down earlier on Tuesday because of copyright infringement issues with the manufacturer of the Scrabble board game, word game fans weren't totally left in the dark. After all, Electronic Arts (which handles the digital rights to Scrabble for the game's parent company, Hasbro) had recently created an official beta version of Scrabble for the platform.
Problem is, the servers that were hosting the "real" Scrabble app couldn't handle the load of new migrants, and the application crashed on Tuesday afternoon. Oops!
"We'll be back up shortly," an apologetic error message read. "We're working on some tech problems and Scrabble will be ready to play as soon as possible!" The game is slated to exit the beta phase in the middle of next month, and some (my colleague Rafe Needleman among them) initially found it to be a better-quality game experience than Scrabulous had been.
But in the wake of a server crash, Facebook users weren't too pleased, as the message wall for the Scrabble application revealed. "Wow, does this suck," one Facebook user wrote. "Why can't you guys work out a licensing deal with the Scrabulous boys? Now we're back to square one and have to go through all of your debugging process."
Well, to be fair, rumor has it that Hasbro put out an acquisition offer for Scrabulous, only to have it rebuffed because its creators thought the amount offered was insufficient.
"Sucks, sucks, sucks," another Facebook user said. "Locks up at 30 percent loading. Sucks. Oh, did I mention it sucks? Get a grip, Hasbro."
Too bad "FAIL" will net you only seven points.
The Eyebeam Art & Technology Center was decked out in red and black for Tuesday night's annual benefit.
(Credit: Caroline McCarthy/CNET News.com)NEW YORK--"We skipped the paparazzi," Eyebeam director Amanda McDonald Crowley said as she welcomed several hundred people to the digital art center's annual benefit on Tuesday night. "We've got a photo-taking duck."
That requires a little bit of context.
On display at Eyebeam's "Freedom and Creativity"-themed benefit, held at the organization's headquarters in the post-industrial West Chelsea neighborhood, were a number of commissioned artists' and fellows' projects. One of them was Taeyoon Choi's "Camerautomata," literally a robotic duck that skittered about the floor, Roomba-like, taking photos with a camera embedded in its head and then printing them.
But that was just the start of it. This year's Eyebeam benefit featured a surprise live performance by the Walkmen, an MC gig by Comedy Central's John Mulaney, a DJ set by the downtown trio known as the MisShapes, and an auction of bizarre items that had all been found on Craigslist.
That's because the guest of honor was Craigslist founder Craig Newmark, selected for his company's values and community ethos. The newspaper industry, with advertising revenues hurt badly by online classifieds like Craigslist, might beg to differ, but the free-spirited Newmark is inarguably a geek hero.
"Pick almost any project coming out of Eyebeam and you'll see an attempt at humanizing the technology that so much of the world is rushing to cash in on," Eyebeam founder John Johnson said as he introduced Newmark.
He hailed the Craigslist founder as the embodiment of that goal. "(Craigslist is) a community service that does something simple very, very well. It connects people to people and the things they're looking for," Johnson explained. "It has fostered a community that is both local and international, and has helped to provide millions of stories that illustrate that people at heart, when given the chance, are basically good, helpful, and trustworthy."
Camerautomata, the robot duck who takes photos. He's dangerously close to skirt height.
(Credit: Caroline McCarthy/CNET News.com)Accepting the dedication, Newmark insisted on staying humble. "Craigslist is a platform where people give each other a break, and you know, that ain't bad. And I'm honored by this and I feel pretty flattered, but the reality is that before I came over here, I was doing customer service at the hotel, and in the near term I think there's about 30 to 45 minutes of it remaining when I get there. And that's what we focus on."
At the reception prior to the benefit dinner, Newmark--sporting a Barack Obama campaign button--had been checking Twitter updates about the North Carolina and Indiana on his iPhone.
To support Eyebeam's mission while continuing to keep Newmark the center of the evening, the evening also featured an auction of several oddball packages that consisted exclusively of items mined from Craigslist. A "political package" featuring a talking Bill Clinton doll and a Palm Beach County voting machine from the 2000 election (among other things) sold for $750; a "wacky technology package" that included an antique typewriter, an '80s-era computer, and some hand massagers sold for $1,050; and an assortment of art including a Marilyn Monroe piece by Andy Warhol, a DC Comics cell featuring the supervillain Brainiac, and a vintage T-shirt featuring art by downtown New York icon Keith Haring sold for $5,300.
Comedian John Mulaney, who was explaining each of the auction items, gave some background on Brainiac, a high-tech villain whom Superman started battling in the 1950s, and then said, "If you know what I just said and understand it, you did not go to prom."
Judging by the appearance of the attendees, the only Eyebeam benefit-goers who didn't go to their high school proms were the ones who considered themselves too cool to show up. The mix of designer dresses and skinny hipster jeans was, for the most part, too chic to be geek-chic. The tech community was represented strictly by a few well-connected luminaries like Gawker Media founder Nick Denton and Personal Democracy Forum czar Andrew Rasiej.
The event was also, apparently, highbrow enough for benefit-bouncing socialite Kristian Laliberte to make an appearance: he waltzed into Eyebeam's headquarters carrying a gift bag emblazoned with the logo of luxury lingerie brand Agent Provocateur, proudly declaring that it was his second party of the evening already. I regrettably didn't ask Laliberte, who according to gossip columns will be the star of a reality show about New York's posh Upper East Side called The 10021, if he has any clue who Craig Newmark is.
The presence of Taeyoon Choi's omnipresent paparazzi duck, however, kept the quirk factor high, as did a comic monologue from Mulaney, who referred briefly to Craigslist ("I love Craigslist! It has so many different faces! If you're not comfortable talking to drag queens in real life, you can do it there!") but preferred to stick to non-tech topics for the most part.
"Pirates never have a big enough chest," he mused when discussing buried treasures. "In movies, the chests are always overflowing. Why is that? I think with the eye-patches, they have poor depth perception."
Google executive Marissa Mayer shows off one of the iGoogle Artist Themes designs by fashion icon Diane von Furstenberg. Ironically, von Furstenberg is married to Barry Diller, whose InterActiveCorp runs would-be Google rival Ask.com.
(Credit: Caroline McCarthy/CNET Networks)
NEW YORK--There were massive video animations projected on the sides of post-industrial buildings, trippy progressive songs blasted into the streets, and famed artists and designers hobnobbing with software developers over an open bar. A white tent emblazoned with Google's iconic logo sprawled across the cobble-stoned Gansevoort Square, and Thursday night's bubbly partygoers surveyed the scene in awe.
Even for New York's Meatpacking District, the grit-meets-glamour setting of innumerable Sex and the City episodes, it was an odd display.
Earlier this week, Google had announced iGoogle Artist Themes, a new set of designs for its personalized-home page product, with contributions by more than 70 artists, designers, and pop-culture figures.
On Thursday night, Google executive Marissa Mayer welcomed many of the artists, as well as a bevy of journalists both local and international, photographers, and art enthusiasts, to the candle-lit One nightclub for a celebration. And that celebration entailed enormous animated projections of the Artist Themes onto several surrounding buildings.
It was a step shy of the bungee-hopping interpretive dancers that Microsoft brought to the neighborhood last year, but still, quite it was a spectacle.
In between rounds of an open bar, Mayer hosted a panel with four of the iGoogle artists--architect Michael Graves, photographer Anne Geddes, artist Jeff Koons, designer Marc Ecko, and New Yorker cartoon editor Robert Mankoff--to discuss their participation in the project and views on how the Internet is changing their industry.
iGoogle Artist Themes, Mayer asserted, "represent one of the first times that artists have had to interact with a person's daily routine." The fashionable Mayer, in addition to being Google's first female engineer, and vice president of search and user experience, seems to have taken on the additional (and unofficial) role of the company's patroness of the arts.
Early last year, Mayer keynoted a daylong event at the historic New York Public Library, extolling Google's book-archiving project as the company's contribution to the literary world. (The publishing industry, fearing lost profits, still isn't sold.) Later in 2007, she was one of the executives present at a mixer at the company's Gotham offices so that employees of the Valley mainstay could get to know New York's media elite.
But on Thursday night, Mayer was playing hostess to a crowd that heretofore had not had much to do with the Mountain View, Calif.-based tech company. Architect Graves, who jokingly said he only signed on to the program because he thought he'd get Google stock in exchange, admitted that the world of googling is new to him. And Mankoff said "there are still librarians who remember things that no search algorithm can find."
But for the most part, the artists welcomed the iGoogle partnership as a way to reach new audiences and adapt to the inevitable new climate of the Digital Age.
"There's the printing press, there's the moving image, and there's Google," Marc Ecko exalted. The colorful streetwear designer, who said his iGoogle theme was "a love letter to graffiti," described the anyone-can-be-famous nature of the Internet as "the American dream...God bless America."
Geddes interjected facetiously. "Excuse me, but I'm Australian."
Ecko responded, "Google's from America!"
If you thought Google's capacity for high design didn't go far beyond its primary-colored logo, think again.
The iGoogle personalized home pages have been graced with new flair thanks to the introduction of iGoogle Artist Themes, a way for Google members to do digital interior decoration.
It may not help Mountain View on its quest to organize all the world's information, but it can make some of that information look a little prettier. Microsoft did something like this with Zune Originals, trendy designs for its music players.
"We've collaborated with almost 70 artists from around the world," an e-mail announcement from Google reads, "inviting them to use iGoogle as their canvas by creating unique, dynamic themes for our users to personalize their pages." The imagery in each theme changes continually.
Artist Jeff Koons' 'Google doodle'
(Credit: Google)This is no small-time operation. Google has pulled out the stops, with contributions from artists and architects like Jeff Koons, Michael Graves, Philippe Starck, and Yann Arthus-Betrand, as well as fashion luminaries like Diane von Furstenberg, Tory Burch, Oscar de la Renta, Marc Ecko, and Dolce & Gabbana. A few music artists like Coldplay, the John Butler Trio, and the Beastie Boys also are present, as are pop-culture figures like BoingBoing's Mark Frauenfelder, Jackie Chan, The Wiggles, and...Lance Armstrong.
To celebrate, Google will host an art-themed party Thursday night at a nightclub in New York's Meatpacking District, the upscale shopping and nightclub enclave that lies conveniently adjacent to the company's sprawling Gotham satellite office.
In addition, the Google.com logo has been tweaked by Koons for the day.
The legendary Museum of Modern Art in midtown Manhattan just got a bit more...modernized.
MoMA announced Monday that it has installed a museum-wide Wi-Fi network so that visitors can access a mobile Web site on handheld devices with HTML browsers, which basically means Apple's iPhone and iPod Touch. They can then load up audio tours and commentary; content is available in eight languages as well as in specialized versions for children, teenagers, and the visually impaired.
It's not clear whether the museum Wi-Fi will also let visitors access the Web as a whole, or just the internal museum site. Requests for clarification were not immediately answered.
Additionally, MoMA has put its library of audio and video programming into podcast format for Apple's iTunes Store's iTunes U education section: current and past audio programs, content from panels and lectures, and video clips from exhibit installations and artist interviews.
Museum visitors who are particularly information-hungry can also now use "interactive kiosks" in the form of a number of Apple's iMac computers stationed around MoMA, featuring detailed museum information, artist biographies, events listings, and e-card services.
One of New York's most talked about tech start-ups these days is undoubtedly Etsy, the Brooklyn-based online marketplace for buying and selling handmade goods. And it's continuing to generate headlines: co-founder Robert Kalin announced in a blog post Wednesday that the company has picked up an impressive $27 million in Series D financing.
The venture funding comes from existing investors Union Square Ventures and Hubert Burda Media, as well as Accel Partners' Jim Breyer, who will take on a seat on Etsy's board of directors.
Etsy is "almost break-even" when it comes to profits, Kalin admitted in his blog post, but it does have 650,000 registered users, 120,000 of whom are classified as "sellers." The company employs about 50 people, and last year opened the Etsy Labs community space in a converted industrial space in Brooklyn.
With the new financing, the company hopes to achieve a laundry list of goals: expand beyond the U.S. dollar and the English language, improve its search and checkout technology, ensure that it can pay its employees fairly, keep its servers running, and have a "cushion" to ensure stability through current economic woes.
It's as much a social mission as an economic one, Kalin wrote. "Throughout the myriad challenges since we launched the Web site, we have worked day and night to see things through. We're in this for the long haul," he said. "We believe that the world cannot keep consuming the way it does now, and that buying handmade is part of the solution."
For about the longest time, the background on my Mac had been fairly dull--a Manhattan cityscape plucked from the selection at DesktopNexus. I want my desktop patterns to look good, but I'm not one to put a whole lot of thinking power into it; there are better ways to waste energy.
I have a pretty new desktop--'Within' by Vlad Studio
This morning, however, I switched when I read about Desktoptopia, a new Mac-only downloadable app that lets you easily discover aesthetically pleasing "designer desktop" backgrounds created by innovative digital artists (no generic landscapes here) and switch them up either automatically or manually with a very simple set of controls. Install the software, and you'll get a new little menu in your navigation bar to play around with it.
For further interaction, the drop-down menu also allows you to rate your current background--presumably, this will mean that higher-rated desktops will show up more frequently in the rotation--or visit the Web site of the designer who created it. You can additionally select exactly how much time you want to go in between desktop refreshes (mine's set to manual) or which categories you'd like the selection to come from (we're talking the likes of "photography," "typography," and "graphic design," not "beaches" and "sunsets"). Most of the available desktops are really quite lovely; a few border on the yawn-worthy "abstract displays of light" genre, but the majority are very fresh.
I do wish there were more social features to help build a community around the app and encourage both user and designer feedback--think of it as a Threadless for desktop backgrounds. Now that would be really cool. And it is, very tragically, $20 to go beyond the trial version. But doesn't the label "designer" usually come with a premium?
(Via Josh Spear)
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