The Not-So-Casual Journey To Mainstream Entertainment

I had a great time yesterday delivering my speech at the Casual Connect Conference. I delivered a speech entitled, "The Not-So-Casual Journey To Mainstream Entertainment." The speech is available here:    
Download Matth_keynote_final

In addition, it got picked up on MSNBC by Winda Benedetti.

In the speech, I covered how the traditional casual gaming industry has missed the larger opportunities around smartphones and social.  Check out how fast it took for social networks to hit 50 million players — it only took Zynga's Farmville 4 months to hit 50 million players.

 

Conversely, I talked about how the new entrants like the social gaming players are going to have to address owning off-Facebook reach and better game quality/branded IP.

We are at the early innings in the social gaming space.  I sincerely believe that the current model will change.  I believe that the social gaming developers will need to think about gaming quality, brand IP, and off Facebook distribution.  I believe that the current model will change since we’ve highlighted the issues when the combined revenue (and profit) for the major application developers outstrips that of the platform – the platform may begin to charge for access.  I also believe that the consumers are going to demand new types of gaming experiences. 

Traditional casual developers have much to learn as well.  Building games as a service is a completely different skillset.  It requires ongoing maintenance and content development necessary to keep engagement ongoing relationship with customer. Skill sets for success on social networks are closer to direct response than traditional retailing skills.  Its not just a develop and ship mentality. Most successful applications are launching new levels or content regularly — often launch when the game is less than 30% complete, continue to add levels and content weekly or even daily.  This has huge ramifications on overall team deployment and development schedules

Licenses are still unproven – of the top 25 games only 2 are licensed IP (UNO and Family Feud).  I still think that brands have a place in social and could be the one aspect that can catapult a new developer to the front of consumer demand.

Traditionally we have seen most revenue generated from a mix of advertising and license sales/subscriptions.  On social networks today primary monetization is through micro-transactions. General split is 85-90% micro-transactions vs. 10-15% advertising – much closer to the on-line free to play models popular in Asia online free-to-play represents ~10% of the traditional PC gaming population.  Monetization today of free-to-play (MTX) is primarily driven by early adopters and younger male demo. To date using developer specific currencies which is a significant barrier – volume will accelerates with FB credits. 

The distribution of the top social players is a tale of a few big winners with thousands of “also-rans.”  The chart above shows that Zynga command 30% of all of the Facebook MAU traffic – and the next 4 players combined make up 51%.  The only two traditional companies in the top 50 applications developers are PopCap, Iwin, and GameHouse.  Its extremely difficult to break-thru into the social space – even if you have a novel game mechanic, it can be rapidly copied and  out-marketed by the top players.

 

At the end of the day, I see a merger of the best practices of both the traditional and new entrants.  I will send a link to the video when available.