Well, apologies for not direct tweeting from this event tonight, a long conference call before the event drained my battery and didn’t have enough to last for the whole event tweeting from my phone.
Besides, it’s been a while since I’ve posted and this gives me a chance to provide more commentary.
Before the panel began, the Orkut Team from Google presented some stats and numbers about Orkut. I think this was a plug for the developers out there to help out Google in trying to build apps and grow Orkut.
Orkut: 80M monthly active users, with 30M photo uploads daily. Their core audience is 18-24 year olds and after about age 26, there is significant drop off in the population and demographic. Two main markets are India and Brazil. The claim is that the portal is more fun than serious. There were a few snapshots of apps on Orkut and a plea for putting more social games and apps on their platform to help grow the utility and community.
90% of the revenue from Orkut is derived from virtual currency and the remaining 10% is from display advertising.
Lastly, when asked about an Orkut-platform currency, the answer was no immediate plans because it is complex to deal with accepting and being compliant with all the countries it would need to support.
My comments: While 80M is impressive, why not leverage the wider base of Google users and convert them to using Orkut? That’s a broken model that even Yahoo has a better handle on. On the other hand, Facebook has 10% of Orkut in the two markets with 2.1M in Brasil and 4.7M in India, respectively. Maybe Facebook should try and *target* those two BRIC countries! Finally, Google likes to solve hard problems! Why not solve the one currency for virtual goods, accepting real currency problem?
All right. Moving on. To the Main Event:
- Daniel James, Co-founder and CEO, Three Rings
- Wilson Kriegel, VP of Business Development and Ad Sales, Outspark
- Lisa Marino, Chief Revenue Officer, RockYou
- Mark Rose, Director of Product, Payments and Platform, Playspan
- Eric Eldon, Editor, Inside Social Games
- Jonathan Flesher, VP of Business Development, Zynga
Observations from each person about Social Gaming:
Lisa: Ad networks are possible with platforms like Facebook. They are the largest ad network next to Facebook and can start to attract brands to their platform.
Mark: At 350M users, Facebook is still not mainstream. Believes that there is the possibility of more Farmville-like successes in the future.
Wilson: LTV (Lifetime Value) is the word for 2010. Businesses cannot survive on a Customer Churn of 28 days. No matter how much you pump up advertising and game play, you need to think seriously about LTV.
Eric: “Out of no where surprise companies” will emerge, even with RockYou, Zynga, Playdom and Playfish as established players. Mobile application developers with experience with virtual goods stand a good chance at taking social games to the next level. There are three stages so far for social games: 1. In the 2007-8 timeframe, there were simple 1st-Gen puzzles, quizzes; 2. 2008 saw the rise of RPGs and simulation games; 3. In 2009 and this year, there will be the Next-Gen of game that are even more compelling and immersive.
Jonathan: Facebook Connect will increase in usage and expansion. There will be more experimentation with advertising.
Daniel: Quality, Depth and Interaction will win for future games. While the traditional gaming business folks think of games on Facebook, not being legitimate games, but more of distraction. (When asked about revenue and active users, Daniel commented with) Our game Puzzle Pirates does $0.20/day per DAU. They can be profitable with less users, but higher engagement.
Switching gears to their Advice for Developers in 2010 regarding social gaming:
Wilson: M&A and consolidation in 2010. Focus on LTV. Social games are becoming a real-time retail service. You need to build a business that way.
Mark: We are entering the “Experience Economy.” This will matter in the long-term. He also observes that everyone is watching each other. He feels that there will be a convergence of experience for a title across MMO, mobile and social. There will be a big push in the sophistication of monetization. The game mechanics for people to pay for games will happen more and more.
Lisa: There will be a redefinition in digital goods in the social games space. We need to start achieving 25 to 30% monetization from users. And eventually Premium Brands will want social games as part of their experience. In 2009, Brands were introduced to Social in a big way. It will take until Q3/Q4 of this year for Brands to really want to push in a big way towards social.
Last question was around the numbers for predictive growth for 2010.
Everyone on the panel agreed that it would be at least 100% growth rate in social gaming with the exception of Lisa who said 2 to 3x. Everyone also agreed that we need to make monetization more efficient to sustain. The “China Factor” would play a large role in the virtual/social games economy and based on that, it would be hard to accurately predict.
After that, there were a smattering of questions, but two answers seemed to stand out.
1. Adopt the Zynga model: Test and Iterate. Make that your Mantra for developing Social Games.
2. Build and invest in a Business Intelligence database. Make it one of your core IP assets in the company where you can know as much about the user as possible. At the end of the day, if you are on Facebook, you don’t *own* the customer, Facebook does, but you can learn a lot about them.
My comments: Overall a great panel with lots of thought and fraught. I certainly think the monitoring of LTV and enhancing engagement to drive active monetization is key to creating a sustainable business. That is what might be missing in some of the discipline. Innovation can come from lots of places, even the big companies, not just the small. But an open platform can definitely democratize the big and small guy who hope to make it big.
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