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Social Gaming, What’s All the Hype About?



Presently there’s a lot of hype around gaming, especially around Social Gaming. This comes in the form of a number of substantial buyouts of social gaming companies, by large media conglomerates, statistics of massive growth numbers, specifically around micro payments and finally around the vast numbers of users playing social games on a daily basis.

 

Let’s start by defining Social Games, this is the best definition that I’ve come across: A Social Game is a digital online game that: (1) utilizes a players social graph to provide an enhanced game experience, (2) facilitates and encourages communication about the game, outside of the game; and, (3) has a minimal barrier to entry (one click away and simple registration).

 

Most definitions refer to a social game as a game that is played within a social network environment, with asynchronous communication taking place in the form of messages, gifts, requests, etc. There is an argument around multiplayer games, such as Backgammon, that these are in most cases, social games, but this view has been refuted. The argument goes along these lines, when playing a typical multiplayer game, you’re generally playing against a stranger and have no qualms about abandoning the game, should you be on a losing streak, this wouldn’t be the case if you were playing against a family member or friend as there’s pride at stake in following through to the end of the game and then finally there’s the bragging rights that you managed to beat the pants of them, this is generally not the case when playing against a total stranger.

 

Typically social games have some form of virtual currency built into them, the publishers need some way to offset the massive investment that are needed to develop a world class social game. It is estimated that the Virtual Goods Market is set to generate $7 billion per annum, by 2012, with $1.7 Billion turnover expected in the USA during 2010, it is to be noted that the bulk of this revenue is derived from social gaming. There is no doubt that these numbers and the popularity of social games will continue to grow, especially with the increased penetration of smartphones across the globe. Nokia is at this point, shipping 280,000 smartphones a day, this segment of the mobile handset market is what’s fuelling the growth of the mobile web. This is an important point, as social gaming is not only played through traditional web browsers, but is accessed from web browser enabled mobile handsets and this trend is set to continue on a spiralling growth path.

 

There is no doubt that gaming in general is serious business, one just needs to take a look at some of the investments of late.

·         Zynga, the largest social game provider, recently announced that Digital Sky Technologies (“DST”), along with other investors, has agreed to purchase approximately $180 million of the company’s shares.  Industry insiders believe that Zynga could be valued at around $1.5 billion to $3 billion;

·         Playfish, a rival social gaming company, was acquired by Electronic Arts for $300 million in November 2009;

·         Riot Games, a leading independent developer and publisher of premium online games, has closed a round of financing with the top venture capital firms, Benchmark Capital and FirstMark Capital, and the Chinese online services company Tencent in September 2009 to the value of $8 million;

·         Playdom builds games that run on social networking sites such as Facebook and MySpace. Disney is in talks to acquire Playdom for $500 million. Previously the company has raised a total of $76 million in funding;

 

What are some of the benefits of Social Games, to advertisers and publishers?

·         Even longer gameplay – a deeper brand experience.

·         Leverage the Social Networks and their viral power

·         Leverage the trust of Social Networks

·         Leverage the technology of the Social Networks

·         Take advantage of the acceptance of Viral Currencies

·         Long Term Benefits – the game becomes a property that the brand can leverage off for years, it’s no longer just a campaign

 

Social Games – Fun Facts

·         24% of the US/UK online population play social games

·         56m people in the US play social games

·         24% see social networks as their primary source of “gaming”

·         83% of all social gamers use Facebook to play

·         41% are full-time workers

·         95% play multiple (2-3) time per week

·         61% play for more than 30 minutes each session

·         Social gamers have played on average 6.1 social games

·         35% of all social gamers had never played a game before

 

* Source; PopCap, Gamezbo & Mashable

 

SkillPod Media, a South African company that has focused on the development of casual games solutions since 2004, has started establishing itself as a provider of casual games solutions. The platform has been built as a robust, scalable and highly configurable solution from the ground up, says Mark van Diggelen, CEO of SkillPod Media. Over the past few months we’ve extracted the best elements of our platform and created a social gaming solution that has already seen clients such as Jip (South Africa) and, Reklamport (Turkey), launch their social gaming offerings to their respective markets. A number of new clients, in as far afield as UK, Middle East and Vietnam will be launching versions of the SkillPod Social Gaming Framework to their markets, during the course of the next few months.

 

The SkillPod social games solution offers the following features:

·         Extensive games catalogue, including multiplayer and single player titles

·         High score logging, with live Leaderboards

·         Challenges

·         Tournaments with Virtual Trophies

·         Invite Friends

·         Messaging & Comments

·         Extensive Backend Reporting

·         Content and Promotions Management

 

SkillPod will be launching their enhanced platform in November, some of the new features will include and will be migrated to the social gaming platform:

·         Micropayments for buying power-ups, customising games and pimping avatars

·         A new avatar creation platform, allowing users to create custom avatars, pimp their avatars, message, set moods and access themes for free, and/ or, to buy, sponsored content

·         Game customisation platform, allowing users the opportunity to create their own custom games

·         Enhanced post game screens, featuring Rankings, Featured Content, Friends Achievements and Challenges

·         New highly configurable white label platform

·         Badges for achievements

·         Virtual Gifts

·         And a number of other new features

 

There is no doubt that all this activity is great for the game playing population, the choice is endless, with users being able to play their favourite social games from home, or work, or while commuting and sadly in most instances even while on holiday, when they should be relaxing and taking in the sun with their family and friends. The reality is that there is a downside to all this hype, and this is that there are now more businesses developing games, than ever before, and each one of them is looking to strike it rich. This is no easy task as the key to success to this pot of gold, is that you need users and lots of them, this is either achieved by having relationships with publishers that have large users bases, or developers may already have sites that have significant user bases that can then be used to drive traffic to the new social gaming products or developers need to have access to huge marketing budgets to effectively start from a zero base, for a start-up these budgets usually come from investors or loans, which have their own set of risks and negatives.

 

How can publishers and advertisers leverage off these opportunities? There are undoubtedly numerous opportunities available for publishers and advertisers to increase their brand and product awareness and more so, there are opportunities to earn revenue from aligning with successful social game brands. Publishers can leverage off opportunities that include: CPA deals for referred users that sign up, in some cases they can create white label versions of the social games, which allows them to offer the solution to their user base, within their website, this more often than not also includes the integration of their user registration engines, with those of the social games registration platform. There are a number of opportunities for advertisers to increase the awareness of the product or brand in social games, these include: traditional banner advertising around the games, inclusion of product and/or brand within the games, sponsorship of virtual goods, banner or video ads as pre-rolls and can also be flighted during the various levels within these games.

 

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