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Investigating the real cost of free games. By Dan Griliopoulos
ast year the games industry shrank, just a touch. We all attributed it to the economy. Industry analysts in suits said that Modern Warfare 2 had scared off all the other big releases, so the first quarter of 2010 was going to be hugely profitable for everyone. They praised the industry for its resilience. That huge spring of 2010 has come and gone, and the market hasn’t recovered. Lots of awesome games came out – Just Cause 2, Bad Company 2, Assassin’s Creed II – but the market is even lower than it was at Christmas. What’s happened?
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One theory is that the monster eating our babies is what was once called casual gaming, back when we wanted a word for rubbish games played by cubicleslaves. Now it’s called social gaming. It’s hard to put a bracket around all of these games, but they do share two things: they’re free to play (with optional microtransactions), and they integrate with the real world through social networks. Other recurring characteristics include simple mechanics, being programmed in Flash, and a design that favours short bursts of play.
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Who plays social games? Steve Shipton, of gaming site Playfish: “Our core social gamers are 20-34 years old, with an even gender split. However, it pretty much reflects the wider demographic of Facebook, which is our primary platform.” The makers of Evony, though it has a heavier male bias due to its Civ-like theme and genesis outside Facebook, are finding that older women are their fastest growing demographic. “They’re the glue of the alliance, the organisers and motivators,” says Walt Yarbrough, the Turbine and Mythic veteran who hopes to change the perception of this strangely-loathed game. “Their numbers are small, but their impact is huge. The same could be said of real life.” Mark Skagg of Zynga, developers of Farmville among others, takes another slant. “Our users tell us that there’s an untracked demographic of kids playing on their parents’ laps, as it’s an enjoyable bonding time... and produces a wonderful connection between family members.” This really is a market that attracts everyone, from tots to teens to tottering old-timers. (Everyone, that is, except for hardcore gamers.) The three gentlemen I’ve just quoted probably have about 180 million people playing their games every month. “Our biggest game,” says Shipton, “Pet Society, has 21 million monthly active users, with four million daily active users, but we have ten games on Facebook – that’s just the most popular one.” Zynga, meanwhile, can claim even more startling statistics: “Farmville does 30 million a day, by itself. Our new title Treasure Isle has six million daily gamers – it’s been out for two weeks.”
These companies are rolling in money – the ﬁrst Facebook social game, Mob Wars, is still rumoured to be generating $1 million a month – and it all comes from players buying either in-game money, or in-game items (companies prefer the former, as players often end up with odd amounts left over). But supposing you do spend your money on these virtual items – what are you actually buying? Jas Purewal of GamerLaw.com: “The critical issue is this: are virtual goods and money ‘property’? On the one hand, they are ‘things’ just like a house or car, they are purchased for real money, and – crucially – players are encouraged to think they are ‘buying’ something. On the other hand, virtual goods/money are in inﬁnite supply and are, well, ‘virtual’ - so maybe they’re not property at all, but something like a service instead?” This is serious business, although it may sound like a boring legal debate. If virtual goods/money are property, who owns them? “Is it the games company (which is effectively how the current legal framework is set up) or the player?” asks Purewal. “If the latter, what rights do players have in them – the right to turn them into cash? To mass-copy that virtual cow? To destroy that l33t sword? Do other laws then become involved, like tax? Clearly, if – and it’s a big if – any of that was right, it could fundamentally change the way games companies treat virtual goods.” Does this really matter? “Deﬁnitely,” says Purewal. “The more money pours into virtual goods and money, the higher the prospects that sooner or later someone is going to turn around and st art asking questions about what they ‘own’ in return for their money. And that’s when the lawyers get involved.”
Couch Potatoes: guess what it’s about. Go on, guess.
Demographically, access to these games is limited to where social networks have sprung up – Playfish, for example, are primarily Facebookorientated, tapping its 450 million users, whereas Evony and Portalarium’s products are designed to work across any social network and as standalone games. Big translates to profitable. Mob Wars, one of the earliest social games, was already making $1,000,000 a
“Our biggest game, Pet Society, has 21 million monthly users. And we have ten games on Facebook”
month back in 2008, and this was before Playfish and Zynga refined the game design. Allfacebook.com estimates that the latter are making around $100m in annual revenue, all from microtransactions. Understandably, none of these companies are that keen to talk about the huge sums these games are generating, but let’s take a quick look at the development model. They
Country Story would work better with zombies.
make each game with a tiny team, more akin to indie or mod development than the big AAA games. Both Playfish and Zynga start their games with three or four people, and have larger temporary teams of 15-30 ready for their regular launches. “Most of the work is done after launch,” says Stagg. “There’s nothing like having a million people playing your game to test it.” “We launch the game at about 20% of development,” agrees Shipton, “it’s about seeing games as a service.” With two-three month development cycles and such tiny overheads, these games are a licence to print money (more on which later). So, the social games industry is growing hugely fast, is massively moreish, and hugely profitable. Why aren’t hardcore gamers playing – and why has it got such a bad reputation so quickly? The reason is that social gaming is the Wild West, with Red Indies roaming the wastes, independent townships setting up home in strange new lands, and large corporations laying track down and railroading their way into the heart of the continent. No one’s really sure who’s going to win out. Like any undiscovered country, it’s
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FIELDS OF GOLD
THE GURUS OF CASUAL GAMING
(Technical director worldwide studios) - Playﬁsh. Playﬁsh were one of the biggest social gaming pioneers and, though they’ve fallen behind Zynga in recent months, were still bought up by Electronic Arts for the princely sum of $300 million dollars. Which just goes to show how much money there is to be made from something that’s free. They’re only two years old, but already have ofﬁces around the world.
Tsk, these people must lead sad, empty lives.
fields are fecund with controversy. The aggressive way players are acquired has come under scrutiny, as well as the endless copycatting between companies, and the invasive Facebook spam. Most damningly, the companies have been accused of making games that are not fun, but merely compelling, actively antisocial and greedy for user’s money.
There’s a big incentive to spend. Primarily, to speed up progression. Thankfully most games have removed their dodgy Offer Walls, promising in-game funds in return for clicking on advertising links or performing unsalubrious tasks, but there are still problems. Take the case (reported in The Guardian) of a 12-year-old who ran up a £900 bill on Farmville. The problem here wasn’t just that he spent the money – it was that it wasn’t his but his mother’s. Other people out there are spending equally huge amounts of money, but it’s OK because they’re adults. These people have problems and need help, but they’re hugely profitable – and these are businesses, not charities. As Jesse Schell of Schell Games says, “Is it crazy to use these techniques? It’s crazy to use them in the long term, but in the short term, it will get you money and players, so it would be crazy not to use them! You can always change techniques later – in fact, you definitely will, since players, games, and technology are changing so fast.” Well, at least we’re playing with our friends... right? Hang on. We don’t assume that just because politicians call themselves socialists they’re the best at socialising, so should we assume that social gaming is, y’know
‘social’? Most of the time you’re not playing with people as people, but as in-game tokens of success. In fact, are social games antisocial? A critic would say their design is derived from cynical, amoral stuff, like the ’50s social science experiments of Skinner and Milgram. The games use random mechanisms and ‘variable ratio rewards’ with the mechanics of a slot machine, to encourage you to do things you don’t necessarily enjoy to get items that, strictly speaking, are worthless (ie, virtual), and that may even degenerate if you don’t return. The mechanism is made addictive through random drops that get less frequent as the game goes on, an absence of stopping points, nebulous win-lose conditions, and an illusion of satisfaction. These challenges are simpler and easier than the real world – and hence undermine the accomplishments of real life. Braidcreator Jonathan Blow has called this ‘addiction-based gaming’. Schell: “Remember, games don’t have to be ‘fun’ all the time, they just have to be engaging... All a good game needs is a simple interaction with someone whose opinion I care about.” Do they feature real relationships? Schell: “If they didn’t, Facebook games would work just as well with strangers as they do with your real friends. But they don’t. We don’t want to be ashamed in front of our real friends, and we want to feel equal, or superior, to our real friends, there are powerful forces at work that make us want to succeed at games when our real friends are involved. So, real relationships are at the fore. The games don’t develop these relationships, but they do use them.” Is this done intentionally? After all,
(Founder) - Schell Games One of the keenest analysts of social gaming, Schell paints a picture of a near future that’s somewhere between utopian and dystopian. He spoke to us about the game design techniques social developers use to draw money from their players. The short: it’s proﬁtable, but faintly terrifying. For a full explanation of his ideas, watch his excellent TED talk at tinyurl. com/schellpcg.
(Vice-president) – Evony Evony is a Civilization-like citybuilding game, which you may recognise as “Come play, my Lord” from a series of increasingly bizarre adverts featuring buxom women not included in the game. These ads left The Guardian asking “ is this the most despised game on the Web?” and garnered it 18 million players. Evony have just relaunched Evony Age II, making the game more fair and social.
(Co-founder, chairman, development director) – Portalarium A small but rapidly growing social game developer, Portalarium boast such huge ﬁgures of gaming as Richard ‘Lord British’ Garriott and Snell from Origin among its staff. It aims to build a series of casual games that can be played standalone or through a larger world-cum-social-network called Centreport.
(Vice president, product development) – Zynga Zynga is the biggest of the social games companies, having been quick to move to Facebook and corner its broad userbase. As of December 2009, they had 60 million daily active users on their games, and Skaggs told us Farmville currently has as many as 30 million on its own. Those are astonishing ﬁgures . This is a company making money hand over ﬁst.
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the same charge could be laid at the door of World of Warcraft and other MMOs with Skinner mechanisms. Yarbrough: “People ascribe a little too much intelligence to game designers – in most cases you tend to put in something that you feel is going to be fun, and as people test your game you reinforce the things that people spend their time doing. I’ve never been a part of a game where there’s a conscious decision to make the game more addictive through Mechanism X.” Either game developers are deluding themselves, or social games are just evolving this way in a highpressure environment. Schell: “The social gaming universe right now is a Darwinian experiment, evolving at 100x the speed of traditional videogaming, to find out what people find rewarding to play, and what they’ll spend money on.” There’s definitely a survival of the fittest going on – if you look at the major three companies’ portfolios you’ll feel like you’re seeing treble. Playdom have Mobsters, Playfish have Gangster City and Zynga have Mafia
Wars – all of them modelled after Mob Wars. Though the Mob Wars developer got an out-of-court settlement from Zynga estimated to be a substantial figure, this is the exception rather than the rule. “It reminds me a lot of beginnings of the Apple II, PC and arcade games,” says Stagg. “Genres are being established. A farm game is a
“Social gaming is a Darwinian experiment, evolving at 100x the speed of traditional videogaming”
genre – casual players don’t just play one, they play lots.” Shipton agrees: “The FPS has been done over and over – you only notice this because our development times are much shorter.” Yarbrough is a little more despondent: “it’s relatively sad that most of America’s popular TV shows started out in Britain, but it’s less risky to copy off something that has been successful and polish it.” The other notable feature of social games is the crapulent spam that fills up Facebook. Facebook has made this
easier to filter out now, but it’s still highly invasive. Shipton: “We have to spend a lot of time keeping up to date with the Facebook policy changes and being respectful to their users; it’s very similar to console gaming. We don’t want players to be spammed either.” Schell is more brusque: “Well, part of what we’re doing at Schell Games are Facebook games and other social network games. And for those to succeed, they have to be viral. And to be viral, you have to risk being annoying.” This viral marketing is the main source of new players, via invitations from friends or targeted advertising. The queens of targeted advertising are, obviously, Evony. “The ads were and are very effective,” says Yarbrough. “They’re the primary means by which we acquire customers, and we’ve got 18 million players through it. In fact, we’ve only just moved into Facebook, but we remain focused on advertising to drive new customers.” Playfish, on the other hand, have always used pure viral techniques. “Our very first game was Who has the biggest brain,”
NIGHTMARE FUTURE What social games could look like in ten years
MINORITY RETORT On-demand, personalised advertising will use game design mechanics to co-opt people’s subconscious. Its success will depend on how malleable the global population proves to be.
OPT-OUTS Some people will have either opted out of the system or possess ad-blocking technology. The former are likely to be fed generic ‘old-fashioned” adverts, due to their lack of a profile.
THE TERMINALS All mobile devices will have super-HD cameras and miniprojectors. Decisions about social networking will become about when to turn off devices, not to turn them on.
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© istockphoto.com/ iLexx
THE NEXUS All social games will be played through your mobile device by this time. Users much prefer to access social networks through mobile devices.
FIELDS OF GOLD
says Shipton, “which we only distributed within Playfish to our friends. Within weeks, the number of players had grown from 100 to 100,000 and carried on exponentially. In essence, it’s an incredible disruption happening from social media into traditional marketing. If you have a relationship with someone, there’s a reason you’ve done that. If they recommend something, it has cred and 90% of people will take that recommendation. Yet an advert only affects 10% of people.” Getting a single recommendation is
“The big brands will move in... and social gaming will move into the wider world”
therefore worth more than ten people seeing your advert. This sector is changing so quickly that relevant stories were coming through quicker than I could write them down. ‘Korea to ban overnight play in Freemium MMOs’, ‘Shanda looking to buy social games company’, ‘Offer Walls introduced – and removed – in D&D Online.” The future consists of two things – this niche being saturated with startups until the bubble bursts (from the levelling off of user numbers, I think we may be nearly there) – and the deeper, more comprehensive integration of social gaming into every aspect of our lives. All parties agree that the market is going to shift in the coming year – but everyone has a different story. Shipton talks about the arrival of the big brands: “Firstly, there’s going to
FishVille: it lets you give fish love. Not like that.
be a shake-out as the sector consolidates. Then well-known brands will come to dominate. In 2008, two of the top ten games on iPhone were well-known brands – it was mostly indie. Fast-forward one year and seven of the top ten are wellknown brands – and predominantly EA... simplistically, if you have a branded sports game you’re clearly in an advantageous position over a generic sports game.” Industry veteran Dallas Snell does voice a warning, however: “Is the market going to get saturated? Hell, yes. It’s going to saturate because everyone and their mother is going to be out panning for that gold, and there’s going to be a lot of stuff that’s just not premium.” As Yarbrough points out, even with the financial markets in the state they’re in, there’s lots of venture capital going into social gaming right now.
Not only are we going to see the big brands moving into social gaming, but social gaming is going to move into the wider world. Already there are teachers using experience point systems to incentivise their classes. But when direct marketing and social gaming clash, the world gets weird, fast. Schell envisages a world where your every action is monitored by brand-enabled devices that reward you for brand-friendly behaviour – such as saying their catchphrase – and use game mechanics to encourage
Totally different to matching gems.
you to spend more money and time on the brand. “There will be lots and lots and lots of annoying marketing games, in shapes and forms we can only start to imagine,” he says. “‘Buy a 24 pack of Coca-Cola, and get 100 free gold in World of Warcraft!’ ‘Tweet about NBC TV shows five times this week, and get 20 farmcash, and a coupon for MacDonalds!’ And on, and on, and on...” Buy a PC Gamer-approved product every day this week and you get reward points. You’ve levelled up, now you’re a PCG Ambassador, so you get a PCG fan kit. Meanwhile, your health insurance is incentivising you to walk as it’s worried about your heart rate, and a tobacco firm is incentivising you not to read The Guardian because of its coverage of cancer risk. You get an achievement from the local council for not giving money to a tramp, and your eyetracking device is giving you bonus points for reading every line of an advert (but not the small print). It’s a nightmare and it’s coming. What no one is mentioning is a crash, a bubble bursting. There’s a risk that social gaming could collapse overnight. Yet this is unlikely, because the place where it’s based, Facebook, is now so central to our lives. Instead, social gaming is spilling out virally into the world, and its effectiveness in altering our behaviour means it’s soon going to be affecting you in ways you may not even notice.
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