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Summary:

Startups associated with social gaming were all the funding rage in 2008. (Think SGN’s $15 million last May, for example, or the $17 million that went to Playfish in October.) And though executives with casual game startups recently told me they’re confident they’ll survive this recession, […]

pet-society-by-playfishStartups associated with social gaming were all the funding rage in 2008. (Think SGN’s $15 million last May, for example, or the $17 million that went to Playfish in October.) And though executives with casual game startups recently told me they’re confident they’ll survive this recession, the challenges and opportunities for social games, which still primarily exist on major social networks, are considerably different. So what about the coming year worries and excites top execs in the social gaming space most?

First, the challenges: Many of the execs I contacted brought up the unpredictability of social games. For example, Charles Edward Hudson III, V-P of business development for Serious Business, noted that the majority of startups in the space are still at the mercy of the top social networks, which have a habit of suddenly changing their policies — to the detriment of third-party applications such as social games.

There’s unpredictability in competition, too. Hudson pointed out that most social network-based games are easy to produce, so established developers often find themselves competing with quickie knock-off versions of their IP. Kristian Segerstrale, CEO and co-founder of Playfish, was also concerned with how dubious fly-by-night social games might hurt the genre as a whole. “Poor quality user experiences or misleading monetization mechanisms like some of the aggressive CPA practices we’ve seen in 2008 could jeopardize the perception of social games and our growth potential as an industry,” he wrote me.

In some cases, uncertainty and opportunity are two sides of the same coin. The largest social games have millions of players, for example, but that’s still a fraction of the total user base of social networks. Mark Pincus, founder and CEO of Zynga, notes that social networks went mass market in 2008. “The biggest challenge for social gaming in the year ahead,” he told me, “will be to become useful and fun to non-gamers and to reach the mass market who have yet to embrace web gaming.”

And there will be plenty of opportunity. “We’ve seen the tip of the iceberg with Spore,” Serious Business’ Hudson told me. He was impressed by the cross-platform features of that Electronic Arts title, predicting, “[W]e’ll see more as things like Google FriendConnect and Facebook Connect are made available to game developers.” Shervin Pishevar, CEO of Social Gaming Network, described the social gaming space as a three-point axis of mobile, social networks and the wider web; the goal for social game developers, he told me, should be “unifying the user experience across these three axis at scale” so their products are seamlessly and consistently enjoyable from whatever platform they’re played. If they’re successful in this, the audience for social games will expand proportionately.

Serious Business’ Hudson foresees improvements in the way social game companies market for-fee services in the coming year, and with them, increased revenue. Playfish’s Segerstrale thinks the recession will boost the space’s prominence, arguing that unlike the traditional gaming industry, which still charges $60 a game, social games are generally free to play, with optional payment systems. “This will be a compelling proposition when there is a squeeze on overall consumer spending,” he said.

And Nabeel Hyatt, founder of Conduit Labs, thinks social gaming will not only be profitable, but culturally transformative: “What started as simply another name for ‘Facebook Games’ will, if we are lucky, evolve to mean games which provide social value.”

Image credit: www.playfish.com

  1. big fan of social games using established social tools (like FriendConnect) to enhance the experience. You mentioned Spore – they had a fabulous screencap and upload to YouTube feature which resulted in more than 150k fan videos being produced and automatically blasted to YT for distribution. [note, working at YouTube myself i'm clearly biased here].

    My sense is that we’re still really early in social games from a game design perspective thus you see the familiar genres and knockoffs dominating the space. My prediction would be that the most successful games of 09 involve new mechanics and themes which take advantage of the Internet as opposed to just porting successful titles into gadgets or social network X.

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  2. [...] The original post from which this post was adapted can be found here. [...]

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  3. [...] Social Gaming: Challenges And Opportunities For ‘09 — Social gaming may be a growth sector, but GigaOm’s Wagner James Au warns the coming year will bring challenges as well as opportunities for social gaming startups. One of the biggest challenges, he says, is that the majority of startups are still at the mercy of top social networks like Facebook, which have a habit of suddenly changing their policies. Such changes can have an adverse affect on third party application makers. There’s also unpredictability in competition. Most social networking games are easy to reproduce, so developers often find themselves competing with knockoff versions of their own app. Also, the proliferation of poor quality games could hurt the sector as a whole, says Kristian Segerstrale, CEO and co-founder of Playfish: “Poor quality user experiences or misleading monetization mechanisms like some of the aggressive CPA practices we’ve seen in 2008 could jeopardize the perception of social games and our growth potential as an industry.” [...]

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  4. [...] funding news should also come as good news to the social gaming niche, which is still laboring to find reliable revenue streams — especially during this lean period when VCs are scaling back their investments. The funding [...]

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  5. great article on the future of gaming for the year. Can’t wait to see all these things happen!

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  6. Hey guys this is the owner of MMOReactor.com Just wanted to add to the article that mmoreactor.com is a new website which is basically a myspace/facebook style social network for gamers. Not only soon we will allow members to upload games they have or have created to the site. We also provide Free Ventrilo, Free Game Servers and also soon we will be giving away GTCs for Online Gamers like WoW Gamers and such.

    since we are a Community Run website, we do make sure that all the rules and regulations of the website is decided by majority of the members itself.

    Come visit us and tell us what you think we are always looking for feedbacks and advice.

    mmoreactor.com

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  7. Social Gaming is the future, there is no doubt about that.

    But there is still a long way to go, as the article describe.

    I think there are a lot of great companies out there, and we will see fantastic things in the future

    http://www.spigo.com is a company, im personally i following very close. They create a very high standard of games and try to incorporate all the big social communities in there solution.

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  8. The challenges involved in social gaming is applicable to a competitive organisation. The market is big and there is so much competition involved, this produces games in mass numbers but at the same time it tests the game developers creativity. The idea behind social gaming should be encouraged and i like the part of free to play rather than paying $60 for a game.Great!!!!

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