Still ‘Very Early’ Days

Console, Social Game Arenas Will ‘Bend and Blur’—Zynga Executive

September 22, 2010 by Jeff Berman|Top News

"Everything is going to bend and blur,” Steven Chiang, president of studios at Zynga, said Tuesday at the NY Games Conference, when asked if console games will take on a growing role in the social gaming arena. Console and social games have already started to “blend,” he said, pointing to recent games including Madden NFL Superstars from Electronic Arts, the first entry in that publisher’s football franchise launched on Facebook.

"Everything is going to merge” between the two game sectors, and “there’s space for both,” Chiang said. ThinkEquity analyst Atul Bagga also pointed to the growing presence of console game franchises in the social gaming arena. He predicted Facebook will start to resemble Sony’s PlayStation Network and Microsoft’s Xbox Live Arcade. A growing number of console gamers are playing online, and game makers will continue to more aggressively try to monetize connected games, he said.

It’s still “a very early business,” Chiang said of social gaming. Zynga has only been in business for about four years, he said. He predicted “free-to-play will become the model” most widely used in North America for mobile and online games, in part because it’s “hard to make money at 99 cents” a game. Free-to-play is the main business model for connected games in Asia, he said. Asked where Zynga plans to make its games available in the future, he said, wherever “people are playing games.” The company’s games have found success in markets outside the U.S., he also said. He pointed to Zynga’s game Café World, in which about 60 percent of players are from outside North America, he said.

Facebook has opened up a whole new market, similar to what the Nintendo Wii did with console gaming, said ThinkEquity’s Bagga. About 55 percent of Facebook users now play games on it, and games account for about 40 percent of views at the social networking site, he said. But he said that, with Facebook, “we're just “scratching the surface” of the opportunities available in social gaming now.

NY Games Conference Notebook

It will be a long time before digital game revenue in North America surpasses packaged game revenue, Chris Petrovic, general manager of digital media at retailer GameStop, said. Game and entertainment industry executives speaking on the same panel agreed. PlayFirst CEO Mari Baker predicted it will take at least 2-5 years, while Teemu Huuhtanen, executive vice president of business development and communications at social entertainment company Sulake, guessed it will take 5-10 years. No downloadable game will soon take in $200 million in one day as Microsoft said its Xbox 360 game Halo: Reach did at launch last week, Huuhtanen predicted. How quickly the digital transition happens “depends on the speed of the pipelines,” and right now many consumers can’t download full, console games and play them, MTV Networks Supervising Producer Tom Akel said.

Social entertainment company hi5 will introduce a new networking platform called SocioPath, President and Chief Technology Officer Alex St. John said. The “anti-social networking platform” will provide technology that will “enable games” to get the same sort of viral buzz typically generated by a social networking site without having to be on Facebook or any other specific social network, he said. More details, including initial partners, will be announced at Game Developers Conference Online in Austin, Texas, Oct. 5-8, he said. Viral marketing is a viable way for companies to make revenue, he said. While some people who receive such viral messaging might not create revenue for a company directly, they may attract others who do, he said.

About 14 percent of gamers play games on computers, Facebook and smartphones, PlayFirst CEO Mari Baker said. Almost 80 percent of gamers 18-34 years old play casual games, she said. The data was based on a poll of 2,075 U.S. consumers in June by Frank Magid Associates, the research company and PlayFirst said. Other findings of the study: About 87 percent play Macintosh or PC games; 50 percent play games on Facebook; 28 percent play smartphone games; and 52 percent play on at least two of the three platforms. Also, about 66 percent of adults play some type of digital game, while 80 percent said they liked playing games more than watching movies, listening to music and reading books, newspapers or magazines.

"Relying on the audience to come to you is a failed approach” for game makers today, said Julie Uhrman, vice president and general manager of digital content at IGN. Game companies need to release games across multiple platforms so consumers who only use select platforms can find them, she said. There’s “less friction” for consumers when they buy games online instead of at retail stores, she said. Distribution of game content through cloud computing is “going to be a great experience” for consumers as long as latency issues are resolved, she said. The problem with buying computer games today is that it takes time to download them before they can be played, whereas cloud services can remove that long wait time, she said. Jim Poole, general manager of global networks and content at data center service company Equinix, agreed “instant gratification” is a major benefit to cloud distribution. Cloud computing is growing rapidly and it won’t be long before all media that consumers own is automatically updated via a cloud service, he said. Cloud delivery services like OnLive, however, “will co-exist” with traditional distribution for a while longer because of the slow broadband connections that some consumers still have, he said. Uhrman went further, predicting that packaged game media will continue to exist for years to come, due in part to the huge amount of money that some games generate. She argued that you can’t directly compare the digital transition that’s happening in the game space to the digital transition that happened with music that Apple benefited from. One major factor is that videogame console companies make much of their money from the games for their systems, not the hardware, she said. In comparison, money was lost when Apple sold songs at only 99 cents per download to help sell their hardware, she said.

Casual game company Oberon Media reaches about 50 million players a month via its partners, CEO Tal Kerret said. Those partners reach about 300 million gamers a month, he said.

Gamers are spending a growing amount of time playing each game they buy, said ThinkEquity analyst Atul Bagga. The average player of Activision’s game Call of Duty: Modern Warfare 2, released in late 2009, played it for about 150 hours in the first six months of the game’s launch, he said.