Facebook’s Early Glory and Inevitable Misery

When I look at Facebook, I see a games platform that has been thoroughly enjoying the “early glory” phase of maturity. Not too long ago, there was guarded optimism about the potential of Facebook to host profitable games, but few good examples of such games. Less than a blink of an eye later, Facebook has become the apple of our industry’s eye.

While most publishers are laying employees off by the hundreds, Facebook-centric publishers are hiring like mad. Savvy conference organizers are rushing to capitalize on audience demand for business venues to discuss social gaming. The inevitable stories of unbelievable growth have, quite predictably, become common-place. Facebook’s platform managers have finally started embracing our industry and contributing to the hype around their platform. And finally, a remarkable number of developers (and even large publishers) have begun to re-orient themselves towards the development of social games.

Facebook’s “inevitable misery”

All of these are classic signs that Facebook gaming’s “early glory” phase is in full swing. You may therefore conclude, with 99% certainty, that Facebook as a games platform is likely within a single year’s reach of the “inevitable misery” phase of its lifecycle. Probably much less than a year, in fact. As I’ve argued before, this does not necessarily mean that savvy developers should begin to look elsewhere — it simply means that there will soon be a large quantity of blood in Facebook’s waters. The victims of that impending blood-bath are listed here, in no particular order:

  • Developers who fail to realize that the quality bar for content is rising rapidly.
  • Developers who believe that “viral game design” is all that matters. Hardly! User retention will prove increasingly crucial (and difficult!) as the options available to consumers explode in quantity. Furthermore, effective marketing and/or cross-promotion will increasingly distinguish those games that reach critical mass — the point before which “virality” is meaningless — from those games that do not reach critical mass and therefore fail.
  • Developers who run afoul of Facebook’s platform managers. Make no mistake: Facebook may be an “open platform” but they can and will pull the rug out from under developers… not because they are nasty people, but because they genuinely believe their actions serve the greater good and/or the customer (they may also be looking to pad their own pocketbook.) Facebook might choose to dramatically change the mechanics upon which a developer has unfortunately bet all their eggs. Or perhaps Facebook might begin to proactively promote content, ala Xbox LIVE or the iPhone App store, in which case a developer could find their competitors’ games featured at the expense of their own! (Better be sure you’re supporting Facebook Credits if you want to stay off the black list…)

Early signs of trouble?

Very early signs of the “inevitable misery” phase are already evident. Not long ago, I was hearing that the conversion rate from free users to paying users on Facebook was somewhere around 3%. However, Zynga recently revealed that as of now, 1% to 2% is probably more accurate. Falling conversion rates are one of the harbingers of “inevitable misery,” though I must re-emphasize that neither falling conversion rates nor the inevitable misery phase itself are inherently “bad.” A low conversion rate is fine when your game attracts 70m players! The inevitable misery phase features a great many losers, but it sets the stage for some big winners as well.

When it arrives, what will Facebook’s “inevitable misery” phase look like?

Facebook gaming’s “inevitable misery” phase is going to look a lot like every other successful platform’s inevitable misery phase. Industry news will turn mostly sour for a period of time. Many developers will lose their shirts as games that formerly would have succeeded no longer do so. But there is one major difference between Facebook and other platforms that came before it: never before has a platform been so friendly to cross-promotion and viral growth. These twin forces will likely guarantee that today’s big social gaming companies (i.e., Zynga, Playdom, EA Playfish, etc) should continue to thrive despite any mistakes they might make. In other words, we are less likely to see a Sierra Online-esq fall from grace.

Between having truck-loads of venture capital to advertise new games with, and having millions of existing players that they can point towards new games, these social gaming juggernauts should have an easier time surviving the inevitable misery phase. They may be hiring new employees way too quickly (which unnecessarily increases their burn rate and makes them less efficient), and they may currently be cranking out derivative, shallow games, but as long as they manage to publish at least a few compelling titles as well, they should be OK. (Those “compelling titles” may be clones of competing games, but hopefully a rising quality bar and greater consumer awareness will make cloning harder in the future. I wouldn’t hold my breath, but we can hope!)

And what should you do if you’re not a Zynga, Playdom or Playfish? Well, aside from referring to the advice I gave in my previous article, I’ll add this: unlike so many other games platforms, Facebook is actually large, open, and accessible enough to support many games that target niche audiences — and Zynga is less likely to clone your game if you’ve targeted a niche. (They’re probably looking for games that have the potential to attract 100m players, not 1m or 5m players.) I’m not suggesting that indie developers abandon the mass market — not at all — but niche strategies are worth considering as competition on Facebook continues to intensify.

4 responses to “Facebook’s Early Glory and Inevitable Misery

  1. And if your business model monetizes 5M better than Zynga’s monetizes 100M, all the better. The whole time-for-cash trade is getting awfully crowded.

  2. Patrick – right! A niche audience might theoretically be much more likely to transact as well…

  3. What gets me is how venture capitalists swarm to or attempt to enable early glory phases. Their holy grail of 10x return requires huge risks. Where are the venture capitalists who aim lower, say 2x, on more reliable niches? Stardock sets that example, but were/are they majorly funded? Didn’t they have to bootstrap themselves?

    I guess what I’m trying to say is, there would be a lot more diversity of games if the funding models diversified. Maybe then we wouldn’t see these crazy rates of change that seriously disrupt our industry.

    -from a pre-Seattle, ex-sierra guy –

  4. Or people could just go outside and throw a freakin baseball around for a bit?? It’s called the great outdoors. It is your friend!

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