Dangerous Curves and Social Games 2.0
I’ve written here a few times about the business model for social games and why I think this is a very good area to be working in. I continue to believe this is a large market in its early stages, with more people spending more on virtual goods in the past year, and with at least one recent study predicting incredible revenue growth over the next few years. We’ve all seen the meteoric rise in this sector in the past couple of years, both at the top end in Zynga, Playdom, and Playfish (now EA), and in the medium-size and long-tail developers.
But recently, some of the shine seems to have come off this area. This is most clearly seen in the dropping MAU and DAU in the top social games — Farmville for example has dropped from a high of about 83M MAU in March to 66M today. 66M is still a number that no one else can touch, but it’s also a huge drop in a game that had been rising steadily.
And it’s not just Farmville. If you look at the graphs for the top games that have been around for a while, rising continually (e.g., Texas HoldEm, Cafe World, Pet Society), each shows a peak and a subsequent fall-off. Notably, this isn’t just due to the age of the game: some more recent games like Treasure Isle and Hotel City show the same dangerous curve at around the same time, even though they haven’t been around as long. Some like Nightclub City show a rising MAU curve — but a daily users curve that has peaked, indicating that the trailing MAU indicator will show this soon too. Still others, despite strong PR-backed launches in what seemed like good areas, have fared much worse from the start (indicating among other things how critical repeat play is to the success of these games).
So other than the fact that simply putting out a social game isn’t a license to print money, what does this mean?
Causes for the Curve
There are likely a number of causes for this peaking. There has been a lot of discussion of Facebook’s policies and how they have made it more difficult for games to publish updates and the like, reducing the ad-like nature of these updates, and thus reducing the games’ virality. Surely that’s had an effect on the growth of these games — but to the extent Facebook’s policy and UI changes are responsible, that might indicate a degree of over-reliance on that one avenue of attracting users on the part of these games.
The age of the games definitely plays a part too; since the first successes of games like Farmtown (which has also seen this same peak-and-fall, sitting now at about 6.5M MAU, off its high of just over 18M) people have been waiting to see what the lifespan of these social games would be. We may have found the answer to that question — at least for the first generation of social games.
That brings us to the next probable cause, and one that I think bears greater examination: players may simply be tiring of these games as their expectations mature. Early on, with games like Mafia Wars, little in the way of traditional art or animation was required, and players flocked to the game (which sits now at a respectable 20M MAU, off its high of 27M MAU late in 2009, though with a DAU ratio that’s dropping fast too). The next generation of games like Restaurant City, Cafe World, and Farmville all hit success with borderline art and gameplay, and really little in the way of anything “social” about them. These games polished up ideas like “appointment gameplay,” which may have worn out their welcome with players, at least as a main reason to continue playing.
In effect, the players may be rotating off of these existing games because there is little innovation in them: once you get past the skins and a few of the gameplay gimmicks, most of these games employ the same basic underlying game engine — and both the developers and the players know it.
What does this mean for the future? Well, the good news is we know there is a huge market hungry for free-to-play, browser-accessible online games. The not so good news — if you’re a developer or investor whose plan is to reap the rewards of yet-another-reskinned-farming-clone — is that players may well have had their fill of the current generation of games. The “farming mechanic” is so well known and has been so well explored by this point that it may not be realistic to assume players will jump at the next game that comes along with a slight variation on this overly cloned mechanic.
What this says to me is that it’s time to innovate again. This doesn’t mean that the money-making engine has broken down, only that it needs new fuel. Designing new gameplay instead of cloning existing play is riskier and takes more time, both of which drive up the costs of development — you can’t just turn the crank and pop out a game in a few months and expect it to do well. It seems increasingly clear that what has worked well for the past couple of years will not sustain the growing market over the next few years. We need to find new sweet spots and new forms of gameplay while keeping the games accessible to casual players, meeting rising expectations for art and fun, and creating new longevity and depth in what have been pretty shallow games.
In other words, we’ve seen that Social Games work in a commercial sense. We have a market that has grown from nothing to nearly a billion dollars in just a few years, and is poised to grow to $7B in the next five years — if we keep feeding it what it wants.
Time to get ready for Social Games 2.0.
And may they truly be social this time around.