Social Networking Conference Case Study: Travis Falstad on Gaming & Social Networks

Case Study: Travis Falstad on Gaming and Social Networks summarizes remarks how Electronic Arts is using social networking and gaming, and how the business grows virally.

Travis gave an eye-opening glimpse of how gaming plays with social networks ,^). He gave a demo of Pet Society, which has been intermittently the top game on Facebook.

• Travis is relatively new to gaming, having spent much of his career in music.
• Facebook and MySpace are major platforms for gaming within the networks; people play social games with friends: Mafia Wars, Scrabble, etc.
• Top game vendors gross $30-80 million; a key metric is MAU (monthly active user, how many users play per month). Even more interesting is this ratio: daily average users/monthly average users is a good indication of engagement.
• Some demographics: generally, most players are in their early 30s, but the segment that spends the most money is women over 35.
• Travis illustrated some of the dynamics with some examples: Playdom’s Mobsters on MySpace has 13.7 million active users. Zynga’s Poker is currently the top game on Facebook with 14.6 million MAU. Playfish’s Pet Society is another major player that he demoed.
• Pet Society is another game that is notable for its cross-promotions with retail partners like PapaJohn’s, where people can choose free “coin” coupons to spend in its game on Facebook.
• Gaming is big business, and Travis explained some of its eye-opening business features.
• Micropayments, defined as less than $10 but in practice usually $1 or less, represent 75-95% of game developers’ revenue. Banner ads average .05% clickthrough because people are there to play (clickthroughs also generally low on Facebook and other social networks). If you want the best clickthroughs, you must tie ads to the content (the game).
• Time-based virtual goods are effective: although perhaps mindbending to some traditional audiences, if you buy a $5 Christmas Tree for your pet in Pet Society, more people will see it than your $150 Fraser Fir in the living room.
• Most games use the freemium model in which anyone can play for free but can purchase accessories or extra features. In Pet Society, for example, you can decorate your pet’s apartment, give gifts to other pets, buy it clothes and food. In Pet Society, you can have the results of your transactions published on your Facebook Wall. The better care you give your pet the more experience points you get.
• 5% of players buy on average, and the average purchase is $.80 (80 cents). Game developers increasingly try to keep players within the game by enabling them to update their Facebook status, etc., from within the game. This can result in tens or hundreds of millions of dollars in annual revenue for top games.
• When marketing your game, be careful, or Facebook will block you. Encourage players to publish their activity on their Walls, so their Friends see it, get curious, and visit the game. Be very careful when promoting the game to non-players. Don’t try to force people to pay to play.
• Fraud is usually not a problem with this style of game because you can’t redeem coins or points outside of the game very easily.
• A useful site to compare games and find statistics is developer Analytics.

The Social Networking Conference took place June 24-26 in Beverly Hills. Between leading the pre-conference workshop on Enterprise Social Networking and leading the final panel, I scribbled these notes.

Enjoy and watch for the final report within a few days!