What Is Behind The Success Of Candy Crush's Attraction Of Female Gamers?

Candy Crush has been studied in great depth due to its stand out position as one of the most successful online games ever created.   Game designers, publishers,  gaming operators and investors envy the success of Candy Crush and the brand that has emerged from its success. Acknowledged experts in the field of addictive behavior  place it in the same category as Angry Birds  and traditional casino slot machines in terms of its popularity and ability to maintain high levels of engagement and repetitive play. All of this is great. However, the real reason the gaming industry is so interested in Candy Crush is its ability to "monetize" game play and cater to a female audience that has largely been ignored in the gaming world.   In its halcyon days Candy Crush was generating close to $900,000 USD per day. That is a very good day at the office!! 

So what are the game mechanics, visual experience,  target audience, game access, etc. characteristics of Candy Crush that separate Candy Crush from the other games to create a unique and one of kind experiences that lead to high levels of engagement and monetization for the female audience?

 Accessibility/Virality - The emergence of Facebook as a gaming and application  platform has had a big impact on the gaming industry. Initially launched as a social network only  platform the move to add apps to its offering and especially game apps has completely changed the gaming world. This is old news. However, with the emergence of mobile as an app and game platform  people forget how important and strategic a launch  of a game in the Facebook environment can be.  Although Facebook has virtually eliminated "virality" there is still the ability to reach ones own connections and engage with these connections to promote an app.  Even in a mobile only environment Candy Crush provides the ability to engage with "friends" notifying them of ones participation in the app. More importantly, the social nature of Facebook continues to be attractive to the "female" demographic due to its "social" features.

Specific Design For Mobile And Facebook -  King's initial launch of Candy Crush in Facebook was very strategic designed to leverage the "social" nature of the target female audience. With the success of the Facebook introduction King "ported" the app to mobile.  Although  initially designed for  and launched in Facebook Candy Crush's mobile implementation is specifically designed for a mobile platform. This may seem to be an obvious thing to do. However, many apps are developed on one platform and are "ported" to others without taking into consideration the specifics of the environment they are ported too. For instance, the "real estate and access points in a Facebook environment are very different then the experience on iPhone/iPad and Android based devices.  In addition, "virality" infrastructure is  not "native" to mobile requiring in app invitation and virality features to be added to encourage engagement on a viral scale in a mobile context.

Easy To Understand And Play -  This may seem obvious, however, many games that are launched include "mechanics" that assume a certain "skill" level.  For instance, "role playing" games which have been popular on a number of gaming platforms including consoles were some of the first games to appear in the Facebook environment. These games are rather complex and evolve and morph as a game is played making them unappealing to the "casual" gaming audience.  The market for these  style games is loyal and likely male oriented.  Compared to easy to use social games role playing games have a  relatively  small audience.   Alternatively, Candy Crush takes its inspiration  from classic slot games which attract a large audience due to their ease of use,  engaging graphics and  clever sound effects.

Continuous Play And Advancing -    Candy Crush in many ways is a game that can be continuously played with the added benefit of advancing to new levels in the game.  The inspiration for this form of engagement comes form the slot world where access to new levels in the game encourage people to attempt to reach these levels. Also, when in a new level the game itself may change resulting in a new experience avoiding the boredom factor.

 Colors, Visual Appeal And Female Targeting  - Colors and layout matter in any game app determining the demographic target for the  game. Candy Crush uses "bold" colors to accentuate the activity in the game. However, the most important color differentiation is the use of "Pink" in the game. This obviously appears to the female audience making that audience comfortable and engaging in terms of community and interest.  

In Game Monetization -  Candy Crush is clever in the way it encourages the purchase of virtual currency at key inflection points in the app. It leads a player to a certain threshold of success and then offers the player the option to purchase more currency to advance even further. 

 King's  conscious effort to attract the female audience to its game offerings with the introduction of Candy Crush has proven to be successful. The design of the game was especially crafted to leverage the natural social propensity for this demographic resulting in a high virality coefficient. The success of Candy Crush demonstrates that females are also "gamers". Vegas has recognized this for decades. The social game development community is now beginning to get it as well. 

        

Kevin Flood is the CEO of Gameinlane, Inc. Gameinlane  has developed, launched and operated Internet gambling sites in Europe.   The company engages with land based casino  operators, online gambling operators, social casino operator and game developers to assist them in determining their strategy and implementation  of game content.  Gameinlane   develops "social and real money" casino games for third parties. Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions. Kevin can be reached at kflood@gameinlane.com.

Social Gaming Companies Entering The Online Gambling Space: Think Before You Leap

A number  of social gaming companies are either contemplating or actually starting the process of entering the online gambling space. These companies have been attracted to online gambling for a number of reasons. The primary reason is the higher ARPU's in gambling relative  to social gaming. Gambling ARPU's on average can be in the hundreds or USD's with some wales contributing in the thousands of USD. Another reason is that social casino games look like traditional gambling games and do have game mechanics similar to traditional gambling games.

However, there is a much more to consider beyond the expectation of acquiring high yielding players before a social gaming company commits to engaging in the online gambling business. Launching and running an online gambling business is much more expensive and complicated relative to operating a social gaming business.  Many business processes have to slow down to avoid the risk of errors in the code and product. Financial records have to be kept for audit purposes and a delicate balance maintained between speed to market and adherence to regulatory standards. Marketing costs are considerably higher for online gambling operators.

The following are a number items that a social gaming company should be aware of and be prepared for if they expect to be successful in the online gambling arena.

Licensing Fees -  Operating a "legal"  online gambling business requires licensing from a recognized  gambling authority usually associated with a state, country, district, principality, etc. This fee can be in the vicinity of 200,000 USD and higher with an annual fee to retain the license. In Europe,  country by country regulation is emerging requiring an online gambling operator to pay licences to every country they want to operate in. If the US decides to legalize gambling it could be on a state by state basis mimicking the same regime that is emerging in Europe. An online gambling company could easily spend a 1,000,000 USD on licensing fees with some annual fee to maintain a licence if that company wishes to be licensed in several countries, states or jurisdictions.

Background Checks And Vetting Of Key Staff Members -  Legal online gambling operations are subject to scrutiny by law enforcement to determine if staff members have been charged and or convicted of any crimes that may suggest that they  intend to operate illegal gambling operations. Key personal will have their backgrounds checked to determine if they have an affiliation with people that have a criminal record. Staff members will be subject to a review of their financial records to determine if there is any suspicious transaction history that would imply that their interest in online gambling could be used for the diversion of funds from the online gambling operation.

Regulatory Review And Audits - Regulators are going to want to audit the game platform and perhaps the games themselves. The RNG(Random Number Generator) is the key piece of code that will be scrutinized. However, other portions of the stack could be of interest. Intrusion detection is another area of concern by regulatory authorities. These audits may come randomly or at scheduled times during the lifetime of the operation. This means that your code has to be up to the standards required by the regulators, it should be well commented and the sensitive code can not be changed without permission from the regulatory authority.

Player Age/Location/Identity Check - All players interested in playing on a gambling site have to be screened to make sure they are above the gambling age limit and they are coming from a location where it is legal to gamble. If a player's age, identity and location cannot be verified they must be rejected and cannot play. In some cases players that do fit the criteria  to play will be rejected because their is not enough evidence that they are who they claim to be. Location is becoming more important with many European countries only accepting players from their country. The US state by state model will most likely take this position. In Europe some countries are requiring pre-screening of potential players by the authorities before the player can interact with the gaming property resulting in player drop off prior to ever experiencing game play.

Marketing and Retention Costs - The overall market size of "real" gamblers versus social gamers is significantly different with gambling players representing only a fraction of the number of social game players. Regulation itself restricts the numbers of players with only a small segment of the population having access to "legal" gambling properties.  Age restrictions also constrict the total size of the market. Playing for "real" is also a deterrent curtailing the number of players and the amount of time they gamble.

 It is not uncommon to pay on average  of between $300 and $500 USD's to acquire an online gambling player.  Placing Ads either in electronic or physical mediums are higher as well.  The methods of acquiring gambling players  differs as well. Affiliate marketing is a key component of online gambling with certain affiliates focusing exclusively on online gamblers. 

Competition can be fierce  for  the acquisition of gambling players requiring online gambling business to provide extra incentives for gamblers to play on their properties. Players my be given free chips to start play and to encourage players to return to play if they have been absent for a period of time.

 Many traditional marketing tools are not available to marketers  For instance, paid search in Google is not allowed by Google  and certain e-mail providers will filter gambling related e-mail campaigns.  It is unclear on what restrictions Facebook will place on online gambling within Facebook. 

Gambling Legal Counsel  - An attorney specialized in online gambling will have to be added to the budget. In some cases different legal counsel will have to be added for each jurisdiction that a company seeks to enter. Obviously, this can add a significant expense item to a game operators budget.

Transaction Reporting - The European country by country online gambling model has lead to the requirement for licensees to report on all gambling transactions. It is highly likely that this model will be replicated in the US. This means that a special feed of gaming transaction has to be constructed in a way that the data feed complies with the regulatory specifications and that data is transmitted in real time to a special location external to the game hosting site.  The experience in Europe indicates that the setup of these game transaction systems is time consuming and expensive. 

Game Play - Social games, even if they are social casino games emphasize the "fun" part of gaming.   They encourage other people to join  a player in this fun activity and players often gift other players with free virtual currency and perhaps virtual items.  Gambling is different. Believe it or not "real" gamblers may not be all that interested in letting others know they are gambling or how much they are spending on their gambling wagers. If you are going to extend your social game into the gambling realm think about opt in and opt out features that let players remain anonymous.  If you launch a gambling game in Facebook realize that the social graph may be restricted in Facebook and certain gamblers will not want to make others aware that they are gambling in Facebook. Traditional gamblers may want a more traditional gambling game experience. This means that if you have modified a game like blackjack or roulette  to fit a more play for fun environment it may have to reworked to look more like the original game.  Gamblers want to know what the payouts are for various games and what the different wins in a game will payout. They want to know the odds of winning in a specific games. Player game time may decrease because they only have so much in their wallet requiring a social game company to think of clever ways to keep a gambler engaged.

Regional Game Preferences - I participated in the development and launch of two online gambling platforms targeting UK players and learned  the hard way about regional game preferences.  We developed our game content based on the land based preferences of US casino players and free to play gamers. Needless to say, when we launched our games in the UK we were surprised at how different the UK gambling preferences where relative to  an American  land based audience. The biggest difference was in slot preferences. However, table gable preferences where skewed differently as well. The moral of the story is know your audience before you start building your gambling content.

Game Development - There will be tighter restrictions on how games will be developed and who develops them. Overnight peer programming mash ups to jam a game out as fast as possible may not work. Certain best practices such as code documentation is very important. Code has to be developed with security in mind to avoid intrusion attempts and changes  to the code by internal personal that could result in preferential game play features that could be unlocked during game play. The wallet function is an especially vulnerable  area that could easily be tampered with by a developer or an IT tech for the purpose of redirecting funds to an external account.  The game development process inevitable slows down. Changes to games can not be pushed as quickly as in a social gaming environment. Agile processed can still be used. However, the velocity of releases slow down and change control gets more stringent. 

IT Infrastructure  - Many social game companies are using cloud hosting facilities to host their games. This may not be an option for them when they move into the gambling business. Regulators will want their hardware isolated and in total control of the operator and a certified hosting facility. This will increase the cost of hosting requiring computer and net working equipment purchases with steady  and continuous upgrades as hardware evolves.  Additional IT staff will have to added to monitor and service the equipment making sure that it is operational on a 7/24 hour basis.  Hosting facilities will be limited to the ones specifically sanctioned by regulators to be "certified" hosting facilities.

Game Platform - The underlying mechanisms that determine the out come of a game have to be random and not modifiable. The random generator (RNG) that is required for most gambling games has to be truly random and will be subject to audit. Currently many social game out comes are not random. They are programmable and frequently changed to adjust a game to particular audience or event. This practice will have to stop.

The Odds Of Winning - The odds of winning a game have to be clearly stated and the odds cannot change unless players are made aware of it. No more changing or manipulating the odds at random times to increase or decrease a player winnings.

Gambling Companies Need To Be Profitable - Many social game companies, especially new ones, are not profitable. It is unlikely that an unprofitable social gaming company is going to get a gambling license. Also, a gambling company needs to have the financial reserves to cover a large bet that goes well for the player and not for the gambling business. Running a gambling business is expensive. Overall, the business must be profitable. However, there are times when the players beat the house and the house must cover the bet even if this means a losing quarter for the company.

QA -  The reliability, stability and accuracy of a gambling game has to be at a standard higher then most social games. Social game operators have the notion that if they push a release to Facebook and they find out it is not working properly they can always fix and push another release. This mentality will not work in a gambling environment. Any release pushed to production, especially, ones involving payout, wallet functions, player security, etc, has to have a very low margin of error. The need for speed to market has to be tempered with the need for security and fair play for the player.  

Virtual Currency,Wallet And Payment - A gambling environment requires a "wallet" function were a player deposits  "real" money funds to be wagered in game play and where the player stores "real" money won during game play. Essentially,  a gambling game operator acts as a bank for its players. Social games usually monetize players through the purchase  of virtual currency using Facebook credits, other virtual currency platform providers or they create a virtual currency of their own. The social game operator sets the valuation of the virtual currency by creating a conversion rate from virtual currency to chips. There is no need to have a conversion rate back to "real" currency because  there is no cash out function in social games. Conversion rates can change at the whim of the social game operator and the operator can inflate or deflate the value of the virtual currency at their own whim. This all changes  in a gambling environment. Valuation of currency are established by the public market for that currency and the policies of government banking institutions. Currency inflation and management is impossible in a real gambling environment.

Managing the player's  wallet  is extremely important to make sure their are no errors with the deposit, and withdrawal processes. balances  always have to be accurate with players having access t their funds to cash out when they see fit withdrawing all or a portion of the funds. The wallet is consistently a potential  target for fraud and intrusion threats. Only a handful of employees of a gambling company have access to this wallet, knowledge of players balances and the financial instruments(credit cards, bank transfers, etc) used by a player to deposit and withdraw funds.

Obtaining payment processors for gambling operators can be challenging with many banks and payment processors not willing to work with online gambling operators. One of the first things a social game company should do is seek out a payment processor and bank that will support their gambling operation.

Gamblers will have various  deposit and withdrawal preferences requiring the gambling operator to offer all of the standard transaction methods used by the gambling community.  These payment methods may differ depending on what jurisdiction the gaming company is targeting. Also, the transaction fees form some of these services can be vary. However, they are not as high as the 30% tax that Facebook levels on social games. 

Denial Of Service Attacks Fraud Detection And Collusion - Traditional online gambling operators have large and sophisticated fraud detection organizations within their businesses. The sole purpose of these groups is to detect and stop fraud attempts. Collusion amongst players is a common threat with Poker and sometime Blackjack as the most vulnerable because of their multi-player basis. Sophisticated crime networks work from around the world to conduct fraud and collusion attempts on gambling sites. DOS attacks are common were an individual or group will high jack thousands of computers loading them with programs that send thousands of requests to a gambling site resulting in the site grinding to a halt. They then post a ransom letter to the game operator with a price tag for them to stop.  In some cases to operator has paid up. Preventing these attaches requires network equipment purchases and real people observing players game play to detect and avoid fraud and collusion.

Clearly  the "real" online gambling  business differs significantly from a social gaming environment. There certainly is upside potential in the online gambling space for social game companies. However, all of the special considerations associated with gambling have to be taken into consideration before committing to an online gambling business model. 

Kevin Flood is the CEO of Gameinlane, Inc. Kevin writes  about online games and their impact and integration into iGaming and E-commerce environments. Kevin is a frequent speaker at online game events and conferences in Asia, Europe and the US. Kevin and his Gameinlane team are currently working with online gambling, social gaming and e-commerce companies integrating social gaming with online gaming operations and integrate game mechanics into e-commerce applications.   

Making Games Social Outside Of Facebook

 Facebook has demonstrated how important   social elements and mechanics are for the success of a game within Facebook. The benefits are numerous resulting in higher traffic numbers, better retention and  lower cost of acquisition.

 Facebook has been the premiere social platform that most game publishers and developers have exploited to add social mechanics to their games. These mechanics have allowed games to access significant numbers of Facebook players leading to a number of games becoming very successful within the Facebook environment. This has resulted in a number of game publishers and developers becoming dominate within Facebook by exploiting the players they have acquired through Facebook in one game and moving them to other games in their game portfolio. 

However, there is a tax associated with launching and managing a game in Facebook if that game monetizes through virtual currency transactions. The fee is draconian taking 30% of all game transaction revenue and depositing in Facebook's account receivables.

Recently competition within Facebook for Facebook gamers has become so intense that the 30% Facebook tax is making it difficult for game publishers to be profitable within Facebook. Bottom line game revenue has been challenged because marketing costs are rising(Pay Per Click Advertising) and the required sophistication of games has increased resulting in  higher development costs for games.

Game  publishers have responded to this pressure by taking their games outside of Facebook and publishing them on mobile devices and even as web games. Until recently, these environments historically have not had native social mechanics to drive high traffic numbers without extensive advertising, partnerships and affiliate marketing relationships. 

With the introduction of Facebook "Connect" ironically Facebook itself has brought social mechanics to mobile and web games. Certainly it was not the  original intention of  Facebook Connect to enable game applications outside of Facebook to take advantage of its social mechanics without having to be in Facebook. However, game developers have cleverly figured out that they can get most of the social mechanics they need by adding Facebook connect to their games in mobile and web environments.

Game developers and publishers have added notifications, friend awareness, invites, Facebook pages, Facebook community development, etc to their non-Facebook games. There are certainly other less well know social game  platforms such as Gree that actually encourage the use of their social game platform to launch and promote games. However, given the size of the Facebook community Facebook is the obvious place to go to acquire players. I also suspect that Facebook is less then enthusiastic about how game developers and publishers are using Facebook connect to circumvent their virtual currency tax. However, not sure how they can avoid the exodus from Facebook by game publishers without impacting web sites and Facebook members with legitimate Facebook Connect  intentions.

Mobile games riding on top of  Facebook Connect is a powerful combination with more people accessing games from their mobile devices. This combination is actually making mobile games work from a business perspective.

We will have to see how Facebook reacts to increasing numbers of game publishers and developers exploiting Facebook Connect outside of Facebook.  

Kevin Flood is the CEO of Gameinlane, Inc. Kevin writes  about online games and their impact and integration into iGaming and E-commerce environments. Kevin is a frequent speaker at online game events and conferences in Asia, Europe and the US. Kevin and his Gameinlane team are currently working with online gambling, social gaming and e-commerce companies integrating social gaming with online gaming operations and integrate game mechanics into e-commerce applications.

Are Social And Freemium Games Stealing Players From Internet Gambling Operators?

There has been a recent surge of freemium and social  virtual currency based gambling style games in Facebook and on mobile devices. The number of offerings and the amount of players is staggering. It is estimated that  Facebook social games have 49 million active users per month. The mobile freemium and social gaming space is even more impressive with projected revenue growth rates of 3.37 USD by 2014. 38% of the US population has played some form of mobile freemium game. 40% have transacted with virtual currency.  In China, Korea and Japan freemium and social virtual currency games are the primary source of entertainment online.  There is a new announcement everyday indicating that traditional Internet gambling businesses and land based casino operators  are launching social and freemium game properties. Conversely, the Internet gambling market is not growing anywhere near the growth  rates of social and freemium games. Increasingly complex  legal regulations are causing the European gambling market to constrict and at the same time the cost of operating an Internet gambling operation in Europe is increasing.   This begs the question as to what the true motivation is for existing Internet gambling properties to enter the social/freemium gambling space.

Social/ Freemium Lead Generation - The conventional wisdom has been that the Internet gambling companies are most interested in the cross over from social/freemium games to Internet gambling games. The notion is that some percentage of social/freemium players will cross over to traditional gambling if properly incentivized. There has been some history with this approach. Zynga has sold leads to European gambling sites over the years. However, the conversion rates of these leads has been poor. Part of the issue with this approach has been the lack of "profiling"  of social/freemium players  to determine what players would most likely convert to Internet gambling players.

Social/Freemium Standalone Business - Two years ago at the ICE gambling conference in London I had the opportunity to chair a number of sessions on freemium/social  games. During this conference the traditional gambling operators that had purchased social/freemium and mobile gaming sites indicated that they were more interested in this space as a separate business unit and had no intention of trying to move players back and forth between gambling and social/freemium properties. This was the first indication to me that Internet gambling properties were seriously thinking about the freemium/social space as a separate business unit. 

Abandoning Internet Gambling Business Completely - This may appear to be far fetched at this time. However, with the increasing difficulty of making an Internet gambling business work in an environment were regulators are more interested in short term tax revenue then they are in the survival of a once thriving business model, i.e. the death of .com and the emergence of .country, I am sure the Internet gambling operators are going to be looking closely at the numbers of both business models. If freemium/social can break even for the gambling companies the operators may just decide to close the gambling operations all together.

Impact Of Potential US Legalization Of Internet Gambling - Since October of 2006 Internet gambling has been illegal in the US. The law supporting that legislation has proven to be unenforceable and is about to be rewritten on a federal and or state level. This means that one day an Internet gambling operator could wake-up to find that it is once again legal to take wagers from  US Internet gamblers.  The problem is that these operators will have to figure out how to instantly acquire these players. Clearly, some of the gambling operators see social/freemium as a way to pre-acquire players, establish brand awareness and if the operators are smart, profile social/freemium players to determine the likelihood of social/freemium players converting to traditional gambling.

Social/freemium games provide a number of opportunities for existing Internet gambling operators. The Internet  gambling operators know how to acquire players, monetize them, retain them and run very efficient  businesses.  Certainly operating a social/freemium gaming site is different from operating an Internet gambling property. Also, the gambling operators are late to the party (no pun intended). However, I suspect they will adapt to the social/freemium world quickly.

Kevin Flood is the CEO of Gameinlane, Inc. Kevin writes  about online games and their impact and integration into iGaming and E-commerce environments. Kevin is a frequent speaker at online game events and conferences in Asia, Europe and the US. Kevin and his Gameinlane team are currently working with online gambling, social gaming and e-commerce companies integrating social gaming with online gaming operations and integrate game mechanics into e-commerce applications.

 

Disappointing Facebook And Zynga Quarterly Earnings Not Surprising

The continuing disappointment investors are expressing in both Zynga and Facebook's earnings is indicative of how poorly investors understand their  Facebook and Zynga investments.  It is just dawning on analysts now how symbiotic the  relationship between these two companies really is. I see simplistic, almost, child like presentations created for investors in these stocks explaining how Zynga, virtual currency and social media actually works. Sad really with a deserving outcome for the investors that obviously had no idea what they  had invested in.

When Zynga and Facebook were steaming to their IPO's I wrote an analysis of both the Facebook and Zynga S1's showing how close these companies were aligned.. The S1 of Facebook did reveal a 12% dependence on Zynga for virtual currency and virtual goods sales through the Facebook transaction platform. It did not mention the advertising dependence it also has on Zynga. Zynga generates plenty of ads in its games as well. So is the revenue dependence more like 15% or perhaps even higher?

Conversely Zynga is almost 100% dependent on the Facebook community for its revenue. If Facebook  falters in their growth so does Zynga.

So what do both of these companies have to do to continue their expected population growth and revenue per individual?

Mobile - All of the analysts Facebook and Zynga themselves are saying that mobile is the place to be to sustain their growth. However, the mobile environment is very different than the Facebook environment and  not a place either company spend enough time on during the early growth years of mobile platforms.  Jumping in late is not going to be easy. Yes people are accessing their Facebook accounts on their mobile devices. However, the experience in mobile needs to be different from the Facebook web version. Navigation, invites and the very limited time people will spend in a Facebook mobile app will be less then the web version.

Zynga's challenge is that their massive games such as Farmville and Cityville will be hard to convert to a mobile environment. Interface, play time, player navigation through the game environment are all different. Smaller and easier to understand games that clearly and intuitively guide the player through the experience is required. The tablets may be the saving grace for Zynga providing a larger playing surface enabling MMO type game play and a differentiation for Zynga.

So where are these companies headed with a stalling revenue model in the Facebook environment and a very late start into the mobile world for Zynga?

Clearly, in the short run(next 2 quarter)s not likely a pleasant outcome. Sure they both have big cash reserves based on their IPO's and could buy their way into the mobile space. However, in the end they really have to have organizations that understand the mobile universe.  Facebook has to continue to be "interesting" to existing members and they have to somehow continue to add more people to Facebook then are dropping off. We have seen social platform fatigue before with Friendster, MySpace, etc. Are we seeing this in Facebook now? I am not sure myself. I believe the Facebook platform is more flexible then their predecessor platforms and therefore provides Facebook with more options on how to retain and grow its community. Depending primarily on advertising revenue as its main source of revenue is very risky. Their virtual currency move was very clever and has contributed good revenue to the bottom line. However, in mobile there are many other virtual currency options for gamers do they really need Facebook.

In the coming months look for  Facebook to create a "true" mobile platform and see how Zynga games are converted over or if they embark on en entirely new game strategy for  mobile. This will give us all a better picture of what future earning will look like for these companies.

 Kevin Flood is the CEO of Gameinlane, Inc. Kevin writes  about online games and their impact and integration into iGaming and E-commerce environments. Kevin is a frequent speaker at online game events and conferences in Asia, Europe and the US. Kevin and his Gameinlane team are currently working with online gambling, social gaming and e-commerce companies integrating social gaming with online gaming operations and integrate game mechanics into e-commerce applications. 

Game Analytics - The Social Connection

Analyzing and tracking the impact of social connections in the context of games is an important part of managing a game and game properties. When most people think of social games they think in terms of Facebook and the social mechanics of the Facebook environment. Facebook is an environment we will cover. However, Facebook is not the only social environment to consider when analyzing the impact of the social graph or social engagement of a game. This is especially true for games that are inherently social like poker, bingo, MMO's some RPG's. In fact, when designing a game thought should be given to how a game will stimulate social interaction because this form of engagement usually improves  a game's  popularity, decreases the cost of acquiring players and improves player retention.

So what data points should a game platform track to determine how social a game is performing and how a game's social popularity impacts the profitability of the game? I mention profitability because in some cases a social game or a game with built in social mechanics can attract large numbers of players. You may say that this is a good problem to have. However, for a game company that is working hard to balance the budget and grow a company, an extreme spike of sustained traffic has implications for the infrastructure costs of supporting that traffic. The last thing you want is for a game to become popular and not be able to handle the traffic.

1.) Social Trail - Every player that participates in a  socially connection environment should be tracked in a way to determine all of the connections they have spawned. This seems simple enough. However, if a game is not hosted in Facebook and is on the web, in a mobile environment or in a game environment that does not support this tracking the game developer will have to add the tracking.

2.) Social Monetization - It all comes down to showing how a game generates revenue. Just because a game is social and has the capability to grow large communities does not mean it is a successful game. We all view Angry Birds as a big success because of its social distribution. However, was the game an economic success? I suspect that merchandising and licencing of the Angry Bird brand was more profitable then the game itself. Build monetization into the social structure of the game. Each of the  monetization opportunities should be tracked by game and by player. Each player's connections should be rolled up to determine the monetization power of a single player.

3.) Game  Cycle - I mentioned in a previous blog the notion of a game state machine. Games do differ from standard applications because they are usually not fall through applications. Instead they engage a player in a cycle of some kind that can keep players in a game for prolonged periods of time. This does have implications for social connections because there are more opportunities in a game to interact socially or to invite others to join in on a game. From a game development perspective hooks and features should be added to a game to encourage social interaction during a game cycle. Each of these events or opportunities should be tracked to determine how many connections have been made, determine if they are existing or new connections and if the social interaction

4.) Influential Players - It usually comes down to a small percentage of players that either generate most of the connections  and or revenue for a game. Analytics that provide an understanding of the semantic social web created by players helps to determine the true power of an individual. Quite often a player that generates the most players does so because they have people in their network that are also influential. The same goes for revenue generation. A "whale" most likely attracts other whales to a game. Game companies can get lost in the number of social connections without focusing on the important protagonists a social game. Analytics will help to identify who the important players are. 

5.) Facebook - The Facebook environment and any other legitimate social network facilitate social connections outside of the context of a game or application.   Social connections exist for a variety of reasons and Facebook does a good job of exploiting that. Facebook no longer supports application virality for this very reason. There was a time when application developers could exploit the Facebook platform to produce a truly viral effect. Facebook has removed these features for obvious reasons (covered in one of my previous blogs). This does not mean that social connections do not occur in Facebook and Facebook games they do, However, a game environment has to work harder in Facebook to acquire and retain players in a social game environment. This means higher cost of acquisition and more focus on the "influencers" previously mentioned. Thus the reason for developing special Facebook social game analytics to maximize revenue and acquisition in Facebook.

Tracking this process is important with a number of off the shelf analytics packages advertising that they can do this. The challenge is to combine the analytics provided by these packages with the special social analytics developed for your own game. This intersection is required to give  the management team a full view of the impact of the social factor of a game.  

6.) Cross Game Social Fertilization - There is a growing trend to cultivate the social connect factor across games and potentially across environments(mobile, Facebook, web, etc). Essentially, if you acquire a gamer and their social semantic web one game why not exploit this is another game. The key is to determine how successful this is. What percentage of the players network transfers and or how is their network and the game community enhanced.

7.) Big Data - There is no doubt that games have largely contributed to the concept of Big Data, NoSQL DB's , emerging data storage, retrieval and reporting on non-relational DB data stores. This space is still evolving quickly and does have an impact on social game network analytics.  When building a social game analytics platform consideration has to be given to the trade off of game performance and the capture of data for analytics purposes. Storing data in NoSQL depositories still creates a big challenge for game business interested in farming this data for business intelligence purposes.

In summary creating analytics to capture  game data for the purpose of understanding the game connect factor and the influence of key players in the context of a community and social network is critical to the success of a game, game platform and the success of a game company. Standard funnel analysis will not suffice requiring a different set of analytics to address social game data sources. Games are growing in popularity as powerful ways to acquire, engage and monetize applications. However, this trend also challenges the conventional wisdom on how best to create a business intelligence system for these games.

 Game Analytics Series
Game Analytics Overview

Game Analytics - The Classic Funnel And The State Machine

Game Analytics - The Social Connection

Game Analytics - Big Data And Business Intelligence(BI)

Kevin Flood is the CEO of Gameinlane, Inc. Kevin writes extensively about online games and their impact and integration into iGaming and E-commerce environments. Kevin is a frequent speaker at online game events and conferences in Asia, Europe and the US. Kevin and his Gameinlane team are currently working with online gambling, social gaming and e-commerce companies integrating social gaming with online gaming operations and integrate game mechanics into e-commerce applications.  

The End Of Facebook Social And Viral Applications And Games

If you define virality (K-Factor) as a phenomena that results in the spreading of information pertaining to or involving the self perpetuating spread of information and opinions about a product or service, there has not been a truly viral application in Facebook since 2007. In 2007 when Zynga launched the first social game, poker, in Facebook, Zynga was successful because they launched a game that was naturally social and plugged this game into an environment that facilitated the proliferation of the game throughout the Facebook community. Over the years Facebook has removed the mechanisms that would make it easy for a popular social game to go viral. They have done away with the forced invites to other members and are now eliminating invites all together. Consequently. Facebook has become a cleaner environment where people are less likely to become "exposed" to a game unless they take the initiative to experience it. 

Facebook has done this for a couple of reasons. The more benign  and community friendly reason is to reduce the forced exposure of a community to a game. There were certainly many complaints over time as to why a person would be exposed to a game or invited to play a game when they had no real interest in the game. Also, as more games have been pushed in the Facebook environment people become frustrated by the bombardment of notifications they were getting from the game publishers.

A less community friendly reason for removing virality features from Facebook is revenue related. If you look at Facebook's S-1 filing you will notice that they rely heavily on advertising revenue to fuel their company. In fact 80% of this revenue is coming  from advertising and 20% from virtual currency transactions.  Consequently, they are forcing game and application providers to buy advertising in Facebook to drive traffic to their properties. 

Granted the concept of the "Like" button and posting recommendations to your wall are free ways to get an app or game notices. However, this is a really difficult way to get any meaningful exposure to an app if you consider the size of Facebook and the requirement for a Facebook user to find the app or game and take an action. Also, these mechanisms require a conscious effort to endorse a game.

So what does this mean for application and game providers that want to leveraged the social graph. Well if you are in Facebook the social graph becomes significantly muted and the world looks a lot like  standard web marketing through advertising. Essentially, you have to advertise to get noticed in Facebook. Certainly Google+ could take advantage of Facebook's lack of viral features and add such features to Google+. This would certainly increase the likelihood that more game and application providers would jump into Google+. Right now app and game developers see little reason to invest in developing in Google+ because its community is relatively small and they have not figured out how to properly link applications to their social graph.  Certainly the concept of circles of social connections is an interesting one that Google+ could combine with application invites to stoke the growth of apps and more Google+ members. We will wait and see.

Game developers could start to build truly social games to offset the lack of forced notifications within the social graph. Currently, many game publishers, especially Internet gambling games, are being introduced into Facebook in anticipation of legal US gambling. The problem with these types of games is that they are not social games and have no natural viral tendencies. Make your game social.

The mobile gaming environment has been an alternative and in some cases a must have for game publishers.  Unfortunately there is even less viral components in a mobile environment. Certainly, a game like Angry Bird went viral even without any viral features. 

The social game world is becoming harder to be successful in and it is becoming expensive. With the social networking world converging on only one(with the potential for Google+?) not so social social network getting a game or any app recognized in Facebook becomes a standard ad and media world where traditional web marketing skills get pushed to the forefront.  

Kevin Flood is the CEO of Gameinlane, Inc. Kevin writes extensively about online games and their impact and integration into iGaming and E-commerce environments. Kevin is a frequent speaker at online game events and conferences in Asia, Europe and the US. Kevin and his Gameinlane team are currently working with online gambling, social gaming and e-commerce companies integrating social gaming with online gaming operations and integrate game mechanics into e-commerce applications.

HTML5 Versus Flash, Objective C(Apple) , And Java App(Google) Game Development Debate

Many game developers have decided to build their games in HTML 5 moving away from native platform development on Android,  Apple O/S and in Flash(Microsoft native app.) development. I have been encouraging my clients and  game developers to do the same.  My advice has generated a fair amount of controversy and  in some cases outright hostility or all out endorsement. The variability of the responses indicates that not everyone sees HTML5 game development  from the same perspective.

 Reasons For Endorsing HTML5 Game Development 

Build Once For Deployment On Multiple Platforms(Web, IPhone, IPad, Android, Facebook, etc.) - The world is no longer one dimensional allowing developers to only deploy a game in Facebook, on mobile devices or on the web. A game should be manifest in all of these environments and in many cases tied together to encourage people to play against each other on different devices and environments. HTML5 gives you some leverage to achieve this goal by decoupling game development form the operating system (OS). 

Keep The Cost Of Development Down - Clearly developing the same game on many devices can be costly from a variety of viewpoints. Development platform expertise, unique user interface design, connection to server methods, moneitzation mechanics, payment processing. etc. HTML5 does not solve all of these issues but it will solve many of them. Developers and web designers have become very efficient and cleaver developing a game first for a mobile device using HTML and then moving the game to other platforms. This allows the interface to undergo few changes as it moves up the user interface ladder.

Get To Market Faster - From a marketing perspective its makes sense to get your game on as many platforms as possible as soon as possible to capture market share in all of the environments and to build brand awareness for the game across platforms. There is a very short period of time to get a game recognized and growing. The more places it appears simultaneously the more likely that a referral buzz will be created to propel the game up to the charts in the mobile and Facebook environments.

Get On Multiple Platforms Faster - I have yet to find a game development organization that has not been asked to get the game on mobile, on MS, Apple, Facebook, etc. as soon as possible. To a large degree the developers are the ones pushing the HTML5 button to relieve development load on their organizations and to get the game to market.

Game Download Speed - It still amazes me that client side games exists and are still being developed. The download for these things is obnoxious if you do not have any of the game assets per-loaded even with broadband connects. They are also error prone given the constant updates that MS and Apple drop on your device. HTML5 goes a long way in eliminating this issue.

Objections For Developing HTML5 Games

The Games Do Not Look As Good - A product manager came up to me one day waving his Apple laptop at me with mock ups for the user interface of a new game on the screen. He asked me if I could make an HTML5 game with the rich graphic content of the example he showed me. I indicated probably not. First of all the quality of the graphic content spelled heavy download to me. Sure caching would help after the initial download. However, the game mechanics in a browser with all of these graphics moving in and out of the game did not encourage me to be positive. I told him we could build the game in HTML5 with some UI compromises to make the game more accessible and easier to access. He walked away fuming insisting that we have the rich graphic content and he wanted the game interface on mobile and the Facebook platform. I said sure  but you might regret that decision. I am sure this interchange occurs often and requires a producer or product manager to make some very difficult decisions about appearance versus user experience.

The Game Mechanics Are Not Sophisticated Enough On HTML5 - Well certainly native application development will give you a richer library of functions to make more sophisticated games.  In certain cases there may be good reason for this and HTML5 is not the answer. However, the question should always be asked are these functions really necessary and where else do you intend to post or display the game.

HTML5 Is Immature And Not Ready For "Serious" Game Development - I am not entirely sure what "immature" means in all cases. However, HTML5 is new, it is designed to be generic addressing a number of web development interests. This mean that there will be things that can not be done with HTML5 at this time. However, abandoning HTML5 because it does not support a function today may not be the best decision. HTML5 will evolve based on input from the user community. I suspect that if enough developers speak-up about a missing feature in HTML5 it will eventually show up in the specification. The last thing you want to do is to stay on a fading platform and miss a wave. If you do you it will be very hard to get back on the wave as it gets stronger and starts to move faster.

Game Development Expertise - Some game development shops are heavy staffed with with C, C++, Java and less with "web development" resources like Python, PHP, etc. talent. Certainly this does have an impact on a shops ability to build web based games and may require a team to start thinking about other resources to complement their teams to produce HTML5 games.  I would suggest that a game development team start investing in resources that can develop HTML5 games to build the skill set and expertise in their organization.

In conclusion, many game developers are now building games in HTML5 for the reason I have identified. Yes, HTML5 has it limitations. However, the multi-platform deployment ability should be taken into consideration when deciding on the game development platform. There are certainly times when HTML5 is not the answer. Certain sophisticated games in terms of animation, game logic, taking advantage of low level O/S functions and connection speed may discount the benefits of HTML5 and require a different approach. However HTML5 will evolve quickly for the simple reason that game developers would prefer to build once and deploy on multiple platforms. Socket connections are an obvious area that HTML5 and browsers will begin to do a better job at to allow for better communication between server and web client. I am sure their will be many more on the pure graphic creation and rendering side.

Kevin Flood is the CEO of Gameinlane, Inc. Kevin writes extensively about online games and their impact and integration into iGaming and E-commerce environments. Kevin is a frequent speaker at online game events and conferences in Asia, Europe and the US. Kevin and his Gameinlane team are currently working with online gambling, social gaming and e-commerce companies integrating social gaming with online gaming operations and integrate game mechanics into e-commerce applications.

Why Is Social Gaming So Important For Online Gambling Companies?

I had the pleasure of participating in a GIGSE panel discussion this year where I was asked to comment on the role of social gaming in the context of the potential legalization of online gambling in the US.

I indicated that social gaming should be a critical strategic consideration for any company interested in taking advantage of the future prospect of legalized online gambling. I also implied that even if US online gambling is not legalized or takes a long time to happen a serious look at  social networks and social games should be a part of any gaming companies strategy.

I pointed to the success of Zynga as an example of how a social gaming strategy has created perhaps the most successful online gaming company to date.

Despite Zynga's  impressive numbers many of the people in the audience dismissed Zynga or any other social gaming company as irrelevant and inconsequential relative to online gambling. The reaction I received from many attendees was a bit shocking to me.

The argument's they used to support their position are as follows.

1.) The majority of social gamers are under the age of 18.

2.) The social gaming experience is different then "real" online gambling.

3.) There is no money in social gaming. Revenue per player is very low.

4.) There are only a  "few" high virtual currency transactors in social gaming.

5.) Zynga's lead generation to online gambling operators has been very poor.

6.) Social gaming companies do not know how to operate real gambling sites.

Although some of these arguments have merit others do not or are taken out of the context of the intricate online gaming ecosystem.

The following are items online gambling companies should take into consideration before they completely dismiss social gaming.

1.) Average Age Of Facebook Players -Just about everyone has a Facebook ID. The average age of Facebook members is now 35 years old and getting older. The 18 to 25 year old age group is a significant portion of Facebook membership. This is the perfect age group profile for online gambling. If you have every played in Zynga poker you will see (their pictures) that many of these players are the traditional age group for online gamblers.

2.) Social Games Are Different For Online Gambling Games - Yes the social game experience is different from an online gambling experience. Of course it is, because online gambling is not allowed in Facebook. Companies like Zynga have shrewdly decided to offer a game experience that matches the social environment. This is one of the reasons why Zynga has 250 million players and online gambling companies are not even close to these numbers.

3.) Social Games Will Change If Online Gambling Is Legalized - If online gambling becomes legal in the US and Facebook embraces it (which they will in a clever way) online gaming content in Facebook will change making it more gambling like. The gaming companies will not change their current casual offering. Instead they will offer a different game experience and upgrade casual gamers into the gambling operations. Even if the conversion rates is in the single digits the numbers are astounding. Also, Goolge, Apple, Yahoo, Amazon, EA, etc. and other major online companies that have large numbers of online profiled transactors will create online gambling games and seek to convert their current visitors to online gambling.

5.) Making Money In Social Gaming -Many online gambling companies that come to me to help them understand the social gaming world are appalled at the relatively small monetary transactions per player. They become discouraged by these numbers not realizing that if a gaming company can create a gaming application that has a viable social component and a good social network marketing strategy the shear numbers of players will make up for the lower transactions per player. No this is not an easy thing to do. However, if successful, social gaming can begin to pay for itself.

In contrast to online gambling companies, social gaming companies use a variety of game "monetizationr" techniques to make money from social gaming. In gaming advertising, virtual currency, virtual goods, lead generation for other social applications, etc. In aggregate these numbers start to add up. Virtual currency and good sales alone are climbing to rates equal to and exceeding online gambling revenue. It is estimated that the virtual world will be generating 5 billion USD per year in the not too distant future.

6.) Player Profiling And The Online Gaming Ecosystem - Treating  online gambling and social gaming players as distinct and separate individuals is not realistic given the large numbers of players engaged in social gaming. Inevitably there is an intersection between these two groups. In the past two years social gaming companies with the help of third party companies specializing in social network profiling have begun to take a look at all of the Twitter, Facebook, Google search, etc data to decipher the likes and dislikes of people on the web. Evaluating and making sense of this data is not easy. However, some progress is being made to provide hints as to the propensity of an individual to buy a certain product, play a certain game, travel to a specific destination, etc. There is still much work to be done to in this area and privacy issues abound. However, with the increasing amount of information we are all contributing freely to the Internet there will be a time when  profiling will get to a point where we can successfully to move players to and from different environments with a high degree of accuracy and increased moneitization.

7.) Marketing And Player Acquisition On The Social Web - An online gambling company has to learn how to market to players within the social web even if they believe that social gamers are not the target audience. Everyone is in a social network of some kind and online gamblers are no exception. Developing a productive and effective social networking marketing program is non-trivial and requires a very different approach then tradition web, affiliate, e-mail, physical, etc. marketing. Ironically, social games are one of the most effective ways to market products and services because they do have the potential to get close to a truly viral application. This is the holy grail of social marketing and and should be a goal for online gaming companies even if they never launch a social game of their own.

8.) Social Games As A Separate Business Unit - At the ICE conference in London this year I had the opportunity to help organize a special session on social game monetization.  It was revealing because it came to light that traditional gambling companies like 888 and BetWin are creating separate social gaming business units not related to their gambling properties. These companies realize that the future of online gaming is within social networks. This is where the growth and innovation will be. They want to be in it and be just as successful as Zynga and other high profile social gaming companies.

It is clear that  many online gambling companies do not fully understand the importance of  social networks and social games in the context of online gambling and distinct social gaming applications. Some of them do and are taking steps to explore how to be successful within social networks and to launch social games that can stand on their own taking advantage of the social graph. This space is certainly evolving quickly making it more difficult to get into the social space and establishing expertise and brand awareness. Despite this a presence in social networks is becoming mandatory for any company wishing to maintain market share and to grow. The sooner an online gambling companies embraces this reality the better off they will be.

Kevin Flood is the CEO of Gameinlane, Inc. Kevin writes extensively about online games and their impact and integration into iGaming and E-commerce environments. Kevin is a frequent speaker at online game events and conferences in Asia, Europe and the US. Kevin and his Gameinlane team are currently working with online gambling, social gaming and e-commerce companies integrating social gaming with online gaming operations and integrate game mechanics into e-commerce applications.