At Inside Social Apps All Eyes Are on Monetization
Today kicked off the third annual Inside Social Apps summit put on by Justin Smith and team at The Inside Network. With a turnout of over 1,000 attendees it was clear that the games industry is getting hotter by the day as it continues to propel growth in the tech sector, above and beyond the two most hyped IPOs in recent history — Facebook and Zynga. Whether the panel topic was which platforms hold the most opportunity in 2012 or mobile game marketing and distribution, the focus always came back to monetization. While games historically has been very male dominated, the new crop of social casual games that are popular on mobile phones and Facebook are mostly played by females. Not only are females out-playing men, women are increasingly running game companies and covering the games space. This was represented at ISA, where there were women on four of the five panels.
In the first panel of the day on the topic of promising platforms, Kevin Chou, CEO of Kabam, and John Spinale, SVP of Social Games at Disney both agreed that Google is very serious about gaming. They pointed to the massive user base and engagement that come from Google’s properties. Kevin went one step further and surprised the audience by announcing that the large majority of Kabam’s new users are not from Facebook. Instead, as Facebook user acquisition has become increasingly expensive, most game developers are scrambling for more cost-effective channels. Kabam has turned to G+, Yahoo and other social networks across the globe.
In the panel on Cutting Edge Social Game Product Development, Bill Jackson, creative director at Zynga Dallas, embraced the combination of design and metrics, while Sebastian Knutsson, Chief Creative Officer of King.com spoke to the importance of having connected games that are cross-platform. Things got really interesting when the topic of cloning arose. With Apple pulling games from the app store for cloning, and the recent controversy around the astounding similarity of games from Nimblebit/Zynga and Spry Fox/6Waves Lolapps, there was a great deal of interest in the topic. Brenda Garno Brathwaite, COO of Loot Drop did not disappoint. She noted that cloning hurts innovation for all of us. To the cloners out there she said, “Congratulations. You are empty of inspiration. You belong in the subset of human being in a special area of hell.” She advised game developers to be phenomenally protective of their ideas since game rules are not outright protectable.
Next up, Justin Smith spoke with Carl SjoGreen, Director of Product Management at Facebook. Carl drove home the value of bookmarks, both in the browser and on Facebook, as a way to re-engage with visitors after the initial game installation. Carl noted that half of Facebook’s 845 million users are accessing the social network from mobile phones. When asked about the value prop of HTML5 to game developers, Carl replied that it depends on the app. His big picture view is that social applications are inherently cross-platform, because at the end of the day the fundamental value is being able to play with friends.
Lisa Marino, CEO of RockYou and Will Harbin, CEO of Kixeye were the most vocal panelists on the topic of “Monetizing Social Games on Facebook.” Lisa kicked things off by saying, “Let’s face it, we are a media company.” Will rebutted with “We are not a media company. We are a game company. 99 times out of 100 our revenue is through a transaction.” Then, he provided the choice quote of the day, “We monetize revenge.” For Kixeye, monetization is inherent in the game play, not in ads. When the panelists were asked about their thoughts on advertising competitors’ games in their own games, Lisa’s response was “Absolutely. We want to monetize people who are not paying in our games.”
Day one of Inside Social Apps saw a strong turn-out and lively panels. While the industry as a whole grows, there is increasing friction in the space as it gets more difficult to acquire players and make hit games in an over-saturated market that is driven to some degree by cloning. Last year new game studios popped up with regularity and funding was easier to attain. More recently, studios that have not produced a hit within their first or second game launch are shutting down, and VCs are looking beyond studios with hit-driven businesses, and instead are eyeing businesses like platform plays. It will be interesting to hear more about the funding climate in ISA’s day two VC panel.
