Archive for October, 2009

« Older Entries

Tencent tests the Facebook waters

Friday, October 30th, 2009

Building upon their financial success as well as investment in free-to-play gaming development studios, Chinese megalith Tencent has recently started testing the waters of Facebook gaming. Perhaps appropriately titled “Treasure Hunter”, Tencent execs say that this is not a full fledged move into the Facebook space, but rather a “market research” project.

The game itself is not entirely new to the North American market, as Tencent released the game last year funneled through AOL’s AIM instant messenger service, a method that’s proven extremely successful for the company in the domestic market via their QQ messenger product. According to Eric Eldon from insidesocialgames.com, Tencent’s US representatives, Leon Kitain and Brad Bao state that the move to Facebook is a preliminary one; one that will study the dynamics of gaming within the popular social network. Both commented that Treasure Hunter is a market research product, simply because the company can “only learn so much from reading about what other people are doing on the platform.”

Treasure

However, the Treasure Hunter project will focus on a slightly different, method of social gaming: synchronous gaming. Most of the popular games within the Facebook offerings are turn based player vs. player, or player vs. environment titles in combat titles, or generally involve raising and nurturing virtual pets, or the highly popular farming games. Snychonous gaming on the other hand, involves two or more players playing against in each in real time. The most successful of this genre thus far might be Zynga’s Texas Hold’em Poker.

This in itself is quite interesting. As Tencent clearly isn’t short on cash, they’ve got all the time in the world to sit back and really dig deep into not only collecting data, but analyzing it, making appropriate changes, and then rinsing and repeating the process until they’ve really nailed what just might be the next ‘big thing’ in social gaming. Is it synchronous gaming? Perhaps, but we’ll not really know until others start investigating the possibilities, and it looks like Tencent is already on point with that one. And since Treasure Hunter isn’t a ‘specifically developed for Facebook’ application, Tencent always has the option of bringing over a whole host of their other games (aka it’s AOL offerings).

Tags: , , , , ,
Posted in industry news | No Comments »

 

Friendster to launch microtransaction based virtual goods sales

Thursday, October 29th, 2009

Friendster. Remember them? While they’re still busy gobbling up the patents, they’ve also managed to remain on the radar. At least in the Southeast Asian market. That’s not to say that Facebook isn’t closing in on their action (in so many more ways than one), with Friendster only edging out Facebook in terms of users in the Phillippines according to ComScore. In neighboring countries Indonesia, Malaysia and Singapore, Facebook has already taken the lead. The increasing interest and involvement in Facebook has naturally carved into Friendster’s last remaining turf. They’ve seen a decline in both visitors to the site, as well as how long these visitors remain on the site. “Friendster has to find new ways to make money but at the same time they have to maintain their market share and have a reason why people would stay with Friendster and not go to Facebook,” says Ben Poole regional head of interaction for media agency, MEC. “They also have to up their engagement levels.”

FriendsterIn order to maintain their foothold, as well as open new revenue streams, Friendster is upping their ante, instituting a virtual goods market, powered by microtransaction purchases. They’re also getting into physical, real-world events such as their recent Pinoy Friendster Day in the Phillippines that included live performances by local bands, speed dating, style make-overs, and fireworks that attracted over 7,000 participants.

Currently generating revenue via advertising and sponsorship deals, the new virtual goods sales will open up new revenue streams for the social network on the decline. Alla Facebook and MySpace, Friendster’s virtual goods system will include and API that will open up development to advertisers, game publishers, and application developers – all of which Friendster will take a cut of purchases made with their proprietary currency, Friendster Coins.

Based on the popularity of prepaid cards in Friendster’s area of influence, “We’re extending that model to work on Friendster,” says Friendster’s global product director Jeff Roberto. “We’re applying it to a variety of products and services that have realized success in other micro-payment ecosystems.”

“Once you establish a virtual economy, it’s just your creativity, or best practices that you can integrate, that limit the type of things you can sell,” points out Benjamin Joffe, CEO of Beijing-based digital specialist +8. “There’s so much you can sell, so many existing proven ideas and so many new ideas to find.”

So while Friendster is still chugging along after missing the boat so many years ago, the only question that can really be asked here is – is history, yet again, repeating itself? In the region where the microtransactions model was born, Friendster is only now getting around to instituting the model? We’ve seen the dramatic increase in revenues generated via social networking virtual goods sales, as well as casual gaming sales, primarily in the Facebook court. Once an industry innovator and leader, is this new virtual goods market just another ‘follow the leader’ for Friendster?

Tags: , , , , , , , , ,
Posted in industry news | No Comments »

 

Outspark adds former Nexon CEO San Won Chung to executive board

Wednesday, October 28th, 2009

San Francisco based Outspark is quickly on the path to becoming the darling of the North American free-to-play industry. A quick look at their recent staff and/or advisory board additions clearly points to the making of the perfect storm. Today’s announcement adds just another perfect element to this storm, as Outspark has just added San Won Chung to their advisory board. Chung, the former CEO of Nexon, the gold standard in free-to-play gaming in the Korean/Asian free-to-play market, as well as his most recent position of EVP with Neowiz, will now sit on Outspark’s advisory board.

With an industry career spanning over a decade, Chung recently filled the shoes of Executive Vice President with Neowiz, one of Korea’s largest online gaming publishers, where he successfully brought the FIFA Online title to the Korean market. This project was in collaboration with Electronic Arts. If you’re starting to notice the heavy EA influence in Outspark, you’re on the right track.

“We are delighted to add another outstanding business leader with broad and relevant experience to our Advisory Board,” said Owen Mahoney, CEO of Outspark. “Sang Won Chung is a veteran executive in the online gaming industry with considerable experience that will help foster our long-term growth and success as we expand our ever increasing base of loyal game players.”

Having served as CEO of Nexon from 2001-2004, Mr. Chung was in the drivers’ seat when some of Nexon’s top products were launched including (the one that started it all) Maple Story, Kart Rider, and Shattered Galaxy. Arguably, these titles singlehandedly ignited the free-to-play/microtransactions supported online gaming business model.

“This is an exciting and transformative time in the online gaming industry and Outspark is clearly one of the most innovative game companies in the world today,” said Mr. Chung. “With North America and Europe poised to be the next great markets for free-to-play games, I feel privileged to join a dynamic team of renowned industry leaders. I look forward to participating in the growth of Outspark as it helps guide the future of the freemium game industry.”

Tags: , , , , , , , , ,
Posted in industry news | No Comments »

 

New Survey reveals console gamers big on Digital Distribution

Tuesday, October 27th, 2009

While GameStop claims that it isn’t really worried about the rise of digital distribution cutting into it’s brick and mortal retail stores revenues’, a new survey from the TNS and gamesindustry.com titled The UK National Gamers Survey, could have retailers rethinking.

Traditionally, PC and console games were produced to a disk (or cartridge), packed in a fancy box, and sent off to retailers for sale to the general public. One can still find this method alive today, but perhaps not doing so well. A wide variety of factors all contribute to the decline of boxed sales, perhaps most notably the rise of both mobile and web portal based gaming; a scenario where there’s no wait involved. The UK National Gamers Survey 2009, as well as identical surveys conducted in the US and EU markets clearly indicate that digital distribution has arrived, and is a favorite amongst both PC and console gamers.

The survey found that 25 percent of all UK console gamers have paid for and downloaded not only complete titles, but also additional levels for their favorite games. The former being a purchase, the later being a microtransaction. 7 percent of all gamers surveyed indicated that when they’re after a new game, they usually purchase them directly via a digital distribution channel, circumventing a physical retailer altogether. On the PC side of gaming this figure is doubled, with 14 percent of all PC gamers regularly buying and downloading their pixel pleasure directly. In the US market these figures rise even more, with 16 percent of console players purchasing directly, and 23 percent of PC users accustomed to the digital distribution method.

TG_Digital_Distribution

The survey also indicates that over half (55 percent) of the UK population (as defined by 8 years of age or older and access to an internet connection) play on consoles. 27 percent of this demographic indicated that they regularly download either complete games or additional levels for their existing games. Almost all respondents indicated that they have experience paying for this. When broken down by console, Sony’s PlayStation 3 takes the lead with over half, again 55 percent, of owners regularly obtain content via digital distribution, 51 percent of Xbox 360 users, and 25 percent of Nintendo Wii owners are downloading.

“With the growing part of games being played and paid for online, a key way to monitor the complete games business is by asking consumers directly about their overall game behavior and spending. An additional advantage of this approach is insight across all platforms as the traditional divide between the online casual and core console market has evaporated,” adds Peter Warman from gamesindustry.com.

Tags: , , , , , , , ,
Posted in industry news | No Comments »

 

Riot Games’ League of Legends beta now open

Friday, October 23rd, 2009

While we’re still 4 days short of the “official pre-season” opener for fatfoogoo client Riot Games’ highly anticipated League of Legends, the doors are now open to the beta program.

lolLeague of Legends is based upon a highly successful Warcraft III mod, Defense of the Ancients, whereby players have a host of demons that they can then summon and engage in intense battles against each other. The game is free-to-play, and supported through various microtransactions, powered by fatfoogoo technology. “League of Legends is being built as a highly competitive core game that we believe will change many people’s minds about the type and caliber of games that can be offered for free,” states Riot Games CEO and co-founder Brandon Beck.

The team at Riot has been working day and night on this ambitious project, and recently gave the game a complete user interface makeover, including new voices, and a tuned interface, similar to the Warcraft 3 engine that devoted DOTA fans will remember. The overhaul also includes a 3 player map that will focus on more intimate, intense battles whereby the player will have much more influence on the outcome of the match.

With quotes including “The gameplay is better than DotA,” from Hubert Thieblot, CEO of Curse.com and “Easy to pick up and play…insanely fun,” from worthplaying.com, and what we’ve seen on our end, it’s a forgone conclusion that League of Legends will not only please long time devoted DOTA fans, but is sure to bring in a whole new cluster of fans of Riot’s new gaming format – the MOBA, multiplayer online battle arena.

Now’s your chance to get the skinny on League of Legends before the official pre-season release. Beta signups and client download, again, a free-to-play game, are available directly from LeagueofLegends.com.

YouTube Preview Image

Tags: , , , ,
Posted in industry news | No Comments »

 

EA’s Need for Speed franchise tops 100 million, date set for online free-to-play version

Thursday, October 22nd, 2009

EA has officially sold more than 100 million copies of it’s popular racing/driving series Need for Speed. Since the first release in 1994, the NFS titles have generated over $2.7 billion in revenue for the Redwood, California based Electronic Arts. The games’ newest iteration, Need for Speed: Shift sales have topped the franchise over this milestone, placing it in the number four all time best selling games. Also included in the over 100 million units sold club are the best selling game of all time, The Sims, as well as the Mario Brother franchise, Pokemon, and Grand Theft Auto.

need-for-speed_shift_03“Few videogame franchises ever reach the 100M units mark, so this is a huge honor. We have millions of fans to thank for driving us to this milestone,” said Frank Gibeau, president, EA Games Label. “With the launch of Need for Speed SHIFT and the upcoming release of Need for Speed NITRO, we hope to continue to deliver the most entertaining, action-packed racing experiences.”

While the game has been through 15 different versions, and produced for 14 different platforms, it wasn’t until the 2003 version, Need for Speed: Underground version was released that the franchise really started to take off. Previous versions focused on supercar racing off in a mythical European countryside. The underground version made a dramatic shift to more “accessible” cars, those that we actually obtainable by racing/gaming fans around the world. And while the good times were on a roll for EA for the following two years, in 2007 with Need for Speed Pro Street, the title had sunk back to levels of mediocrity. Recognizing the potential within the franchise, but perhaps more importantly, that there were three distinct groups that played the game, EA wisely broke up the then current studio developing the titles, and brought in a fresh set of hands and eyes, and has now developed three unique product offerings. What once was one, is now in fact three: one group focuses on an action based game for mass market fans, another on pure simulation for die hard fans, and still another, arcade style play for casual racers.

Need for Speed Shift, released this past September falls into the simulation category, while the upcoming release of Need for Speed Nitro, specifically developed for the Nintendo Wii and DS, will fill the arcade pillar, falling perfectly in line with Nintendo’s top racing game of the year 2008, Mario Kart.

The third, and perhaps most interesting continuation of the Need for Speed franchise should arrive on North American shores around this time one year from now. Titled Need for Speed World Online, this version will be an online only, free-to-play title, yet again signaling EA’s firm commitment to the free-to-play, microtransactions supported gaming business model. No word yet on where the microtransactions will come into play, but based on the game play style, it’s safe to assume that car cosmetic upgrades will be available for purchase, as well as temporary performance enhancements, alla Battlefield Heroes. Closed beta testing is expected to commence in Taiwan this winter, with an official global release in Fall 2010.

Tags: , , , , , , ,
Posted in industry news | No Comments »

 

Meez coming to MySpace. Meh.

Wednesday, October 21st, 2009

Popular social networking avatars developer Meez has recently announced that they’ve inked a deal with MySpace to provide it’s users with a virtual meeting point where they can play games and interact together in a virtual world inside the MySpace home. Running on Java, Meez Nation won’t require users to download any additional software. Likewise, a portion of Meez’s monetization, pre-roll and banner ads, integrates seamlessly with MySpace’s current platform.

generic_avatarMeez will naturally also be capitalizing on their other form of monetization: virtual goods sales. Using their proprietary form of virtual currency, “Coinz,” users can make RMT’s to fully customize their avatars. In addition to purchasing currency directly from Meez, users can also pick up pre-paid “Coinz” cards at major retailers such as Target and Best Buy. Users can also earn virtual currency by participating in ad supported games – a win/win for Meez. Meez CEO John Cahill stated that virtual goods sales constitute 30 percent of the company’s revenue, but also notes that Meez “hasn’t yet had the conversation” with MySpace execs to discuss a revenue sharing model based on ad generated revenues.

If we rewound to April of 2008, this deal might be a fantastic score for Meez, but in late 2009, this integration can only be described as: Meh. While social games developers reaping profits hand over fist on the ‘other’ social networking giant, why would Meez take the MySpace route over Facebook? CEO Cahill explains that a “significant” number of Meez’ 3 million monthly visitors actively spend time on MySpace as well. He also notes that MySpace’s target demo is more closely inline with Meez’, a predominantly female, teen group. Furthermore, Cahill comments that the way and manner of connections on MySpace is a better choice for Meez integration, “Many people use Facebook to stay in touch with real friends; MySpace is more about discovery—meeting new people that like the same music, movies or games that you do. Meez Nation creates a similar friend-discovery space.”

Cahill is also quick to point to a recent Nielsen study that place MySpace at the top of the social networking pile in terms of video streams. Since a portion of Meez’ revenue is derived from pre-roll advertising, he considers MySpace to be the right choice. He noted a Warner Brothers promotion that received 50,000+ views per day when run as part of a campaign in Meez Nation.

facebook_members_2But here’s the rub: The same Nielsen report provided a plethora of usage statistics that clearly indicate that Facebook is blowing MySpace out of the water, at least in terms of time spent on the site. Since April 2008, Facebook has seen a steady increase in activity, amounting to a 699 percent increase. While at the same time, MySpace saw a 31 percent drop in time spent on the site. So while Cahill can justify the Meez integration with MySpace as much as he wants, just by looking at the numbers, he’s chosen the wrong platform. The target audience may be more closely inline, but at the end of the day, isn’t product integration about expanding markets and thereby, posturing your product in the biggest marketplace? Even if video content consumption is higher on MySpace, is Meez now a video provider? Or virtual world builder? Or virtual goods vendor?

Or….as there’s no hint of exclusivity in this agreement (remember, the Rev Share conversation hasn’t even been put on the table yet), perhaps this just a stepping stone to get ready for ‘The Big One”?

Tags: , , , , , , ,
Posted in industry news | No Comments »

 

Zynga helping Haitian charities through virtual goods

Tuesday, October 20th, 2009

While doing good and giving back are nothing new to the gaming industry, as there are a number of small-ish projects that have taken on the challenge over the years, Zynga’s new campaign is the first microtransaction based charitable cause donation program we’ve seen. According to VentureBeat, social games developer and publisher Zynga has struck upon an idea that they believe will allow them to do a great amount of good in a relatively short amount of time.

haitidonateCentered around their wildly popular farming game, FarmVille, Zynga’s 56 million users of this app have donated $487,500 over the past three weeks to the company’s campaign to help children in Haiti. Titled the “Sweet Seeds for Haiti” initiative, this program is the opening phase of a larger plan to promote what Zynga calls “social goods.” These goods function just like any other microtransaction purchasable item within the virtual world. I.e. instead of purchasing a tractor to up their farming, players can purchase Sweet Seeds, those that are directly connected to the charitable donation. Likewise, Zynga has run a similar promotion in the virtual world YoVille, whereby the games 140 million inhabitants could purchase virtual bulldogs and tabby cats from a virtual animal shelter. These purchases helped raise money for the San Francisco SPCA.

Zynga reports that approximately 50 percent of these purchases are contributed directly to one of two Haitian charities, FATEM.org and/or FONKOZE.org. Jacky Poteau, FATEM president, stated that just from Zynga’s donations alone, the NPO has made possible the reality of a quality education to more than 500 Haitian children.

“The sheer scope and reach of social gaming to affect people’s lives in a positive way wasn’t even a reality a few years ago,” said Mark Pincus, founder and chief executive of Zynga. “Today, with ‘social goods,’ we are enabling players to unlock their power to change the world and impact the lives of children. ‘Sweet Seeds for Haiti’ is an early step for Zynga with more to come.

Obviously, a great plan of action, for a great cause. And again, as stated above, there are a number of games or games relation projects that do give something back to a community and/or make donations to communities that need it most, but most require a concerted effort to find. The Zynga initiative is front and center, cleverly integrated into the hugely popular social gaming format. As I talked about at the beginning of this month, with competition heating up in the social gaming space, developers and publishers are, and will continue to need to separate themselves from the pack. While I’m not certain a charitable donation program is going to do this for Zynga, it’s certainly a noble and worthy project, and obviously, a great PR move.

Tags: , , , , , , , ,
Posted in industry news | No Comments »

 

New Report: US Virtual Goods market to reach $1 billion by years end

Monday, October 19th, 2009

InsideFacebook.com editor Justin Smith and industry expert Charles Hudson of Serious Business have recently released a report for purchase that estimates the total US virtual goods market value will reach $1 billion by years end. This estimation effectively doubles the market value of the previous year, and puts a $1.6 billion dollar amount to 2010’s sales.

virt

While the free-to-play traditional PC gaming platform certainly contributes to this overall figure, Hudson and Smith squarely point to the rapid expansion of casual gaming, firmly finding it’s roots in social networking. “One of the major forces that has led to growth in virtual goods this year is the explosion and seeming ubiquity of social networking in the U.S.,” said Smith in an interview.

This newest estimation is not new to the virtual goods market, as we’ve heard various valuations for quite some time, with no one definitively being able to put a finger on just how much virtual goods are actually worth. Early this year, research firm Plus Eight Star valued the Asian market value at over $5 billion, which, if seen in the light of Hudson and Smith’s newest findings clearly falls short, as the US market alone is expected reach $1 billion this year. Conversely, Brian Balfour of Viximo argued that the US market should be valued in the neighborhood of $400 to $600 million. So who’s, quite literally, on the money here? While valuations and projections are always a sticky science, it’s arguable that no one up to this point has done as much extensive research as Smith and Hudson. Again, the report should not be taken as gospel, but it is perhaps the most researched in detail.

The report, available for purchase from insidevirtualgoods.com focuses on four main areas, thoroughly investigated by Smith and Hudson:

  1. Social Networks, Applications, and Games - The explosion of the virtual goods market on social networks is in our view one of the biggest stories of 2009. We delve deeply into the trends, stats, key players, opportunities, and challenges facing the space this year and next.
  2. Casual MMOs and Virtual Worlds - Virtual worlds and casual MMOs continue to grow as a meaningful share of the virtual goods opportunity in the United States. Our study breaks down the key drivers for success in this segment, trends in monetization and engagement, and the prospects for the future.
  3. Hardcore MMOs and Free-to-Play Online Games – Developers in the MMO / MMORPG space have been among the earliest adopters of the free-to-play model. We explore why free-to-play MMOs are succeeding, revenue and user trends, and the key issues facing this space as we head into 2010.
  4. Emerging Areas: Consoles, iPhone, and Subscription MMOs- As the virtual goods business model becomes more well understood, it is beginning to show up in new and interesting areas of the games and entertainment landscape. We highlight a few of the more promising areas where virtual goods are emerging as a promising opportunity.

“I don’t know anyone who expected it to grow this fast. The Facebook platform went from zero to hundreds of millions of dollars in two and a half years. It reflects a broader shift in society where people are spending more time on casual games,” says Smith.

An of course, fatfoogoo, as an industry leading provider of microtransaction and virtual goods payment systems is profiled in the report.  We’d like to send out a big thanks to Charles and Justin for this outstanding industry report.

Tags: , , , , , , , , ,
Posted in industry news | No Comments »

 

Apple lifts microtransaction ban, opens door to free-to-play iPhone games

Friday, October 16th, 2009

Surely, it was only a matter of time, but yesterday’s announcement from Apple to the developer community has massive implications. As reported by Macworld, developers received word yesterday that the curious, ‘yes, you can use microtransactions, but only in PAID apps,’ rule has been lifted, essentially opening the iPhone to the same business model that’s been ruling the Asian market for years now: free-to-play.

iphonegamingPreviously, not only iPhone games developers, but all app developers in general were restricted from offering free applications, only to be monetized down the road via microtransactions. With the ban being officially lift by Apple yesterday, it now means game on for the masses that have been developing games for the iPhone with the aspiration of one day offering them as ‘free-to-play’, a model that games developers have seen working well on PC and web based gaming.

If any proof was needed that the model can also apply to mobile gaming, specifically iPhone gaming, Amplified Games recently stated that they’re generating close to $10k per month solely via inserted advertising slots. And this is via an app(s) that they offer for free.

The timing of this announcement couldn’t have come at a better time for iPhone game publisher Ngmoco. Just one week prior, at the GDC China conference, Ngmoco’s VP Alan Yu discussed the staggering amount of 50 to 90 percent piracy of Ngmoco’s games pirated within their first week of release on the iPhone. Pointing to the origins of the free-to-play/microtransaction based model in Asia (a market that’s traditionally been rife with piracy – combated through free offerings of titles, but fees charged for a variety of customizations and further advancements in play), as the way to go with iPhone titles. Yu also noted that with approximated 85,000 titles to compete with, app pricing is dropping across the board. How to compete? Make your titles(s) free, and monetize after the “purchase”.

As a direct result of this announcement, Ngmoco put their money where their mouth is (literally), and Ngmoco’s own Neil Young announced via a twitter post that their upcoming multiplayer shooter Eliminate will be taking advantage of the new terms, and will be released as a free-to-play application.

Perhaps my initial speculation of the iPhone 3.0 OS update doing for games what iTunes did for music was a bit premature, it certainly opened the door for what we’ve been after for a long time: putting the free-to-play/microtransaction model on one of the world’s most popular mobile gaming platforms. By now allowing developers to enter their product to the market with a price of $0.00, and utilizing the existing microtransaction model, the free-to-play business model has now come full circle. As what happened with iTunes and music, so shall happen with the iPhone and games.

Tags: , , ,
Posted in industry news | No Comments »

 
« Older Entries