Archive for December, 2009

Another day, another boatload of $$ for Zynga

Wednesday, December 16th, 2009

Social game leader of the pack Zynga has recently landed yet another influx of cash. This time however, the majority of the investment is coming from Russian investor Digital Sky Technologies. If this name sounds vaguely familiar, you might remember them as a $200 million investor in Facebook. They’re also the same firm that we covered less than a month ago with their $5 million investment in a homegrown social strategy game and gaming platform.

logo_zyngaIf you’ve not been keeping score, and admittedly in this blister paced market, it can be quite a challenge, Zynga is currently the king of social gaming on Facebook. They’re the makers of FarmVille, arguably the one that started the farming craze, which launced in June and counts 72.9 million active monthly users. And while this number alone is enough to make any investor sit up and take notice, Zynga also stables Mafia Wars, FishVille, YoVille, Café World, and Texas HoldEm Poker. Combined, Zynga’s active monthly usage amounts to a massive 232 million. To put that in perspective, there are only three countries on the planet (China, India, and the United States) that are larger.

Looking at Zynga in the overall social gaming space, again, they’re clearling leading the pack. The second largest player on the Facebook gaming page is Playfish, which counts 59 million users. Obviously nothing to sneeze at, but when compared to Zynga – peanuts. Playfish was recently acquired by EA, as the traditional games giant is seeking to make a shift towards current market preferences.

And while massive numbers are good, many, if not all, investors in social gaming have recollections of a former internet boom that was fueled by views, and never bothered to look at the solid bottom line. Fast forward 10 (or so) years, and it looks like both investors and startups have learned a lesson. Zynga is not only covering their costs, but bringing home the bacon – in loads. While on paper, it seems like free-to-play gaming in general wouldn’t make sense. Giving games away and waiting for players to make a microtransaction purchase wouldn’t have been a solid solution pre-social gaming explosion days. However, rumors are circulating that Zynga’s 2009 revenues are pushing the $250 million mark. The company employs either full time or part time 712 employees and is constantly growing.

Again, these figures are enough to make any investor take notice, and it’s clear that Russian firm Digital Sky Technologies is clearly putting it’s vote of confidence into the social networking/gaming area.

With respect to the new investment, Zynga’s founder and CEO Mark Pincus commented to the New York Times, “The opportunity every quarter is proving to be bigger than we imagined and we always thought it was prudent to keep adding to the capital of the company as we grow.”

 

Age of Conan goes free-to-play. At least for the first 20 levels. For now.

Tuesday, December 15th, 2009

Norwegian games developer Funcom has recently announced that they’ve opened up their MMORPG Age of Conan Hyborian Adventures as a free-to-play game, with caveats, of course. Players that download the client, register, and start playing what Funcom calls a ‘trial’ between now and January 1st, 2010 won’t have to pay a dime. At least not for the first 20 levels, which includes the Island of Tortage, the game’s first starting area. After which point, Funcom is banking on players enjoying the experience so much that they’ll be willing to fork over some cash for the subscription service.

“Our original seven day trial has been very successful so far,” says Morten Larssen, Vice President of Sales and Marketing at Funcom. “But with the holiday season coming up this is the perfect time to shake up our trial offer a bit and try out something new. So everyone who downloads the trial before January 1st will be able to play the first part of the game for free, forever. We are confident that many of those taking advantage of this offer will choose to become permanent players, allowing them to experience all of what the game has to offer including all the additions and improvements introduced since launch.”

Ok, not a bad promo. Unless of course, you look at the less than stellar performance Age of Conan has seen since it’s launch. While Funcom bills the title as a “smash hit in retail,” looking at some of AoC’s past ‘achievements’ reveals a slightly different story. Remember, AoC is the same title that saw half of it’s servers shut down at the very beginning of the year. Only a few months later, Funcom’s financial report revealed that AoC was clearly not living up to the company’s expectations. Funcom then moved on to giving away virtual goods as a way to draw in more players, as well as initiating the ‘free trial’ program Larssen’s statement refers to. To top it all off, all of this Age of Conan activity has been taking place post Funcom announcing that they’ve got not one, but two free-to-play titles in the works.

Again, with the talk of free-to-plays in development, combined with the proverbial flogging of the dead horse – calling a play from the Turbine handbook doesn’t seem too far off. Remember Turbine’s flailing Dungeons and Dragons Online? Almost banished to the depths of obscurity, Turbine made the move to convert DDO to a full fledged free-to-play, and has seem massive interest, action, and associated sales and revenue arriving via the in-game shop. Now if I were a betting man….I’d be playing an all in on 2010 seeing Funcom do the very same with Age of Conan Hyborian Adventures.

 

Nielsen study finds increase in Seniors using the web – Facebook #3 destination

Monday, December 14th, 2009

A recent study conducted by Nielsen has found that in the past five years the number of seniors (age 65 or older) actively using the internet has increased by over 55 percent. While this demographic still makes up less than 10 percent of the overall internet population, 17.5 million users is still an attractive number to any advertiser.

The study found that female seniors are more active web users, outpacing male usage3 by 6 percentage points. The amount of time that these users are spending on the web is increasing as well. In November 2004, seniors reported on average 52 hours per month online, whereas November 2009 saw an increase of 11 percent, raising the total time per month to 58 hours.

“The over 65 crowd represents about 13% of the total population and with this increase in online usage, they are beginning to catch up with their offline numbers,” notes Chuck Schilling, research director, agency & media, Nielsen’s online division. “Looking at what they’re doing online, it makes sense they’re engaged in many of the same activities that dominate other age segments – e-mail, sharing photos, social networking, checking out the latest news and weather – and it’s worth noting that a good percentage of them are spending time with age-appropriate pursuits such as leisure travel, personal health care and financial concerns.”

Nielsen

So just where are these seniors heading? It should come as no surprise that the number one destination was Google, with 10.3 million unique senior visitors. In second place, Nielsen reports Windows Media Player with approximately 8.2 million unique visitors, which is slightly odd, as MWP isn’t really a web destination. And in a strong 3rd place, Facebook, with 7.9 million unique senior visitors. This is a major victory for social networking site Facebook, as just one year prior, they ranked number 45 on seniors’ radar. This statistic falls right in line with an overall increase of 53 percent of seniors’ usage of social networking and blog sites. Overall, 8.2 percent of all social network and blog traffic is over the age of 65, only 0.1 percent less than teenage visitors.

This data could be the genesis of a new marketing strategy employed by some advertisers on Facebook. The data reflecting increased female usage seamlessly falls in line with Q Interactive’s study indicating that women are competitive and loyal customers of casual games. While most gaming companies are focused on pulling in the teen and middle aged crowd, who’s to say that if approached correctly, seniors might have the same buying power as the other two? With only a 0.1 percentage less than teens, and the fact that there’s no asking to use the credit card involved, seniors represent a huge untapped market. The question is – who’ll be first on the scene to develop a product that appeals to them, one that they’d be willing to make a financial commitment to?

 

Free-to-play Runes of Magic garners Best International PC Game 2009

Friday, December 11th, 2009

82 million strong, the German gaming market is not one to be underestimated. Recently, German gamers bestowed on Runes of Magic one of it’s highest honors: Best International PC Game 2009.

In a public vote, players from across Germany entered their ballots for favorite games of 2009. While Runes of Magic found itself at the top of the pile, it had tight competition from Risen and Anno 1404. The award ceremony was held at the Essen Lichtburg, Germany’s largest film theatre.

Runes of Magic is a free-to-play MMORPG that’s published by Frogster and developed by Taiwan based Runewalker Entertainment. Frogster board member Dirk Weyel was on hand to accept the award on behalf of both companies. “We are thrilled to receive this trophy, especially with it being one awarded by actual players themselves. We would expressly like to thank our community and we’ll continue to work intensively on offering players the maximum of fun with Runes of Magic.”

In combination with the award, Frogster also recently announced that they’d cleared a significant industry milestone, with over 2.5 million registered players coming from the US, Europe and Korea. To celebrate both the award and this registered player milestone, Frogster is awarding every player that’s level 11 or above with 100 Rubies (in-game currency).

The Best International PC Game 2009 award from the German market is certainly a plume in Frogster’s cap, and a great score for the free-to-play industry as a whole. And if this award wasn’t enough, Runes of Magic is also in the running with Massively’s End-of-the-Year Reader’s Choice Awards. Runes of Magic was selected by editors, and entered in a number of categories. Balloting is open until December 31st and can be found here.

 

True Games snags yet another Top EA exec, moves to Lone Star State

Thursday, December 10th, 2009

(Formerly) Irvine, CA based True Games has recently announced that they’ve appointed former EA, Turbine, and SOE veteran Mick Giles as their new Chief Technology Officer. Giles brings 13 years of industry experience to the table, having most recently served as Senior Director of Online Operation for North America and Asia and Senior Director of Technology for Worldwide Studios at Electronic Arts. Pardon me…what? That actually bears repeating – EA’s chief of Online Ops and director of global Tech – just joined a relative startup, with a business model based on free-to-play titles supported by microtransactions. To say this is big might be selling the concept short.

If Giles’ most recent position didn’t warrant enough street cred, he also served as Execvutive Director of Technology at Turbine, where he oversaw core development projects, operations, IT, and Biz Dev efforts for Asheron’s Call, DDO, and LotRO. And rounding out the ‘Wow, this guy’s been a major player in a lot of stuff’ category, from 2003-2006, Giles filled the role of Director of Platform Technology at Sony Online Entertainment, meaning he was deeply involved in development and technology efforts in titles including EverQuest, EverQuest2, Star Wars Galaxies, The Matrix Online, and Planetside.

“Mick brings to the team an extensive background in technology, operations, platform management and more, and we look forward to adding his expertise to our management team,” said Jeff Lujan, Founder and CEO of True Games Interactive. “With one live game in Warrior Epic and one game about to go into beta in Mytheon, as well as multiple games in development, his expertise and experience is a welcome addition to the team.”

This announcement follows True Games’ rather recent appointment of 15 year industry vet Frank Lucero. And lest we forget, K2, Namco, and Vivendi vet Peter Cesario is now with True Games, as well as former NCSoft and EA exec Peter Jarvis. It looks as through True Games has truly managed to attract some very powerful people all under one roof.

And it looks like that roof in the Golden State isn’t going to be big enough.

Bundled with the announcement of Giles joining the True Games team, they’ve also announced that they’re officially moving their HQ from Irvine, CA to Austin, TX. Not exactly a surprise move, as only this past October, the company announced that they’ve opened a development studio in Austin. Slated for an official closure in March 2010, many of True Games employees will soon be relocating to Texas. The company cites continued growth, stronger internal communication, and a heavier focus on game development, as well as the excellent talent pool in Austin as primary motivators to move.

“Once we were doing our planning for the next several years, it just made more sense for us to combine offices in Austin, as opposed to moving everybody here to Irvine,” Cesario said.

It’s also fair to say that economic conditions are a factor in True Games’ decision. Cesario relates, “Last week, a company official was in town looking at potential office locations. An agent quoted the monthly rent on one of the spaces.”

Confused, the company rep. replied, “No, not square footage, what’s the rent?”

“That’s the best quote I’ve heard,” said Ceario. “It kind of sums it all up.”

 

Mochi Media survey reveals only 6 percent of Flash games monetized through microtransactions

Wednesday, December 9th, 2009

San Francisco based Mochi Media recently announced the results of their Flash Games Market Survey finding that only 6 percent of all Flash game developers are using microtransactions to monetize. Oddly enough, Mochi Media says that the survey was conducted prior to Flash based games having a widely available microtransactions tool kit. Bad timing, or just bad luck?

flash-games-market-survey-copyThe survey found that the most popular method of monetizing Flash games is still rooted in in-game advertising. The majority (58 percent) of respondents indicated that they use in-game advertising as their primary monetization method, with sponsorships taking second place at 43 percent. Licensing held down third place with 26 percent, and web site ads landed in forth with 20 percent. Monetization via microtransactions scored dead last in developers methods, garnering only 6 percent.

While this data might not look so hot for the Flash gaming community in terms of microtransaction monetization, it’s important to keep in mind that this community is unique amongst the greater game development population. Of those that were surveyed, the study found that only one-third of developers consider themselves ‘full time’. The survey found that the vast majority of Flash games developers are hobbyists who create games in their spare time. This same percentage also indicated that they’d only begun developing Flash games within the last two years. Matching up with these responses, it’s duly noted that approximately three-quarters of all Flash game portals are still in start-up mode, only having been founded within the past two years.

Taking a look at the numbers, it’s quite easy to deduce from the survey results that monetization within Flash cased games could use a severe shot in the arm. Only twenty percent of all 1100 Flash developers reported that they could be earning $1000+ per month from their games. When jumping to the $5000+ per month mark, the numbers drop even lower, down to five percent. And those that could support a staff and associated actual ‘business’ at $10,000+ per month are represented by a tiny 2 percent slice of the entire industry.

Conducted in partnership with Adobe, Newgrounds, Casual Gameplay and FlashGameLicense.com, the Mochi Media survey was conducted over a three month period. However, Mochi has yet to specify which three months the survey was conducted, begging the question – was it really conducted before microtransaction monetization tools (i.e. Mochi Coins) were made available to developers?

Not merely a coincidence, Mochi also announced their second annual Flash Gaming Summit together with the survey release. The summit will be held this coming March 8th at the UCSF Mission Bay Conference Center.

 

£10 million to be invested in UK Games Industry

Tuesday, December 8th, 2009

The  trade association TIGA, representing the games industry in the United Kingdom has recently announced that the UK games industry is on the verge of receiving £10 million from government agencies. This investment will also see a £2 million earmark for a prototype fund being administered by Abertay University.

british-pound-collage.previewStemming from the Digital Britain report that was published in June 2009, the commercial potential developed at Abertay will be further enhanced by the new center of excellence in Manchester. The new facilities at MediaCity UK will allow games and creative content developers the opportunity to better understand how gamers use their prototype products. This research and development will then in turn allow gaming companies to further refine these prototypes, with the ultimate goal leading to enhanced success in the competitive marketplace.

The MediaCity UK project is supported by £1 million from the Strategic Investment Fund, with additional funding arriving via individual European Regional Development Fund initiatives in both Manchester and Scotland, as well as the North West Development Agency. The Scottish government alone is contributing close to £1 million. The total commitment to the project is estimated at £10 million.

“This is good news for the UK games industry,” says TIGA CEO, Dr. Richard Wilson. “We particularly welcome the intention to use the funding to invest in prototypes to support new Intellectual Property (IP) development. Finding sources for finance for new IP is difficult at the best of times.”

Wilson continues, “We now look forward to the Pre-Budget Report on Wednesday December 9th. A commitment by the Chancellor of the Exchequer, Alistair Darling, that the Government will introduce Games Tax Relief would demonstrate that the Government is serious about supporting the UK games industry, one of the UK’s leading digital industries.”
£10 million to be invested in UK Games Industry

 

MySpace acquiesces, Facebook Connect to be integrated

Monday, December 7th, 2009

Remember MySpace? Yes, they’re still alive and kicking, albeit in a greatly modified form from their one dominant place in the social networking market. But according to insidefacebook.com, it looks like MySpace may have finally read the writing on the wall, and are now adopting Facebook’s ‘Connect’ technology.  The implementation could come to fruition as soon as early 2010.

facebook-logoThis information is still ‘rumored’, but sources on both sides of the fence have given the proverbial nod and smile when asked about it. Traditionally, the two friend destination sites have been bitter rivals, competing tooth and nail for number of registered users, activity on the site, etc.. However, 2009 has seen a rapid cooling off between the two, and Facebook has clearly won out, and is now kind of the social networking hill. Assorted news and rumors started appearing back in October with the U.K. Telegraph news outlet breaking a story indicating that MySpace and Facebook were in talks.

“The move could potentially see MySpace music and video footage being shared on Facebook via its Connect platform, which allows people to log into third-party sites using their Facebook ID,” the article by Emma Barnett explains.

Instead of continuing the social networking cold war standoff, it looks like MySpace has already put in action a dramatic shift that sees the company moving away from the social networking arena, and focusing more on what they call ‘social entertainment’. For some time now, MySpace has been focusing more and more on it’s industry leading music service. In fact, just last week, MySpace took their music service global, and launched MySpace Music to the United Kingdom market.

The details of the deal, and just how far Facebook will reach into MySpace’s space has yet to be revealed. However, this news arrives hot on the heals of Yahoo!’s announcement of a massive Facebook Connect implementation, effectively now making the previous largest social site on the web, into nothing more than a content publisher. A very large content publisher, but still…

The Facebook Connect/MySpace/Yahoo! deal also has significant implications for Mountain View, CA giant, Google. While Google has (virtually) no presense in the social networking end of the pool, the do have quite a bit invested in their one-login-to-rule-them-all product, Google Friend Connect. Coincidentally, the same day that the MySpace Music UK product was announced, Google made waves be announcing that they’ve cut a deal with twitter that allows users to login with their twitter account details.

With Yahoo! and MySpace out of the game, it looks like 2010 could be quite an interesting year, as Facebook and Google turn the heat up on their battle to achieve Web identity dominance.

 

Friendster to be bought by month’s end

Friday, December 4th, 2009

A recent report by TechCrunch indicates that first on the scene social network Friendster will most probably be sold by month’s end. While the deal is yet concrete, inside sources have indicated that the company will be sold to an unnamed Asian buyer for at least $100 million.

new_friendsterTo say that Friendster’s had a long and winding road might be the understatement of the decade. Founded in 2002, the original social network ruled the internets for a short while, but was quickly taken over by MySpace and Facebook. At least in the U.S. market – as Friendster ended up finding a home in the most unlikely of places, Asia. Currently, while numbers are paltry in the U.S., Friendster enjoys 50 + million users in the Asian market (over half the networks total number of users).

TechCrunch put a valuation of $210 million on Friendster back in July, which doesn’t account for Friendsters refocusing of their monetization strategy which they launched at the end of this past October. Instead of relying on advertising revenues, the social network made the shift to revenues coming from microtransaction purchases. A move that’s apparently been working well for hi5, with an admission that hi5 is now more gaming focused than social networking focused. However, that’s not to say that Friendster doesn’t have the same potential. Especially when you look at where their highest market concentration is, who’s buying them, and what market they’re operating in: Asia.

In hindsight, it looks like this deal has been in the works for quite a long time. Last year, Friendster brought now CEO Richard Kimber on board. Prior to Friendster, Kimber headed up Sales and Operations in the South East Asia region for Google. This past summer, Friendster opened itself up on the ‘for sale’ block, and as stated above, this past October they initiated a major shift in monetization from advertising to microtransaction reliance.

Again, no buyer has been named, but the inside source indicated that China’s Tencent Holdings was amongst the short listed buyers. Facebook also showed interest, but was turned away due to competition and IP issues. My guess is that Facebook could really care less about the actual mechanism of Friendster itself, but would love to get their hands on the 5 U.S. patents that Friendster currently holds with the U.S. Patents and Trademarks Office.

 

EA chief Riccitiello – “Digital market will be bigger than consoles next year”

Thursday, December 3rd, 2009

In a recent interview with Reuters news service, Electronic Arts CEO John Riccitiello managed to put a positive spin on the relatively dreary Thanksgiving and Christmas season games sales thus far, and managed to drop a relative industry bombshell…all within the same interview.

RiccitielloWhat makes the statement remarkable, is that Riccitiello sits as the man in charge of the world’s largest video game developer – a firm that’s traditionally focused on pricey, glossy boxed, console focused games. However, Riccitiello took the interview time to point out that projects have been afoot at EA for a while now, almost predicting the coming tide.

“A couple of years ago EA embarked on a plan to really build itself up in this new frontier. In the last quarter alone we did $138 million in revenue and if EA’s digital business were a stand alone company it would be the darling of Wall Street,” Riccitiello said.

He also went on to tell Reuters that consumers often forget about online browser based games including social games often found on Facebook, as well as MMO’s such as Warhammer Online, subscription and microtransaction based games, and claimed that this sector is now, “almost half the industry now. It’s about 40-45 percent. Next year it’s likely to have a larger share in the entire industry, bigger than all the console games put together.”

And as we’ve previously speculated – EA’s recent acquisition of social gaming company Playfish is just a further move towards dominating the digital front, as it has done successfully with the brick and mortar storefront. “It’s an on-purpose transformation,” Riccitiello says. “We’re trying to become a company that looks more like a direct-to-consumer business.”

With this announcement, it might be easy to say, ‘but wait…what about console gamers – are they being abandoned?’ Not at all according to Riccitiello. He notes that his optimism towards new models should not be seen as pessimism towards existing models. “We intend to be the number one packaged goods publisher in the world,” he says.