Posts Tagged ‘social games’

Russian social game dev Drimmi raises “several million” in VC funding

Wednesday, January 27th, 2010

While the Eastern European social networking scene is alive and well, it’s often easy to forget about, simply too small to be heard in the Facebook end of the pool. Partically owning to the simple language (and in some cases alphabet) barriers, eastern Europeans have turned to their own native platforms (i.e. others made a splash on the scene before Facebook was up and running with translations and/or the appropriate market buzz).

manki_3That’s not to say that Eastern European developers haven’t been acutely aware of what’s been happening in the Western European, North American, and Asian markets, and they now want in on a piece of the action on these more popular Eastern European platforms. The Russian social games market alone has taken off at a juggernaut’s pace, growing from $0 in 2008 to a valuation of over $30 million in 2009. Most social gaming in Russian takes place on the countries’ leading social network VKontakte, and currently has a runaway star – Vesely Fermer (Cheerful Farmer) developed by Yekaterinburg based i-Jet, which currently garners half the market. Reports are varied, but revenue numbers indicate that Vesely Fermer currently generates around $1 million per month. If this figure rings a bell, remember, Tapulous reports making the same figure, and Playdom would be in the same ballpark with an annual take of around $50 million.

To this end, the Russian stealth operator Drimmi has recently been awarded “several million” in venture capital funding from Luxembourg’s Mangrove Capital Partners and Russian ABRT Venture Fund. David Waroquier of Mangrove Capital Partners points to the Russian social gaming markets, “high levels of users engagement and strong monetization history,” as a leading factor behind the firms’ decision to commit. In addition to the “several million”, Mangrove Capital, also invested in online trivia games maker Amuso, will take a 20 percent stake in the now only 5 month old company. Drimmi is headed up by CEO Nikita Sherman, former CEO of Russian dating site Mambe, where he’s already introduced and developed micro-payments as revenue streams.

 

Facebook overtakes Google this Christmas

Tuesday, December 29th, 2009

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Christmas 2009 is shaping up to be a season of change, and perhaps a harbinger of things to come in the next decade. As we reported yesterday, Apple’s iPod Touch overtook the iPhone in terms of App Store Christmas Day usage, the very same ‘huh?’ happened on Christmas Eve and Christmas Day in regards to Facebook and Google. For the first time ever, on Christmas Eve and Christmas Day 2009, according to internet research firm Hitwise, Facebook became the number 1 destination in the US, overtaking Google.

Christmas is traditionally a peak time for the social networking site, as users use the platform to connect with friends and family, with their previous peak usage coming on Christmas day in 2008. And it wasn’t just Christmas Day that saw a massive increase for Facebook. The social networking site has seen a steady increase over the past year, recently topping 350 million users, and Hitwise data shows that facebook climbed from the number nine most visited websites in 2008, to the third most visited sites in 2009.

However, while this report of increased usage bodes well for the social networking platform, a number of the popular apps and social games that it serves as a host for saw a decrease in activity. It can only be surmised that the ‘social networking’ served it’s original purpose of connecting with friends and family that couldn’t be physically present.

 

Third largest social games maker Playdom will see $50M in revenues this year

Friday, December 18th, 2009

The third largest player in the social games space, Playdom is expecting a profitable year with $50 million in revenues expected. In an interview with ThinkEquity’s Atul Bagga, Playdom CEO John Pleasant confirmed that the company is profitable, and 2009 will see over $50 million in revenues. This statement falls right in line with last October’s leaked data regarding Playdom’s revenue numbers.

The social gaming company of the year award might land with Playfish, as their acquisition by traditional gaming giant logged over $300 million. In second place, at least in the revenues department, Zynga, with their recent $180 million from Russian investor Digital Sky Technologies alone puts them in second place. Not to be outdone, Playdom’s $50 million places them strongly in third place.

And now for the numbers…

Pleasant, who left Playdom his COO position at EA earlier this year to head up Playdom, stated that three-quarters, or $37.5 million, of Playdom’s revenues are generated from virtual goods sales. Given the on going ‘scamville’ fiasco, Playdom treads on some thin ice with 15 percent of it’s revenues being generated from third party advertisers who offer users marketing “offers” in exchange for virtual goods that are rewarded after a users completes a survey or related activity. The remaining 10 percent comes from advertising deals.

Bagga’s report states that Playdom currently cites 28 million monthly active users. In comparison, EA/Playfish has 50 million users on board, and the top dog, Zynga, reports that they have 200 million active monthly users. However, the measure of “monthly active users” does span the gap across multiple titles from the same producer. When seen in this light, Zynga reports 100 million monthly uniques.

But where’s the disconnect here? Both Zynga and Playfish have been making a killing. That’s not to say that Playdom’s $50 million is a paltry figure, but still hovering in the double digit range, while it’s closest competitors are a decent way into the three figure digits. The missing link? Facebook. When looking at Playdom’s platform distribution, 60 percent is played on MySpace, while 40 percent is focused on Facebook. After receiving $43 million last month in a most recent funding round, Playdom execs state that they plan to double the number of it’s current offerings in 2010. The question is – will they ramp up offerings on the much hotter social gaming platform Facebook?

 

Facebook and Zynga named in class action lawsuit

Friday, November 20th, 2009

Well here it is. The day that both Facebook and Zynga have been dreading. Yesterday the two were officially named as defendants in a federal class action lawsuit.

Filed by Kershaw, Cutter & Ratinoff, a Sacramento firm that specializes in class action lawsuits, in Northern California yesterday, the complaint is seeking damages upwards of $5 million. The issue in question? Well, if you’ve not been following TechCrunch’s ongoing series on the ScamVille affair, it’s best to just head on over and give it all a healthy read right now. Kershaw, Cutter & Ratinoff have been seeking out those that were subject to a number of unauthorized charges emanating from currency offers via social games including Mafia Wars and FarmVille.

Now here’s where things get interesting – neither Facebook nor Zynga actually produce(d) the offers themselves, but rather simply sold advertising space to external ad providers. At it’s most basic, we’re looking at a revenue sharing program here, and reportedly both firms have made heaps of cash from said offers. Apparently, Zynga garners almost a third of it’s revenues from these offers, something that Kershaw, Cutter & Ratinoff have exemplified in their filing.

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And to make matters worse, Zynga CEO and founder Mark Pincus has been fimed stating, “I did every horrible thing in the book just to get revenues.” Ouch. A judge certainly isn’t going to take kindly to such statements.

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Valleywag has the entire complaint here – if you’re so inclined to read legalese.

And while a number of pundits are quick to point out that this recent filing has got to have investors quaking in their boots, it flies directly in the face of Zynga’s announcement earlier this week that it had acquired another $15 million in VC funding. Bad timing? If it is – that’s gotta be one of the worst calendar mis-schedules we’re seen in the Valley in a long time.

 

The shakeup at EA – Acquisitions and Layoffs

Tuesday, November 10th, 2009

Yesterday was a landmark day for games publishing giant EA. Speculation had run wild regarding EA’s interest in acquiring social gaming company Playfish, and yesterday they made the official announcement. Congrats EA. However, within hours of the announcement, the hammer dropped, and EA then announced that it would be laying off 1500 employees.

The Acquisition

Electronic Arts Inc. made the official announcement on November 9 that they had in fact acquired social games maker Playfish for a cash payment of $275 million. EA even went one step further to sweeten the deal but offering an additional $100 million if certain performance benchmarks were met by years end. And….EA threw another $25 million at the deal in equity based agreements with Playfish employees in order to boost company retention. A quick look at the math puts the acquisition at $400 million. $100 million short of half a billion. That’s a lot of virtual goods valuations.

Admittedly, both EA and Playfish have been quite open about the deal, and Playfish is slated to find a new home under the EA interactive umbrella – EA’s branch focused primarily on web and mobile p[rojects.

“Social gaming, with its emphasis on friends and community, is seeing tremendous growth and this is the right time to invest to strengthen our participation in this space,” Barry Cottle, Senior Vice President and General Manager of EA Interactive said. Likewise, Playfish CEO and Co-Founder Kristian Segerstrale sees the deal as a win-win situation, “EA is the ideal opportunity for us to push forward our goals to lead in the social entertainment evolution on a faster and much larger scale.”

And in related news…..the layoffs

The phrase, “Strike the hammer, while the iron is hot” would certainly come to mind in this situation. Only hours after the announcement that EA had acquired Playfish, 1500 EA employees got the pink slip.

RedwoodShoresWhile EA posted record digital revenues of $138 million for Q2 2009 (a 23 percent increase, year-over-year), they’ve decided to batten down the hatches and consolidate their operations – as on the whole the company saw a net loss of $391 million in Q2 2009.

They layoffs will effect EA Redwood Shores (the company’s headquarters), Tiburon, Mythic, and Black Box. Black Box is the home of the Need for Speed development (one that just had great success with Need for Speed:Shift), and Skate titles.

MMO studio (Warhammer Online) Mythic is likely to be hardest hit by the cuts. In a tweet posted by Katherine Pitta, the studio has cut 80 employees, or 40 percent of their workforce.

Tiburon, also effected by the cuts, is primarily responsible for EA’s sports based titles, including Madden NFL.

In light of EA’s announcement of acquiring Playfish, as well as their recent launch of a Facebook version of Spore, it’s safe to say that EA has seriously taken the plunge into social gaming. Scaling back on Racing and Skate games almost makes sense (although I’m surprised EA’s not willing to take a look at the fourth best selling game of all time and taking a social gaming whack at it).

Similarly, Mythic is primarily responsible for the subscription based MMO Warhammer Online, one that’s had it’s own ups and downs over the years. With the current gaming climate making the migration to non-subscription based fees, it’s possible to see the EA logic in this one.

And now for the sports. This one is a bit of a head scratcher. Like them or not, microtransactions within EA’s popular sporting titles have been a success for the company. With Madden NFL continuing to have a fanatical following, and the Tiger Woods golf series expanding it’s catalogue of virtual goods sales, it’s a bit surprising to see a scaling back in this venue.

“EA is performing well, with quality, sales and segment share up so far this year,” said CEO John Riccitiello. “We are making tough calls to cut cost in targeted areas and investing more in our biggest games and digital businesses.”

 

EA moves Spore to Facebook

Monday, November 9th, 2009

Late last week, EA launched the Facebook component of it’s popular Spore franchise. A slimed down version of the full game, Spore Islands is a free-to-play social game that monetizes through the sale of in-game currency, ‘DNA Points’.

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DNA points can be used to modify the appearance or stats of a users’ created creature(s). As with many if not all social games, users are not required to purchase in-game currency, as they can earn DNA Points over time as they play the game. However, those that do decide to buy in, can purchase special customizations such as hats, seasonal and holiday themed looks, and other virtual goods.

Staying close to the social gaming premise, Spore Islands gameplay revolves around groups of Facebook friends competing in a “survival of the fittest” battle on individual islands. Users create their creatures, and then release them on an island inhabited by other users’ (within the group) creations. The strongest creations will be the only ones left standing, and thereby winning the round. The ultimate goal of Spore Islands is to release your creations onto as many islands and possible and dominate them all.

Developed by EA Maxis, the creators of the original PC and Mac version of the game, Spore Islands is testing the waters of real-time social gaming, something that Chinese games giant Tencent has recently started investigating. Islands within this version of Spore are persistent, allowing a never ending series of battles, even while the creator/user is not logged into Facebook. Overall status of players creations are tracked based on the creatures performance, as well has reach – how many islands it’s been deployed to.

Since it’s inception, Spore has had a social gaming element in mind, and the transition to a social networking platform was a logical step. And while doing well as a stand alone title, it will be interesting to see how EA fairs in the relatively uncharted waters of social gaming on the worlds largest social network. The stand alone version of Spore has it’s own unique set of competitors, with EA having already established it’s position in this marketplace. Within the Facebook marketplace, EA is now facing stiff competition from players that have already been around the block a few times and have gleaned their own experience. Can EA do the same, even if they are a bit late to the party?

 

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”?

 

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.

 

Casual Games maker Zynga trumps 100 million users on Facebook

Friday, September 4th, 2009

With more than 250 million users, there’s no doubt that Facebook is truly a powerhouse to be reckoned with. With this massive amount of users flowing through the site, cornering the lucrative casual gaming market would be a triumph. While I’m not sure we’re ready to proclaim a flag raising winner, Zynga is clearly leading the charge, and recently announced that they’ve surpassed the 100 million user mark. Doing a quick look at the numbers, that means that almost half of all Facebook members are, or have at one point, used a Zynga built application.

Released on June 19th, Zynga’s current runaway hit FarmVille is primarily responsible for this boost in usership. Just last month, Zynga proclaimed that FarmVille was the “largest and fastest growing social game.” Two points to Zynga for being dead on with this statement. In a new chart published by Inside Social Games, Zynga claimed 4 out of the 10 top spots in most active games on Facebook.

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With over 12 million active daily users, or roughly 5 percent of the entire Facebook population, FarmVille has almost doubled the previous ‘farming’ based app record help by Slashkey’s Farm Town. To this end, one thing is becoming increasingly clear: Farming is big business. As with iPhone apps, previously the hot spot to be was the ‘Mafia’ wars type games. We’ve seen a number of derivations (or, less politely; copies) of this form of play, right through to market saturation. Whether it was consumer complacency, or this market saturation, over the past few months, there’s been a shift away from bullets and bombs to water and seeds.

We could now be on the verge of another ‘derivation’-fest, as Zynga borrowed more than just the name from Slashkey, and likewise, casual games maker Playfish has launched their own farming app titled Country Story. In just under two weeks, Country Story has gone from 1.4 million active monthly users to 4 million. With 9 farming based titles now in the Facebook application store (within the top 109), in total there are 72 million active monthly users on Facebook, or approximately 29 percent.

Zynga is already the current app developer for Facebook, and these new numbers are just another award on the shelf for the firm. If measured by the typical benchmarks used for startups: audience, page views, growth, etc., it’s a fair statement to make that Zynga is an overwhelming success. What’s even more impressive is that the casual/social games maker is managing to do inside Facebook what the company has yet to do itself: be profitable. Remember, Zynga leverages the power of microtransactions to generate revenue, while at the same time allowing users to purchase any number of character customizations. Estimates place Zynga’s annual revenue around $100 million for this year alone, while Facebook’s estimated value is around $500 million. However, as stated above, Facebook isn’t making any money. So when viewed through these glasses, who’s really getting the better deal here?

 

Playfish nets over 100 million installs

Thursday, July 2nd, 2009

London based social games company, Playfish, announced yesterday that they’ve officially crossed the 100 million installs milestone.  These 100 million installs are comprised of the company’s seven different games offerings, and has been achieved in an astonishing 18 months.

playfish_blueTo name a few, Playfish is the provider of social games such as Pet Society, Restaurant City, Minigolf Party, and Bowling Buddies.  Playfish games are most often played across popular social networks, primarily facebook, bebo, and the other one MySpace.

“Social games are bringing a fundamental shift to video games – away from a single player-focused activity to one in which people play with their real-life friends,” says Atul Bagga, vice president, gaming research for ThinkEquity. “By putting the emphasis on interaction between friends, social games have expanded the potential reach beyond traditional video games to an entirely new, non-gaming audience.”

In their official release, Playfish goes on to point out that they’ve been able to accomplish in 18 months, what two gaming classics have taken 45 years and 8 years to accomplish.  The first, perhaps the most well known game in history, Monopoly took approximately 45 years to attract 100 million players, while the best selling PC game of all time, and third most popular video game series globally, the Sims, took 8 years to achieve this number.  Fair points folks, but I think you also need to look at the delivery mechanism.  Playfish is providing games for free across a readily, almost instantly available mechanism.  They’re also comparing a collective number, seven games offerings, against one singular game.  So while I’m not going to say that 100 million installations isn’t something to celebrate, I’m also not quite sure Playfish should ready to be put themselves in the same category as Monopoly and the Sims.

With that said, Playfish is undoubtedly raking in some seriously impressive numbers.  They currently count over 30 million active monthly users across their portfolio of games offerings, each of which has been in the facebook top 10 at one point or another.  Playfish’s flagship, Pet Society is played by 12 million people every month, and their newest offering Restaurant City, has seen over 5 million players since launching only 10 weeks prior.

“When we founded Playfish, our goal was to change the way the world plays games by creating experiences that are social and connected between friends,” says Kristian Segerstrale, CEO and Co-founder of Playfish. “Reaching 100 million installs in such a short time is clear proof of social gaming’s popularity and how loyal, enthusiastic and deeply engaged the Playfish community is.”