By Matt Hulett, Chief Gamer & President of GameHouse
Republished with permission from VentureBeat.com.
Image credit: Paulgoodchild
A number of social and mobile game businesses — including my company, GameHouse — face the same dilemma in today’s market: hunt or be hunted.
We launch game after game on Facebook in hopes for “the one” that will attract the masses and cut into our competition. Yet many of us — who, let’s face it, are outsized, outfinanced, outgamed by these behemoth companies — attempt to disrupt the gaming industry by throwing stones at the biggest players.
We’ve become monkeys developing games in the era of dinosaurs. It’s time to take another approach.
Our industry is clearly moving to a freemium model as sales of virtual goods on social networking sites, online worlds, and casual games racked in $9 billion in 2011. Facebook and App Stores have become the main distribution channels for freemium titles, as social casual games (bubble, match 3 and casino) represent more than 50 percent of Facebook’s monthly active users.
But while social games attract hundreds of millions of players, only 25 percent of Facebook’s monthly active users play social games on the site, an IHS Screen Digest report shows. [Editor's note: The report's conclusion is disputed]. We also know that nearly half of all Facebook users log on through mobile devices including tablets, yet mobile versions of social games are still maturing and are often difficult for consumers to discover within a fragmented marketplace.
Those in this industry, specifically small game companies like us, can’t afford to leave the rest of the Facebook community out of the social gaming phenomenon. We need to evolve and aim to become an 800-pound gorilla in the industry rather than be eaten by T-Rex. Our evolution will not only allow us to gain market share, but will also drive market expansion and growth.
Take Ouya, a startup working on a $99 video game console built on an Android platform. Where others saw an industry dominated by Sony, Microsoft and Nintendo or read NPD Research reports showing record declines in 2012, Ouya saw an opportunity to change the game and possibly expand the market. The company raised more than $5 million on Kickstarter so far. If it pulls this off, it will likely hit extensive market penetration and open game development on the TV screen for a fraction of the cost.
Like Ouya, smaller game companies like GameHouse are much more nimble and tenacious than the dinosaurs in the industry. We have a real chance at evolving, if not mastering social gaming experiences across multiple screens. Even Zynga’s CEO Mark Pincus said at GamesBeat 2012 that in the next five to 10 years, a small developer that creates a breakthrough game has a real chance for a game to spread virally and leverage all of the traffic already produced by the mobile gaming industry, which in turn moves the entire industry forward.
But we can’t evolve and master social gaming experiences across multiple screens by only building great games. Just think about the raw number of game applications that are currently competing in the market. There are 2,120 games on Facebook Canvas, creating a $2.5 billion market, and there are 120,559 games on iOS. Furthermore, Facebook games see 250 million MAUs and iOS has 101 million mobile gamers.
Discoverability is key, and we need to come together and explore new ways beyond Facebook and App Stores to get social games in front of more players. This is where the industry should invest, and new partnership models should be formed. I believe we need to come together as an industry to better collect and curate social games for consumers, and maximize the opportunities for great titles to get discovered across any screen.
We also need to develop games in categories that are successful on both Facebook and mobile.
The freemium model is driving much of the current game growth for mobile across the top 25 and top 100 game types two-fold, according to industry reports from AppAnnie and Xyologic. The top-game categories for iPhone and iPad based on gross revenues are action and adventure, arcade, casino, puzzle and word and simulation titles. The freemium model reigns for casino, role-playing and simulation titles; simulation is by far and away the most popular game category and captures 30 percent of the freemium market on mobile. Hidden object games have also shown success under free and paid models.
This indicates some strong synergies for social gaming between the Facebook and mobile world. For developers to be successful and master multiple screens, they need tools to hit scale, create cross-platform loyalty, and enhance engagement to increase monetization. I believe that free casual social games will have the best chances of achieving success, but not without challenges.
We know that Facebook wasn’t designed with gaming in mind, and while the social network giant is make great strides to circumvent current challenges for developers, it’s up to us to define and refine social games on Facebook and on mobile. GameHouse has the tools that give us the capability to create new feature sets that embrace classic game components but also incorporate compelling viral and reward loops to foster and retain players without gimmicks.
These tools have allowed us to optimize for the proliferation of these emerging gaming devices, which are opening up the video game market to hundreds of millions of consumers who would not normally have played games.
Small game businesses can lead social games in 2015, but it will be nearly impossible for them to do it alone. I believe we need to work together and deliver incredible gaming experiences that utilize tools designed to optimize the games’ performance to master social games across multiple screens and platforms. By doing so, together, we can and will evolve and forever change the industry for the better.
Matt Hulett is chief gamer and president of GameHouse. GameHouse has published and distributed more than 3,000 casual games. Hullett has a track record of creating profitable companies from scratch.