It’s Time to Move Beyond the Megahit Mindset for Games
“WTF, are you serious? How does RockYou still have cash?”
That was one of the more entertaining Twitter responses after news broke last month that we had acquired three games from Disney Interactive/Playdom. But it’s been years since the top social game publishers were regularly ballyhooed in the tech press, so it wasn’t a surprising question. Since then, as many prominent Facebook games saw waning growth, Silicon Valley and the game industry have largely turned their attention away from the social network as a platform, instead focusing on mobile and mobile’s top publishers.
That’s understandable, but in the transition, my fear is that the industry is overlooking a key point: If we only focus on megahit games, publishers and platforms, we are doomed to an endless cycle of disappointment — and in the process, abandon vast fortunes in potential revenue.
Here’s what I mean:
Mobile is just as hit-driven, if not more so, than online
Top mobile publishers like King and SuperCell deserve a lot of praise for their fortunes, but their high revenue often blinds industry observers to the fact that very, very few games will ever come close to the profits of a Clash of Clans or Candy Crush — even those made by the publishers of megahits. Blessed by an alchemy of art, talent and timing, a handful of games can indeed become blockbusters — but so far, when it comes to maintaining a long-term track record, there is no Pixar of games (see Rovio’s Angry Birds versus Rovio’s follow-up, Amazing Alex). What’s worse, even the megahits decline over time, once continued spend to support new user acquisition becomes unsustainable.
Which takes me to my next point:
Millions of players — and dollars — are left on the table
During the peak hype around Facebook games, we saw the hugest hits exceed 100 million players. This inflated the industry’s expectations around revenue — and the industry’s disappointment, when these usage numbers proved unsustainable once ad spend became unprofitable.
But years after Silicon Valley looked away, a funny thing was happening:
By the millions, the players of these games kept playing them. And all too often, as Facebook publishers desperately pivoted to mobile in search of more revenue and users, they underestimated the value of their existing player base, and the passion they have for the games they’ve loved for years. Consequently, rather than work on solutions to create sustainable revenue models on Facebook — or for that matter, games on the Web, which also maintain large user bases — the industry has largely shifted to mobile.
While the allure of mobile is easy to understand, I can’t overstate how much money has been left on the table for those that understand how to harvest a title. Millions of active but under-monetized Facebook and Web gamers potentially translates into hundreds of millions of missed dollars in yearly revenue for the industry.
Moving past the megahit mindset
With top mobile publishers taking a hit on the stock market recently, we now see the social game cycle repeating itself. If past history is a guide, building a hit will become even harder as discovery becomes more expensive. In contrast, there are many established mobile franchises that will sustain profitable user bases for years — just look at the Diner Dash franchise from PlayFirst. Glu Mobile acquired a brand that is years old, still drives revenue, and maintains a very large and loyal U.S. user base that can be leveraged to extend the franchise.
So, as we realize we are seeing the same movie, I want to make a case for some collective soul-searching about who we are as an industry:
We can no longer be solely about our megahits, nor justify our existence to the market on these black swans. If Hollywood and TV studios depended only on their occasional blockbusters, they’d have been out of business decades ago. Instead, we must invest not just on making the next megahits, but bring as much creativity and capital to fostering new revenue solutions for our existing games — not just for months, but for years after launching. “The Mary Tyler Moore Show” is more than 40 years old, and still enjoys a tidy trickle of ad dollars on Hulu. Shouldn’t we expect at least as much longevity from Facebook games that aren’t even five years old?
Oh, and to answer that Twitter question up top: We’re doing fine, thanks for asking. And thanks to a new model, we’ve actually been very profitable since last year. But then again, that’s probably true of many other companies that got their start in social gaming. The question is when the rest of the industry will take the time to notice — and instead of chasing after a new audience, shift its attention back to the fans it already has.