Panel:

• Terry Angelos (Moderator), TrialPay
• Joe Eibert, Universal Studios
• David Levy, SocialVibe
• Brian Cho, Booyah
• Manny Anekal, Zynga

Slide about social games having a larger audience than prime time TV shows.

TERRY - Why are online ad budgets so much lower than TV? How do you see brand budgets moving to social media?

JOE

• Dollars follow where eyeballs are going. As people spend more time on social games, ad dollars will go there as well. In my business, we are very much into cultivating fans about our movies. We want fans to be advocates for us. Social is great because you can get ppl to sign on to your Fan page or email db and have continuing relationship.

TERRY - Any metrics on budgets growing?

JOE

• Online budgets as a whole are doubling. Social as a % of the online budget is doubling, if not more.

DAVID

• Keep seeing budgets increase. We like to thing it's because more ppl are playing games. But these dollars end up being allocated because the P&Gs of the world do some big study that shows the efficacy of online. So much is still controlled by TV budgets. We still can't say that if we prove more effective, more dollars will flow online. We are still fighting that battle of trying to do an apples to apples comparison.

BRIAN

• For our users, we require them to check into a store, scan a UPC of a product to unlock features. Those are cutting edge techniques we are using to promote brands. Holy grail for those advertisers are validation at point of sale - we can give that.

MANNY

• Only 5% of audience will monetize - so how do we monetize other 95%. We had about 1 campaign per quarter. If we look at Q4, we will have 3-4x more programs in Q4 versus early part of this year.

TERRY - Able to do so many different things in social games from an ad perspective. What are some of the best examples (or worst) of ad programs that will help us understand how you engage with brands?

MANNY

• All about the user experience. All our advertising is user choice - not banner ads. Our 7-11 program saw several million codes being redeemed. Our water program had a 60% redemption rate. We saw huge engagement with McDonald's program.

BRIAN

• Wanted to have best UX. So we partnered with brands that related to DJs, such as Disney's Step Up 3D the movie. 9.3M plays during that program. Users in Nightclub city wanted that content. Did a Pantene campaign, dropped 1.3M locked items in wild, only way to redeem was to go to store and get a CPG UPC code to unlock. 530,000 drops of these locked items, over 250,000 of them were unlocked. So almost 50% engagement rate. Advertisers want to see users engaged with the item. LBS (Location Based Service) play really speaks to that.

JOE

• Public Enemies movie campaign within Zynga's Mafia Wars blew us away with it's success. Had over 100M interactions (different missions, items, etc). Up against latest Harry Potter, Hangover, etc with films 2-3x our box office.
• Also excited by the amount of editorial we received. Public Enemies would not have received that exposure otherwise.

DAVID

• From a developer standpoint, all these things take development resources. First thing to do before going out to do biz dev is to figure out what you can do re: dev time and what budget you'll need, then look at which brands have the money to spend in that category. Try to make sure you are having very limited conversations as the cycles for these deals are very long. Find the most logical partners and target them specifically - don't spread yourself to thin.

TERRY - What about metrics for these campaigns? They are so custom. Do metrics matter? How do you compare metrics?

MANNY

• Very important. We work to to measure the important soft metrics such as brand lift, purchase intent, awareness. We can truly prove the ROI of your campaign. We know the spend and how many products left the shelves. In-game ad space took about 5+ years to get standards across the board.

BRIAN

• Very important, especially in mobile. We can target users down to zipcodes and time of day. Very important to brands. We can create premium campaigns. Fit of brand to game will be very important. Car Town did a great job with brand integration.

JOE

• Interpreting metrics is art and science. You can compare different types of online media. Depending on the campaign, your goals will be reach, frequency or engagement. Unfamiliar or catalog titles may be measured more on engagement. Is there an exact science, no not necessarily. Making sure amount of purchased impressions are delivered on is important.

DAVID

• We are a performance advertising company. All the brands that pay, pay on a cost per engagement basis. It's all based on a specific action. Trevia was all about creating a sweetness moment - uploading a picture of a sweet moment. So we could track that. Right now those metrics don't fit with other buys - the reason being social gaming is so engaging that you will outperform any other medium out there. Performance to me is the biggest differentiator with social gaming.

TERRY - What are the challenges - what's holding this market back? Is this scalable?

BRIAN

• More about the fit than the scalability. For user it is really important they are engaged with the product. In terms of scalability, from LBS side that is still a very small piece of the pie. As it becomes more mainstream we can scale to a new level.

MANNY

• We're still a nascent industry. Zynga has been around for 4 years only. Look at time spent in online vs ad dollars spent and we're still early - those dollars will transition. But look at what we've done with McD's, Farmers Insurance, etc and it's happening.
• Re scalability, I don't have an answer. Two things I'd approach: partnerships with TrialPay and SocialVibe. Also, I'd figure out how to do a MVP first, then expand it.

TERRY - Any advice for small, less resource-rich publishers? When should they look at connecting with brands?

MANNY

• At this point, still pretty intensive for a developer. If you're product is not perfect and you're not monetizing, focus on that first. Your dev team also needs to have time. Reach, revenue, retention should be your first focus. Scale question as well - if you want to reach 5M ppl on a daily basis, there are very few companies that can do that now, so focus on your own product for now.

JOE

• Education process on the brand side is still a big challenge. Educating film makers and C-level execs. Only now do C-level understand online ads - so explaining in-game stuff is a bigger challenge. Other portion is thinking about a win-win situation - brand's ad needs to fit with gameplay. If it doesn't it will negatively affect the brand. Have to be somewhat flexible some game devs have freedom to be creative. Perhaps fewer approvals.

BRIAN

• When you design a game, think about how you would integrate the brands. Design from ground up for brand integration.

TERRY - What hasn't worked? Any big blunders you can talk about?

DAVID

• There'll be a lot of conversations you'll have with brands and a lot of times those don't go anywhere. Need to find 1 or 2 that actually fit really well. Need to have a lot of convos before something hits. Once you can show that success, guys like Zynga can replicate that success. Most guys at agency or client level don't know what Farmville is - so that's a big education process. Run into a lot of issues at the client and agency level around understanding.

MANNY

• We can say no to brands that don't make sense to our games. We haven't had a failure to date. We are protective of our audience.

DAVID

• Nice to have a cross-section of games that allow for almost any brand to fit in. (aka Zynga)
• Might want to also educate the brands about how "vocal" and "passionate" social gamers (or gamers at all) can be so they are not shocked by the odd sound bite in a forum or Fan page.

Questions

Name top 3 tripping points on selling a branded program.

MANNY

• Education of brands and agencies re what's possible. Educating on the gameplay, gifting, trusted connections, etc.
• User experience has to fit. Popups won't work.

DAVID

• Understanding what dev costs really are.
• Education of what the real audience is in social games. Perception that the audience is not moms... these really are the mid-west, etc that the brands are trying to reach. Just because ad exec doesn't play it, doesn't mean it's not your brand's target.

JOE

• Getting people accustomed to receiving criticism. Leave that criticism alone - ppl will come forward with positives. This is not a 1-way medium like a TV ad. Need to respect the consumer who is engaging with your brand.

BRIAN

• Understanding your audience. Which brand integration would make the game cooler and better. We work with Disney and a bunch of indie artists - the brands we work with enhance the gameplay.

Deborah Liu, Manager of Product Marketing, Facebook

DEBORAH

Benefits of FB Credits for users

1. Familiar payment experience
2. Unified virtual currency - more demand for that currency, more money put into system
3. Secure place to store payment info - overhead of mental energy incurred entering multiple payment info is a drag on economy - takes friction out of process
4. New ways to pay and earn - if we add a gift card, it's available across all games

Mahjong Dimensions Example

• Buy 2x boost - you have sufficient credits - make purchase... no pulling out credit card, etc. Just use your stored balance.

Millionaire City Example

• Buy millionaire gold... need to buy FB credits... Visa card is stored, I make payment instantly and get my gold

Benefits for developers

1. Reduced payment friction - in the discretionary goods space you want to remove as much friction as possible
2. Seamless integration with Facebook platform - we don't want the 6th person a 5 person team hires to be a payment processing person.
3. Users with stored payment methods - no hump that user needs to get over to give you their payment info in a new game... if someone has spent before, FB has their info. 5-10x greater monetization among users that already have a stored payment method (whether that is FB Credits or your own cross-game method).
4. More payers

Where are FB Credits now?

1. 200+ games and applications
2. 75+ developers
3. 22 of the top 25 games
4. More than half of all game experiences

Arkadium and Digital Chocolate introduced:

Jessica from Arkadium

• Have 5 games on FB, use FB Credits as their exclusive hard currency
• Wanted seamless integration experience for our users, payment process to be easy
• As a developer, Credits API easy to work with
• Our players are very casual gamers - we didn't want to confuse them with multiple types of hard currencies

A couple ways they've integrated FB Credits

• Changed Mahjong Dimensions to a 1 minute play experience... needed to add ways to enhance game experience
• Social aspect of game is leaderboard
• We introduced Game Boosts... highly consumeable... score multipliers, etc.
• Found users are very very willing to pay to have these boosts in their gameplay
• With a game called Ultimate Fan, we wanted to experiment with purchasing a virtual item like a plane or blimp or snowman that will give you an entry into a sweepstakes (you can also do it for free with a soft currency)
• We launched it last week and it was very successful
• Also implemented Credits via the purchase of downloadable casual games - with Solitaire Heaven, we offer users the ability to download any of our solitaire games and play them offline. In traditional casual downloadable space we'd lose 50-60% of the sale to distributor. In FB, we only lose 30%.
• Final example is Writer's Blox - we offered the ability for users to subscribe for additional puzzles

Lessons learned working with credits:

• Price premium items in Credits only - when offered a chance to buy something with soft currency, players do anything to avoid paying
• Set price anchors so buyers have a reference point - set initial prices and leave for a month or so, then offer a pack of those items for slightly less so they can understand it's a deal for them
• Keep content fresh - retire items, introduce new items weekly or daily, place things on sale
• Make items valuable and consumeable - address a pain point, nothing evergreen (buying it once and having it forever means they are less likely to buy again), advance gameplay

Thomas from Digital Chocolate

• Started in 2003 as mobile games developer
• Put out over 1M SKUs per year... #1 publisher on iPhone with 80 titles last year
• Moved into social gaming 18 months ago
• Grown to 15M MAU, 2.5 DAU across their FB titles
• #6 social company by DAU

Why Credits?

• Trusted partner
• Universal payment interface
• Single point of contact for payments
• Resources shifted from payments to games

Lessons Learned

• UI Flow
• Pre-educate Credits

Results

• Superior revenue (graph shows revenue before and after FB Credits implementation - goes up after implementaiton)
• Increased ARPPU

The future

• VIP Games Network - has over 8M DAU - all partners use FB Credits. Much higher ARPU and significant conversion.
• A localized purchasing experience - really important given FB's international reach.
• Deeper integration - working on FB stored value cards for holiday season.
• SaaS interoperability - Mobile, etc - FB Credits everywhere.

Back to Deborah

• Opening up FB Credits to more developers.
• Starting today, we can on-ramp 3-4x as many developers every week as we've been bringing on in the last 6 months.
• Hope to work through backlog in developer applications over the next few weeks.
• Go to developer.facebook.com/credits to apply
• Announcement #2: Increasing payment options and increasing liquidity in the system
• More than 20 new ways for people to pay for Facebook Credits through partnership with PlaySpan
• International markets very important - new payment methods will capture some of those
• Should open up more audiences for developers who work with FB Credits

• Mark Skaggs, VP of Product Development, Zynga
• Niren Hiro, CEO, Crowdstar
• Christa Quarles, CFO, Playdom
• Dean Takahashi (Moderator), Writer, VentureBeat

DEAN - Panel is about next-gen social games. We're in a post-viral Facebook world. How do you see the landscape now?

Mark

• It's opportunity. Before it was easy to have an app grow. Now is the point where skills are tested. Are you real or are you lucky?

CHRISTA

• Viral multiplier can't get much lower. Facebook is strategically bringing back some of the best viral features of days gone by. We are cautiously optimistic on the viral front. We have to be smart about cross-promotion.

NIREN

• The burden is now on the games makers to make awesome games. Games that are exciting and foster more social interaction will end up winning.

DEAN - User numbers look like they've stabilized now. What do you think is critical to staying on top?

MARK

• Quality of games and is your connection with friends relevant?

CHRISTA

• Actual social content in the games so far has been really light. We are also trying to get more relevant with the social part. There is more time spent playing games than going to movie theatres. How do we compete for people's time more broadly. How do we get audiences to come back.

NIREN

• We have to keep taking risks. As a large company, it's easy to focus on copying. In this business, we have an idea at 7am, thow it up by noon and have data by end of day. We have to stay fast-paced.

DEAN - Seems like we're in a big exit stage now. Lot of consolidation. What do you think of the different corp strategies out there?

CHRISTA

• We got acquired, so that explains our strategy. Disney was exciting because we gained access to their IP library. But you can still make a crappy game with good IP, so that's just one part of the product. We just look at IP as a way to make the marketing spend more efficient. But it's still incumbent on us to make the consumer want to come back after they've tried it once.
• The uncertainty of FB Credits was part of our reason to be acquired - could have been a rocky road.

NIREN

• Self-funded, never raised venture money. We've stayed small and focused and allowed us to make creative games fast. But as a company we are partner-friendly. We joined up on FB Credits earlier so that users would be more comfortable spending money on virtual goods. We're pretty clear that we are here for the long term. If there is a partner that will put us on a faster path to growth, we'll look at that.
• To be self-funded and get this big was high risk - reinvesting profits in talent and games. We've stayed focused, lean and mean, and there is a growth path we're on on our own.

DEAN - What do you think when you see companies moving faster because they have money?

NIREN

• A partner that accelerates Crowdstar does not need to be a big media company. Could be a small studio that has great ideas. We're very clear on what we're good at and where we need to improve.

MARK

• Our strategy is "connect the world through games". We look for whichever platforms and partners that will let us do that as fast as possible. You can see how our acquisitions fit into that strategy.

DEAN - Last 6 months for Zynga has been moving to new platforms.

MARK

• Dipping our toe into Japan. Picking up studios around the world. We need to be in more places to develop more games. More generally said, "Go where the players are".

CHRISTA

• The next big fastest-growing social network in a lot of regions is still Facebook. In India and Brazil Facebook is passing Orkut. But we need to make sure the ROI in going into that country makes sense. Need to balance ARPU and conversion rates with cost of entry into that territory. One of our games that was big in Latin America had price points that were out of whack for the US - need to create dynamic pricing structures.

DEAN - What is a next gen social game to you? I thought Civ on FB would be it.

MARK

• Civ felt very hardcore to me. Like PC hardcore, which is not the FB audience. Women 35-50 love Farmville - that doesn't match to Civ. I think about it as "what's that fast light experience they can do for 5 minutes" - that's how I target next gen social.

NIREN

• Games that require social interaction to play are the next gen. I don't think there will be one giant leap in one direction. Will be baby steps. IT Girl is about taking text-based RPGs in a new direction. Interesting thing about this business is that the users are defining the next gen, unlike the core games biz where the platform owner dictates next gen.
• FB could be a billion users in the future. That means there will likely be a variety of 25-50M user niches, rather than one big next gen marekt
• The other place to look for next gen is Japan, Korea and China. Korea is way future forward on PC platform, Japan on phone. We put products in those markets to force us to think creatively. Keeps us future proof.

CHRISTA

• Not trivial to put social wrapper on a game. We've looked at traditional gaming concepts and bringing them into FB environment and it's not a trivial thing. Figuring out a way to do that is not an easy thing to do. In City of Wonder you have a classic iso-decorator, but there is a PVP element in there. You can attack a neighboring land or you can do a trade with them or even a cultural exchange. So for women, a surprisingly large number of women play it despite this PVP side. We bought Acclaim - they have a light-weight MMO-type game. We're still trying to understand how to engage core gamers on FB.

NIREN

• Gamers on FB are partly coming from casual portals and partly from consoles. So there will be different types and monetization levels. If you look at microtransactions on a per capita basis, we are nowhere near other territories - $7/capita China, $20/capita Japan. So there is many times more growth left in the US.

DEAN - Where do you look for what's next?

MARK

• You know there are some established genres, sometimes ppl want a new style wrapped around it. We had some open field there where non-traditional gamers were looking for new experiences. Picking successes will be just as hard but there are more chances to experiment.

CHRISTA

• It is going to be iterative. Each new social game will layer on a new mechanic. Go back to boardgames - what are all the gaming mechanics when you distill them down to their essence. There aren't that many. It's about finding a concept, environment and art style that appeals to that user base. We've looked at segmentation a lot in City of Wonder.

NIREN

• Blend of recognizing user aspirations and being mindful of what worked before but making sure that the innovation pivots around the social aspect.

MARK

• At EA, our team would often look at what are the sections in the book store and apply those to games.

NIREN

• Location-based and mobile games are really the biggest area of innovation and we can look to markets like Japan for leadership on those. Eventually iPhone will come up to that level.

DEAN - FB has talked about FB Credits putting more energy in the system. What impact have you noticed?

CHRISTA

• 2-2.4% conversion rates would be awesome - 2-4% would be incredible. Card-on-file data definitely helps conversion rates. Hard to draw analogies with foreign markets... in Korea 10-15% payers may be misleading as they are more targeted users, where on FB we are broader. If a FB Credit card is everywhere on the planet, it will transform how many people pay. How smoothly we get there is the question. Is this e-commerce circa 1997? All these things may need to be solved again, but the long term possibility is exciting

NIREN

• It's inevitable. We started with Credits last Christmas. If you went to Amazon and as you were checking out you were presented with 32 different payment options, you'd think twice. If we don't pull these speed breakers out of the way it will hurt our ability to grow.

MARK

• Is it FB Credits creating that change or is that change already coming and they are the mechanism for it. iTunes used to be odd, now it's not. As more generations get used to buying online, FB Credits is an easy way to get there.

Questions

What are the barriers you faced when implenting advertising in games? How much would you pay to acquire a user?

NIREN

• Biggest barrier is audience response. Some audiences don't want to be bothered, some are OK. Repurposed ads do not work. Need to customize ad units.

CHRISTA

• Can't sell ads in the traditional way. Need to come up with creative that is in line with game's fiction. Don't want to disturb the 2% who pay and impact retention for the sake of an ad.

MARK

• Advertisers need to be educated on the space. We haven't pursued it as of yet.

As FB clamps down on viral channels, what is the approach? Going outside FB?

CHRISTA

• Advertising on Google and bringing people back to Facebook requires people to sign in, which causes a material decrease in conversion.

NIREN

• We fish where the fish are. Over time as FB's tentacles go deeper into the net, the experience will be more seamless.

DEAN - Do you guys design for whales (big purchasers)

MARK

• We look at elder gameplay and designing for them... not necessarily who spends the most.

CHRISTA

• We look at that as well. Sorority Life we recently added new geographies and reset the economics so you can start those whales on another ladder.

NIREN

• Great news about the business is that you have the data. So you can optimize the experience for each segment. But you need the community as a whole to be engaged.

DEAN - Google rumoured to be moving into competition with FB. What scenario do you envision unfolding?

MARK

• Can't comment on Google's strategy.

CHRISTA

• Time spent on FB just surpassed Google. So that's not lost on Google. It would be great to have different approaches to the social problem. Will be hard for Google as it's not in their DNA the same way it is for FB.

NIREN

• If you're winning on FB, you're invited to the party when a new entrant sets up. So those dialogs are happening. As a growth company, it's important to reserve a bit of your company for growth platforms and opportunities. We do that with Japan. We just have t make sure that if the community is viable, we should be there.

How young are your youngest spenders?

NIREN

• My 8 year old spends a lot on my account.

CHRISTA

• FB is 13 and over, so you can't be too young. Are younger players are not as good at paying because they have to ask mom and dad, so figuring out alternatives like subscriptions and working with FB to allow that occur would be good.

DEAN - What do you see as the future of the social games market?

MARK

• Social game market will have more platforms. May be a shift away from going to one place for their social game experience. Mobile games will be big.

NIREN

• Best games will win. Mobile will be much more central and so will one or two markets outside of the US or Facebook.

I missed day 1 of this conference due to client meetings, but I'm fortunate enough to catch day 2 thanks to Charles Hudson. The last time I was at a VGSummit was the inaugural one in 2007, when it was held in an auditorium at Stanford.

Track the conference on Twitter using hashtag #VGSummit.

Panel:

• Alan Chen, CEO, Perfect World Entertainment
• Jan Wergin, CTO, Bigpoint GmbH
• Daniel Kim, CEO, Nexon America
• Atul Bagga (Moderator), Senior Equity Research Analyst- Gaming, ThinkEquity

Proceedings:

ATUL

• Companies in the West have not done a good job monetizing user, vs the East.
• China's per capita spend on games is 50% higher than US.
• US is all pay-to-play, China mostly free-to-play, Korea somewhere in between.
• Lord of Rings saw 50% growth after they changed the model to a hybrid model.

JAN

• Over 150 million registered users in the Bigpoint system.
• Expanded into casual genre with Flash-based farm and zoo games recently.
• Launching browser-based 3D games this year, such as Battlestar Galactica Online. Ruined Online and Mummy Online also coming.

DANIEL

• Maplestory, 95 Million users worldwide, 60 different countries. Dungeon and Fighter online largest game in world right now - 2M PCU in China, 3.5M PCU worldwide.
• US operations services 5 games. About to go open beta for Vindictus, 3D action MMO using Source engine.

ALAN

• Since PWI launched in 2008, they've launched 4 games. Coming up is a Western-style MMO.

ATUL - Where do you see the US market going? Still seems early days?

DANIEL

• Huge space for us to grow into. In Asia we've established leadership. But here in US, the online gaming and free-to-play is still in its infancy. We've been very profitable with good revenue in the 5 years we've been in the US, but it's barely 10% of our global revenues. We expect it to be somewhere around 25-30% in the next couple years. We're seeing double digit growth year over year in this market and see it continuing.

JAN

• We opened offices here because we see huge potential in this market. In the core game market it takes $40M to develop a game, but we can spend $100-200K to see if the game is going to be a hit. We can monitor risk better. Classical subscription based model means you only get a small amount of the value of the game - that's the value of virtual goods and the free-to-play model comes in. Of course you see this in the social networks, where ppl who were never gamers are looking into this now. You can do two things in the US: you can build console games or games for the browser that are action based. Europeans are more strategic.

ALAN

• US market is dominated by console games. I just came back from Europe... where the PC market is over 70% of the overall market size. There is a merging of terminals - consoles, PCs, etc are all bleeding into each other (paraphrasing heavily here). I think this is a service vs product approach. When we sell a product we invite the market to come get our latest product. But with service we ask our customers what they want. So the design angle is very different. Customers have individual choices in a free-to-play game... they can spend their time and money in more ways.

ATUL - How big is the US in your revenue stream.

ALAN

• In Europe we expect to grow our revenue up to $20M across 4 new games next year. In 2009 we did about $20M revenue in the US, a year after launching in the US. In 2010 we will double that. Next year we aim to double that again. We are still in budgetary stage though - not final numbers.

ATUL - Are you targeting games to people who have consoles? Your games seem like they are more for those gamers.

DANIEL

• We know that most console gamers have PCs and play games there too as well. Just not a lot of high quality games online for people to play. We are successful because we provide that quality experience online. You can pay $60 for the next big console title or play Vindictus (opening today) for a lot less. We're trying to elevate quality of experience and service to this new audience that isn't used to playing games as a F2P service. Value proposition is clear: they have a low barrier to entry and they can choose to spend money later. We have seen great pickup due to this lack of a barrier to entry from a money standpoint. Most of the US is focused on console games and they are sold like packaged goods, where we see our job as service provider. A lot of these packaged goods games are summer blockbusters - they make all their money in the first week then it drops off over the next month. Most of our games are like the Simpsons - which has been running for 15 years. One of our Korean MMOs has been running for 15 years. Our retention is measured in years, not days or months. Facebook and social games have taken off here in the US and we see that as a huge boon to us - we've been teaching people about F2P and microtrans and over the last year that's become the norm thanks to Facebook. All these people are now used to purchasing virtual goods online and playing F2P games.

ATUL - What are the lessons learned when importing a franchise from another country?

ALAN

• Two fundamental challenges. In Europe there are so many local languages. In the US we can focus on one language and make it highly polished. In Europe we have double everything - double product management team, double localisation team, etc. If you want 5-10 languages, you'll need 10 teams. The other challenge is payment. Publishing a game in China for instance is tough - China won't even allow a joint venture.
• Back to console game - most of our gamers are also console gamers. Remember a survey - "Why do you choose online games?" - and the #1 response was "because I want to make friends". In console games, graphics are the #1 concern, not making friends.

JAN

• In Europe, it's really important to be local. Many countries were Google is not the #1 search engine. Payment providers... Bigpoint offers over 200 payment providers. Without them, you can't monetize those users in each local market. No matter how difficult it is, you need to do it.
• People expect browser based games to look as good as console games. Good news is that we can do that now. Unity looks really impressive. No client download, in a browser.

ATUL - Any differences between countries in terms of ARPU, conversion rates, retention, etc?

DANIEL

• Our business in China has a huge user base, but low ARPU but they make up for it with the huge number of players. Our China revenue is close to our Japan revenue but the number of users are hugely different. Japanese ARPU is typically the highest. Japan conversion rate is somewhere around 10%. Both paying rate (conversion) and ARPU are in the double digit range. Business model here will eventually change from packaged goods to F2P - we've seen it happen elsewhere.
• Localisation is not just language translation. We have a staff of 160 people - none of which are developers. They simply plan localized content for different regions. I.e. Maple Story's wedding system was very Korean originally. The team converted this to a Vegas-style wedding with Elvis as reverend. We do a lot of changes and additions to make them relevant to the local market, not just in terms of language.

ATUL - Any differences in how users in different regions buy? How long will a user stay in your game?

DANIEL

• We don't see a lot of differences between buying patterns between countries. What makes a difference though is how the game is designed. A typical retention rate for us is much higher than what you'd see in a social game. We have players that have been in our games for over 10 years.

JAN

• What's important are price points. We've played around a lot with that. We see that different cultures have different price points for virtual goods. Dark Orbit US customers tend to buy more defensive stuff for their ships first, then offensive second. In Europe it is the other way around.
• One of the reasons Europe is so interesting for US customers is that a lot of people don't have the money to buy high end PCs or consoles. But they still want to play games, so they will go to internet cafes to do so. Hence the need for browser based games. Germany and France are strong countries for browser-based games, but Turkey is also big (due to internet cafes).

ALAN

• Percentage of paying users in the US is about the same as it is in China, but the ARPU is much different. If your concurrent users in China are less than 200K, the game is considered a failure. So China's market is much larger. So there's a lot of potential if you can grow your ARPU.

JAN

• We have the 10% rule: 10% of your user base will account for 80% of your revenues.

DANIEL

• But there is huge value in the remaining 90% of the users as they provide as much content as we provide. The other players are also content for people to interact with. We look at how much influence players have - guild leader, influencer, etc - versus just looking at whether they pay or not. That's one of the reasons we're switching from Nexon.net to Blockparty.com starting early spring 2011 because we are trying to provide more ways for users to connect outside of our game clients.

ATUL - Do core gamers want to know each other's names? See Blizzard.net anonymity issues.

DANIEL

• We've done a lot of research. Facebook is for real life friends, but I don't necessarily want my real life friends to know my gaming identity. Blockparty is trying to provide a forum for our users to continue their in-game identities in the way they want. Blockparty will be able to broadcast your gaming achievements to other social networks, but that is opt-in. The default is to preserve your gaming identity, apart from your real life identity.

ATUL - Accessibility barriers are lower in browser-based than console games. Do you see more browser-based games vs download games?

DANIEL

• PC cafes provide amazing marketing and a great social hub. We don't have them here in the US. Here, most people play by themselves in homes or offices. Harder to get the same virality. The closest thing we have in the US is Facebook as a platform for gaming. For us, we've tried to stay focused on download games that are high quality experiences. We are planning to expand our portfolio to more browser-based games. Currently, all our games are coming from Korea and are proven worldwide hits, but in order to be successful in US we have to make games here. We are looking for co-production (i.e. we fund). Last spring we had 126 entries for our call for developers. We will shortly announce a couple of the winners from that and have already started working on a couple of them.

JAN

• Something we've seen on TV we'll happen in gaming. Channel hopping is becoming game hopping. When you just have to punch in a URL, it makes it very easy to switch between games. This speaks to the rise of pure browser-based gaming in the US.

ALAN

• We found there is no universal formula. Some prefer download games for their quality, others prefer browser based. In US, ppl can download their client in 30-120 minutes. In China, the average download takes 10 hours. But people don't have complaints. They turn it on before they go to bed and can enjoy it in the morning. It really depends on who your user is.

QUESTIONS

How early in production cycle do you recommend doing discovery in China if you're working on a Western IP? When should I start my market research?

ALAN

• You need to do it as soon as you can. We find a huge difference between US and China. US gamers like to enjoy the process of gameplay. In China, most of the players are interested in how to level up quickly and be powerful. That's why they spend a lot of money to buy functional items. In order to be globally successful, my recommendation is to build two versions of the game.

How do you acquire massive user numbers on social networks? Do you plan to spend a lot of marketing dollars?

JAN

• If you want to be successful on Facebook, you need to spend at least $1M on marketing to get into top 5-7 games. Otherwise you won't be successful. We try to get on other networks - Scy-Fy, MSN, etc.

DANIEL

• Trick for us has been word of mouth. 70% of our users come from recommendation from other players. We've used Facebook as a way to continue our relationship with our userbase. We've already reached 500K fans on Facebook over the last 6 months since we've started Fan pages on FB. Been interesting, but the majority of our user acquisition has come from users. We spend money strategically where we can track our ROI all the way through to acquisition of paying/influential users. We value our users as a social node, not just a paying user. We've experienced with broad marketing (i.e. TV) but they are harder to justify - while it increases brand awareness, it doesn't translate to targeted users.

What are your plans with HTML5?

DANIEL

• Blockparty.com will be standard compliant with current standards and upcoming stuff like HTML5. There are features going into HTML5 that will enable a lot of interesting gaming elements. But we have no specific products around HTML5.

Here is what I'm up to:

* Speaking at a roundtable on third party development issues at the Gamesauce event on Monday

* Organizing a partnering event for a provincial interactive agency later in the week (pairing up developers in the social/casual/iPhone sectors with leaders in those sectors)

* Doing business development work for one of my clients (a large consumer electronics company) - scouting out talented games content partners

* Producing a post-show report for a multinational, multiplatform games client

* Taking any meetings that come my way!

Please drop me a line using the contact form on my consulting site if you'd like to get together during Casual Connect!

Minimum Viable Product is a product development and release methodology pioneered by Eric Ries. Its main tenet is the development and early release of only the core of your product, allowing the marketplace to vet and feedback on its pros and cons. While the developer still has a roadmap of their own, risk is mitigated and the product offering more tightly focused when the core is released early and iterated upon often, in response to real customer feedback.

In my presentation, I'll go into why MVP has (or should) become your standard operating procedure for launching new products, especially in the online space. Hope to see you there!

The call for papers for GDC Europe closes this Friday, April 23 at 11:59 p.m. ET.

Lectures and panel proposals are being solicited from the international game developer community for all five of this year's GDC Europe conference tracks, which include Business & Management, Game Design, Production, Technology, and Visual Arts.

To read more about the conference topics and the submission guidelines please visit: http://gdceurope.com/conference/c4p/index.html.

The event, taking place Monday through Wednesday August 16-18, 2010 at the Cologne Congress Center East in Cologne, Germany, will once again run alongside gamescom to present the leading game industry event for developers, consumers, publishers and trade professionals. GDC Europe will offer content to address the development community at a central location in the heart of Europe and command the critical mass of the European games sector.

For more information on GDC Europe visit: www.gdceurope.com

Who is going - or considering going - to GDC Europe? I would love to see some of you there! Can't think of a better excuse to go than to submit a panel or lecture... do it!

Adrian

Monetizing Your Game Outside of Sponsorship

• Moderator: Andy Moore, Andy Moore Games
• Colin Northway, Fantastic Contraption
• Daniel James, Three Rings
• Sian Yue Tan, Rocketbirds
• William Stallwood, Cipher Prime

Daniel (when introducing himself): Whirled is at $300K revenue, $5M invested. Abject failure.

Andy: How do you define success?

William: Everyone says money. But for us, it was to shift from doing rich media apps to doing games, something we love. It had to be financially feasible. Philly cost of living is lower, so it was a bit easier. Success is to be able to do what we're doing with a year's worth of income in the bank, at least.

Sian: Getting this game out on a platform. That's our end goal. We like Flash and its ease of distribution. Helps out for pitching it to various parties who might be interested. We are fairly new and the game only came out recently, so we are still experimenting with different distribution and selling systems.

Daniel: It's a Maslow's Hierarchy question. Base level is food in our bellies. Beyond that, we would have all made different career choices if we were all motivated by money - aside from those working for Zynga (ooh zinger! as I sit beside a Zynga Studio GM). Farmville has tremendous culture meaning, 70M ppl playing 4 or 5 times a day - that's a tremendous success. For us, our aspirations are not that high. We are not chasing Zynga. We are making FB games and success both economically and opportunity cost wise, if we can get 1M to try a game, that's amazing. If we can get 100-200K of those ppl to stick with it, then that's a level of success we can justify moving forward on. We can be sure that some of those ppl had an enriching experience. I got an email from a girl who had met her boyfriend on Puzzle Pirates and was tickled about that. More and more we'll see life-changing interactions via games.

Colin: I want to do something I like and I don't want a boss. That ties into monetizing on a portal or without a portal, because in some degree the portal sets the rule. They decide what success means, they want a specific game, you lose a lot of control if you start making games to someone else's tune. One of the advantages of going off the beaten path is that you can do what you want without worrying about what others think.

William: We took a different approach. We had some good deals we could have taken from portals. But having our own destination site allowed us to make the experience we wanted to make. But not we can tailor our environment to exactly what we want. We can see everything about our game. We can better gauge the fun level. We wouldn't be able to do that if we were on a portal due to the saving of the information (i.e. who owns the customer data). We got viral very early on - we went down on Thanksgiving with 80K hits, we had no donation or pre-order button - this was a first time experience for us. We missed the train - they loved it, but they found something new and interesting. We put a mailing list sign up there and got 17K addresses, but we missed the monetization window. It's important that when success happens, you're set up to handle it. If you're really going to take a big risk to make a longer title, then make sure you've got the ability to monetize it when it releases. We missed that and I'd hate for others to miss it.

Andy: Attaining critical mass is the key challenge to selling a game. Did you do anything specific to create that?

William: Our first press release went to Jayisgames.com and that was huge traffic. Getting to know all these people and establishing these press contacts was really important. I still write individual emails to our press list rather than blasting our releases. They follow us and evangelize us.

Colin: Press is a good thing when you have your own site vs being on a portal. There's not mixup between you and portal - you get all the benefit. The press says the game is by you, those customers know who you are and of value to you later.

William: Big advantage to having a small company. When our game first came out, we really sold ourselves, not the game. All about our backgrounds and driving people to us because of our personal story. Press people want those personal stories.

Sian: When we rolled out, we had a major deadline, we wanted to hit the IGF deadline and go live that day. We put the final touches on that game and made sure it worked up to that day. In hindsight, we should have press released and made it known as soon as our game was out. But we didn't because we wanted to soft launch and debug. So we took a low key approach so we had time to fix problems. But then the press got a hold of it and we were overwhelmed by the response. It helped a lot once the nominations came out that we were on that list. Now we're discussing getting it onto the distribution networks and selling it as a downloadable.

Andy: Fantastic Contraption had no press releases...

Colin: This is the big difference between going with the portal and doing it yourself. When doing it yourself, your biggest challenge is getting people to your game. Internet is the best... iPhone is more challenging. Content is solved on the internet so you can be found in a myriad of ways. Jayisgames and Stumbleupon sent me a ton of traffic. Fantastic Contraption's main mode of spreading is by making things... so when they save a creation, they can send it to their friends via a simple URL. So they can send that item to all their friends, which drives people back to your site. It's a genuine notion of people sharing what they're creating. Now people are thinking about more creative ways to drive traffic back to their site. When you're doing game design, if you are prototyping something that people want to share, then make sure you expand on that.

Andy: How did you get that early success with Puzzle Pirates?

Daniel: Puzzle Pirates was 2003, 2004, 2005 - so ancient history. Tough to draw current lessons from. Penny Arcade gave us a big bump and we still have paying subs from that, 5 years later. We are systemically crap at marketing our stuff. We are good at making them, bad at marketing them. We have done some rev share agreements with PopCap and Shockwave and Miniclip. Miniclip continues to promote us. Those deals were hard to do and have become harder to do. You'd think it would be easy, but most portals have a lot of sensitivity about the strategic value of keeping their users on their websites. We would happily use someone else's billing platform, but most of them don't have a billing platform that would support Puzzle Pirates subs or microtrans. Even Steam doesn't support free to play.

Andy: Is there anything looking back that you wish went differently? Mistakes?

William: We really didn't have a lot of thoughts about monetization. Looking back, would we have done better if we had wrapped the game and sold the exe? Hard to know. We will be doing our next game through Steam. Problem is when talking to peers about strategies is that they're all different games - tough to draw conclusions. Another thing about a destination site is that you're taking their money and they have no idea who you are. There is a lot you have to do there in terms of customer support. You can go another route and not do the destination site thing. More value in it though.. just a lot more work. Not as simple as just making a game.

Colin: You have to wear an incredible number of hats.

Andy: Choosing between subscription and flat fee can make or break your game. Fantastic Contraption was one of the first games to ask for money. How did you set the price?

Colin: Price point is tough. I don't have an answer for that. I should have probably fiddled more with price points and pay walls. You should definitely take advantage of that when you have control over it. If things don't go perfectly at launch, you can still change things. I should have done more of that on FC, but didn't. I figured it was half as good as World of Goo so I charged half as much.

Sian: Rocketbirds sold for $10. It's somewhere between $5-$15 and that seemed sort of right. We thought it was a good price to pay for our game. We didn't count on the game selling worldwide. $10 US may not work in other territories. Perhaps we are pricing it too cheap? $15 might work better - it's a full blown game, just happens to be in Flash. Once you choose a price you shouldn't mess with it, is my belief.

Daniel: Tons of research on changing prices. People will complain, but it's a very good idea to change prices. Steam drops some prices to $2 over Christmas - they make lots of money. Definitely the evidence is that you should experiment with price. The subtext of what Colin said about pricing is that we pull the number out of our butts. With microtrans in Puzzle Pirates we made up the initial prices due to lack of reference points at the time. Making it up is a reasonable approach, but not testing them is not reasonable. Be diligent about testing your hypotheses. As someone who is inclined to take a product-led approach - execute your genius idea and get rich - but if you are not of this approach, if you would prefer to reach a large audience, make money, have commercial success, then you really want to find out as soon as possible. So test your hypotheses as soon as you can. We didn't do this with Whirled. We had all these hypotheses re: UGC and rev sharing that didn't come true. We could have tested these for an order of magnitude less money than we wound up spending developing it. Lots of ways we could have found out if users would use our tools, but we didn't. Recently we shifted our entire product development to lean development - Eric Ries, minimum viable product (ed note: definitely check this out - amazed how many people still don't know about this). Execute, iterate, and change based on customer feedback.

William: We did come up with an answer to pricing. We took donations a week after launch and made about $10K - but don't get false hope because that's an abnormally high number. We found our price point by looking at the average donation. The way you bracket donations dictates the average donation. We played around with this and raised our average donation ($3) and eventually got people who would on occasion donate $100. At this point, there still was no game. We were discovering what people would pay. Tim Ferriss recommends the pre-order fake sales page to capture user purchase intent before the product is ever developed (ed note: this is another form of MVP - minimum viable product).

Daniel: You can even have a form that lets people state what they would donate, but then cut them off before they give you money and say it's not available just yet.

Andy: SIan, did you do any testing on pricing?

Sian: Um, no I didn't. I pulled it out of my ass.

Andy: What about advertising?

Colin: I've had no luck either selling ads or advertising the game itself. Not really sure why... well I sort of know. It's hard for you if you own your own site to get the dollars... you don't have enough traffic to get decent CPMs and can't attract attention. If you go your own way and don't use a portal, it's a lot more work. It sure is, but there are a lot more advantages. Also sometimes your game may not work on a portal. Some people have tried to make their own portal, but most have failed. Hopefully you are making a game you love. Some people feel like the game they're making chose them, rather than the other way around. If that's the case, you should explore all your options and do testing before you spend a year in development. Be really creative in what you're doing and don't be afraid to try things that others are too afraid to try.

Daniel: I like eating (in reference to needing to earn money). Returning to ads... we've spent lots of ads over the years. The rev share deals are tough to get done but work well. We have not had success with Google but I know people who have. IMVU is the most obvious VW with ubiquitous ads. We've been doing a lot with FB ads lately. We've driven some Puzzle Pirates traffic that way. You can buy by CPC and target demographics... certain age, town, interest, etc. Very powerful ad platform. All done online - no calls to greasy salespeople. We actually tested 6 concepts by doing FB ads and landing pages and looking at click through rates and landing page conversions (pages said "coming soon"). Winning concept from all that blew away all the others by five-fold - so now we are making that game with the confidence that it is the right concept. Start by driving a small amount of traffic to your site each day - say $50 - vary your offering and measure stickiness. You don't need to have a launch event. There's usually an initial spike then a quick trailoff - that's not a sustainable system for a product like ours. It's all about long-term sustainability.

William: Actually monetizing ads on your site is pretty impossible. Building a system to target someone demographically, etc is very tough. Portals have an advantage here. This is what portals do, so if you have an ad-supported game, portals are probably your best bet. You can put the Google ads on your site, but to give you an idea of what you can make we made $1000/month initially when we went viral, but then Google found out we were a game dev and they cut us off. They didn't want that kind of traffic. It wasn't a viable option for us. If you're bigger than a five person company, then go for it.

Daniel: Lots of other ad networks like Mochi - I am surprised it's not more viable.

William: You can get great targeting with Google ads and they actually improve your SEO score so it helps your pagerank. Worth doing - you can run different sets of ads to see if the next year of your life is worth spending on this game.

Andy: If everything works out how you want, what do you think the industry will look like?

Colin: I would love to see FB act like as a massive ramp to get more and more people playing games.

Daniel: FB is interesting, but the thing to compare and contrast is the situation with casual portals and any website that is curated and managed by ppl who believe they understand their audience is a walled garden. When an audience is walled it is a less vibrant and free market than it would be otherwise. What excites me is the trend toward transparent, open markets where players can discover games for themselves via genuine word of mouth. Sometimes on a good day I feel like we're on a fast track toward greater transparency. But on down days I feel like things like some of FB's recent moves make it feel more like a curated platform than a wild west, free market.

Sian: I hope cloud gaming becomes more prevalent. Rocketbirds uses cloud servers to stream the data as quickly as possible. I think it's a great way to play anywhere. I hope people will continue to do that.

William: I want to see the day when Flash games don't get called Flash games anymore. (applause from crowd) I want to see more time spent on the game and less time spent on A/B testing and marketing. I want it to be OK just to have a game and not have it need to be called a Flash game.

Question: Maslow's Hierarchy of needs has self-actualization at its top... despite not having reliability of steady job, has it been worth it?

Colin: Hell yeah. Easily yes. I do think that having an incredibly boring day job is a fantastic way to make a great game.

Daniel: I didn't get paid last year, but it's still worth it.

Sian: Same here. The reward is sharing the game with people.

Question: What is it that you're going to do on this next project that will make it that much more successful?

William: We have a new title coming out soon. We're going with Steam. We're wrapping it so it doesn't look like Flash. We're thinking of using portals as a marketing ploy. We will have a free Flash version of the game to draw people to our site. Premium version sold through our site and Steam.

Colin: I am full speed ahead on using Flash. I want to use social interaction to get people to tell others about the game.

Daniel: We continue to do a lot of things - probably too many things. We have an MMO that will launch this year, possibly on Steam. We are very focused on the distribution opportunities. We are also doing a lot of FB stuff - we are gung-ho on that as a platform, but there a big question marks on FB. Interesting the psychology of download - why will ppl gladly hand over money for something they install vs a browser game?

Sian: We've noticed that performance is always an issue. Our action game is of course reliant on performance. We'd like to lower the minspec and see how low we can go.

Question: Have you thought about taking the experience to mobile? Checking leaderboards while in line at Starbucks, etc? Then go home and play on browser?

Colin: I love the idea. Playing the game online as well as playing a component of it on your phone. We have these advantages that console devs don't have... we have the net and can take full advantage of it. We can push it a lot farther.

Daniel: We've not done a lot of mobile stuff. I am a big iPhone fan, but I am not a fan of the discovery process in the App Store - it's a bit of a crapshoot. If you have a large established web property then you can drive mobile adoption. But we're not quite big enough to do that.

Sian: One of the other benefits from us driving down our minspec is being able to deploy on mobile, console, etc.

William: I think it's awesome, so if someone is going to do it then great. Having one game that you access in different ways from different platorms.

Colin: How about a pirate game where you build ships and fight battles on your iPhone? (directed at Daniel)

Daniel: I'll test that. (snickers)

Question: Which wrapper, William?

William: Nprojector.

Question: What about scalability issues - how did you overcome that?

Sian: We use Amazon's cloud service. Easy to use. Within 2 days you have your game on their server. Our game is about 100mb as a full download and you don't want to be hosting that yourself and have it shut down when you're successful.

Daniel: We use Amazon for all our new stuff as well. Re: how to anticipate traffic volume, ppl usually guess too high. World of Goo was run off of one box for a long time. Puzzle Pirates gets 2000 concurrent players on a single piece of hardware. So you have some breathing room. Unless you're doing some crazy big launch event (which I suggest you don't), then you've got a chance to work out the kinks.

William: If your server goes down its almost a good PR event sometimes. But be prepared to get it back up quickly if you need to. Our server went down and we went to dinner for two hours before coming back to get it online.

• Moderator: Sana Choudray, Traffichoney
• Dan Fiden, Playfish
• David Stewart, Playdom
• Gavin Barrett, Crowdstar
• Mark Skaggs, Zynga

Sana: What are four words that are the keys to successful social games?

Dan: Social - provide a context for meaningful interaction, Relatable, pick themes and mechanics that are understandable and aspirational; Rewarding, emotionally rewarding and socially, reinforcement schedules to keep players engaged, Emergent gameplay, easy to pick up but emergent complexity and depth

David: Appealing- people have to be attracted to the game and able to acquire new users easily, making something that appeals to a casual user is critical; Addictive - once you've acquired user, you need to retain them - important to make a game that makes users come back; Social - that's the secret sauce about Facebook and what makes the space different - need to have users want to share what they're doing with their friends; Fun - if something isn't fun, it won't monetize...

Gavin: Monetizable - if it's not fun, you won't make money out of it; Quality - look at games in the market and know the benchmarks for playability, aesthetic quality, etc

Mark: Mass Market - if it doesn't appeal to enough ppl, it won't be as successful as you want; Invest - ppl need to be excited about investing their time in it, Express - needs to be a game that ppl want to express themselves in; Relationships - allow ppl to create new relationships or nurture existing relationships

Sana: How well do you think some of the casual game devs are doing with moving to Facebook/social games?

Dan: Depends on what you're objectives are, but Bejeweled Blitz is successful. Social mechanic makes the core Bejeweled mechanic even more fun than it used to be. So if that's your basis for success, they've been successful. As a player, I enjoy it. It's created meaningful social interactions for me.

Gavin: Lot of ppl knock on your door with IP and think they can create a great social game and make lots of money. To date, there's been limited use of existing brands in the space. Bejeweled is probably the best example.

Sana: Why do you think those casual game companies don't experience the same success on FB?

Mark: Guild of Heroes was a Diablo 2 clone - I joined the company as it was finishing up. The question was how is it social - and it wasn't. The team thinking was that they'd add the social afterward. And it doesn't work. Needs to built from ground up.

David: I agree. So many examples of that. Lots of examples of games on FB that would be big if they weren't on FB... FB games need to be social from the ground up. Also, lots of the users in the social gaming space are REALLY casual, so Bejeweled did it right with short play sessions, accessibility. Lastly, understanding all the API tie-ins on each platform - i.e. you should know what a user-to-user wall feed is vs a general feed is. Really important to understand these details.

David: Notifications have gone away. FB is moving away from one-to-many notifications and toward more deliberate, one-to-one notifications. User to User, App to User.

Dan: This move by FB has not had an effect on our games so far - it's been net neutral. If you're giving users a meaningful experience, they will go the distance to communicate. Cutting out the spammy communications has not affected us.

Gavin: I think this is a pretty profound change. Makes it increasingly difficult for other companies to reach the same success we have. Will be very difficult for other companies to get where we have. Changes way you're going to distribute your game. For business people, it's something they need to look at closely to see how they're going to grow their game. You're going to have to spend more money to launch something.

Sana: What is the quality that a Crowdstar or another company would look for to choose to cross-promote, etc.

Dan: What it isn't is amazing incredibly high polish art or sound. It's a polished game experience... getting into game easily and understanding objectives. Production values are part of it, but it's easy to mispend focus on things that aren't super important to the end consumer. Make sure that you're thinking about your end user.

David: Things we look for in our own games are what we look for in others. We're interested in partnerships and acquisitions. With new environment, it's becoming harder and harder to expect to plop something into FB and experience explosive viral growth.

Mark: The platform and industry is always going to change. You will always need to evolve. Make sure your game is a game that ppl will want to come back to play. We can send players your way, but if you can't keep them it's pointless.

Sana: Are Zynga and Playfish looking for developer partnerships?

Dan: Yes.

Mark: We tend to acquire teams.

Gavin: Part of my job is to find outsource partners in Europe and there wasn't any. If you can do it right in this space, there are great opps for partner services or be acquired.

Sana: What should we expect a year from now?

Dan: Over the next 12 months it will get harder... there will be consolidation. More branded content over the next 12-24 months.

David: Production values and player expectations will go up. Not as easy for one person's 6-week game to take off. Cost of entry will increase.

Gavin: Interested to see how EA gets involved with Playfish. Have you made an announcement about Madden (to Dan)?

Dan: No.

Gavin: Oops. I read it on the internet.

Dan: Then it's probably true.

Mark: Technical and gameplay production value arms race will continue. But with a new vector: social: Everyone will try to one up each other there. NYT was talking about FB Connect and how everyone wants to take their experience with them outside of the ecosystem.

Sana: What are the key metrics you look at for your games? We all know DAU, ARPU, etc.

Mark: We look at DAU, MAUs, retention. We try to get retention above 30%. If you have a game where 5 out of 10 ppl come back every day, then you have a good game.

Gavin: Revenue per DAU is a great one too. Games team should be looking every day at actions that can drive revenue and retention.

Sana: Most of you have two currencies, right?

David: We have a couple PHDs helpding to manage our economies.

Gavin: I heard one of the Playfish guys saying they deal with a billion pieces of data a day(?).

Mark: Zynga collects 5TB of data per day and we have a team that turns that into reports we can track.

David: Very different from any other industry I've seen. I came from Google and YouTube and thought those were data driven companies, but this is way beyond that. You can make valuable decisions within minutes because everyone is logged in all the time and the quality of the info is so much higher than worrying about cookies, etc.

Question: Do we have benchmarks or targets for revenues for active users?

Gavin: I direct you to Justin Smith - Google him - he has a lot of good benchmarks.

David: How leaky is your bucket... retention is big for us. Need to look at how the revenue piece fits into virality and retention.

Mark: Make sure expenses don't exceed revenues... user acquisition costs don't exceed lifetime revenue per player, etc.

Sana: What are the different user acquisition methods?

Mark: Ads, fan pages, forums, podcasts, recommendations from friends (these work best). Word of mouth always works best.

David: Totally agree with that. As we're all growing, cross promotion is really important. Not just friends to friends or word of mouth, but if you can build up a trusted brand, then people want to try the next game you put out.

Sana: Is community marketing important to you guys?

Gavin: Support of your community and the interaction with them is the most important thing you can do. They need to feel that you're there and listening. You need to find a way to feed what you're getting from your community back into the game.

David: We have different levels of community marketing. We have fan pages, blogs for more hardcore users, and forums are the deepest - for a smaller number of really dedicated users.

Dan: Managing your community is really curating your space. All of it goes toward getting players to the point where they will promote your game for you.

Question: What do you guys think of the FB currency platform?

Gavin: Positive thing. It's a trusted brand. The amount of ppl who actually make purchases in our games is quite low. We want to build up that number. So if FB currency increases that number, then great. If it gets more ppl used to spending money on FB, awesome.

David: We've been working with FB a lot as well and it is already showing signs of reducing friction in payment, so it's promising. One of the challenges all devs are working on is trying to figure out how to fit it into the game while having the same freedom we did in the past (in terms of seeding premium currency, for example).

Mark: My sense is FB is really working hard to take care of their ecosystem. If you have your own currency, you can give it away. But with someone else's you can't. However it plays out, I think FB will get it right as they know the value of developers.

Question: What is the minimum bar for success?

Mark: 5M DAU

David: Don't have one.

Dan: It varies. Metrics are important, but we also want to accomplish something creatively.

Question: If games come out today, what chance for success do they have?

David: If you're really sure you have a hit, do you have the resources or partnerships in place to make it a success.

Gavin: The ladder is going away... getting harder to succeed.

Mark: If you copy, you're doing what everyone has done before. Innovate and you might have a chance to be successful.

Question: Returns for investors... do you think you are providing good returns?

YES ALL AROUND, of course.

Question: Aren't these games just sophisticated slot machines?

Mark: Farmville brings families together. Moms play with their 4 year olds, etc.

Sana: Are a lot of people opting in to giving you their emails on FB?

Dan: Yes... we're just starting to use it, but if you have a positive relationship with your end user, then it can be great.

David: We're getting high engagement. It's been very successful.

Mark: Email, used right, opens new possibilities for interacting with players. We don't have to worry about feed phrasing or whether Facebook likes it - you can communicate directly with players.

Sana: What is the ARPU across all your games.

NO ONE ANSWERS, of course.

Mark: Look it up on the web - lots of what's out there is accurate.

Sana: Retention rates across games, what are they?

Gavin: Available on the web, but 30% is a good benchmark.

David: We track 1-day, 2-day, 3-day, 7-day retention rates.

Sana: Percentage of time spend on new IP versus optimizing old?

David: Playdom was 60 ppl when I joined in July, but now we're 300. So we're really focused on new games now.

Gavin: It's all about innovation.

Mark: I spend 100% of my time on new IP. I was trying to calculate this across Zynga and I suspect it's about 30% spend on new IP.

Dan: Same at Playfish. Teams grow at launch, of course.

Mark: Real work starts after launch. Can't discount the innovation that happens after launch.

David: Our teams grow when a game goes live - we don't pull away from it.

In the past, I've attended GDC as a speaker, delivering a presentation on Free-To-Play games to 400 attendees, or as press, covering the conference for this blog.

But most often I attend GDC and other conferences as a developer and game consultant, meeting up with clients of the past, present and future. If you are looking for design, production or strategy consultation to get a game-related product to market - and you're attending GDC - contact me and we'll setup a time to meet.

I'm looking forward to making new acquaintances and reconnecting with my colleagues from gaming hubs throughout the world.

See you at GDC,

Adrian