Can Asia Take the Lead in the Next Generation of Social Games?
About the Author: Sangeet Paul Choudary writes regularly on strategies for online markets, and works closely with startups in these spaces in India, Singapore, and the US. You can follow him on Twitter. A version of this article was previously posted on Sangeet’s blog, platformed.info.
Zynga’s (NASDAQ:ZNGA) recent reversal of fortunes brought up several questions about the social gaming and virtual goods model. The company’s growth is so closely linked to Facebook (NASQAQ:FB) that it is often indistinguishable which of the two was riding on the other’s growth. In any case, Zynga was the first application to leverage Facebook as a marketing platform at such a large scale and with such success. In doing so, it also heralded a wave of social gaming that shook traditional gaming companies into rethinking their offerings.
Zynga’s recent fall has simultaneously exposed the chinks in its strategy (which was leveraged by other players) and highlighted a growing trend among similar players in the social gaming space who are running into similar problems.
Over-reliance on a foreign user acquisition engine
Social gaming is a great example of user acquisition based not on relevance to target users, but on repeated incentives to current users to send invites to new users. There are two interesting points about social gaming in its current state:
1. Viral acquisition: Social games rely heavily on virality. This is often baked into the game mechanics. Users can acquire time (faster leveling up) or resources in the game by inviting their friends. The entire game is built around users calling other users in. This virality is NOT word of mouth; it has nothing to do with a positive experience that users may have had on the game.
2. Cross-promotion: Social games rely heavily on hits and cross-sell. Whenever Zynga puts out a new game out, it acquires users from existing games (cross-sell). However, this has a lot to do with momentum. If a game falls through in between, the audience carry-over suffers. In general, social gaming companies maximize revenues by making users play more games, thereby creating more monetization opportunities.
The two factors above imply that social gaming, unlike every other form of gaming, can scale well only on an underlying user-acquisition platform. Facebook, of course, was perfect as a user acquisition platform. The problem, though, was that this made Zynga and others over-reliant on the Facebook, and hence, over-exposed their business to any policy changes that limited the use of the platform.
Piggybacking on another network
Zynga and Facebook, not best friends anymore
Zynga’s growth strategy was piggybacking on Facebook’s growth. Networked businesses often ride the success of another network. Paypal rode eBay’s growth and YouTube was helped by MySpace’s growth early on. The key driver for success in piggybacking on another network’s growth is the ability of the overlying network to add value to users of the underlying network. Paypal provided eBay users a method for instant payment. Youtube provided Myspace (and later Facebook) users a way to easily share videos.
ZyngaとFacebookは、もはや大親友ではない。
Zyngaの成長戦略はFacebookの成長に便乗することだった。ネットワーク化されたビジネスは、他のネットワークの成功に相乗りすることが多い。PaypalはeBayの成長に相乗りし、YouTubeは初期のMySpaceの成長を助けた。他のネットワークの成長に便乗して成功するための重要な推進力は、基本的なネットワークのユーザーに価値を付加する上位ネットワークの能力である。PaypalはeBayユーザーにインスタント決済の手段を提供した。YoutubeはMyspace(と後にFacebook)のユーザーにビデオを簡単に共有する手段を提供した。
ZyngaとFacebookはもやは親友ではない。
Zyngaの成長戦略はFacebookの成長に乗りかかることであった。ネットワークビジネスは他のネットワークの成功に寄りかかることが多い。PaypalはeBayの成長に、YouTubeはMySpaceの成長に乗りかかって成長した。他のネットワークの成長に乗っかって、成功するためのカギとなるドライバーは、その基礎にあるネットワークが、ユーザーへ価値をもたらすことができるかどうか、である。PaypalはeBayユーザーに瞬時に支払いをできる方法を提供した。YoutubeはMyspace(と後のFacebook）のユーザーにビデオを簡単にシェアできる方法を提供したのだ。
The problem with some of the social gaming companies piggybacking on Facebook, though, was that the many invites sent to users actually depleted value for users on Facebook rather than enhance it.
They did add value to a certain group of users otherwise we would never have had this segment of 50-something women petting puppies on the internet. But in doing so, they spammed another whole set of users, repeatedly sending irrelevant invites.
Facebook itself, over time, has taken progressively greater measures to curb the level of spam on its network. Zynga obviously gained a lot of traction because it was among the first to show up at the party. The restrictions started coming into play only later. And with the restrictions, Facebook has become sub-optimal for user acquisition of this sort.
「外国のユーザー獲得エンジンへの過度な依存」を「外部のユーザー獲得エンジンへの過度な依存」に修正します。よろしくお願いします。
いつも翻訳ありがとうございます。了解しました。引き続きよろしくお願いします。