At the Inside Social Apps conference in San Francisco last week, a panel was held on whether Facebook, Apple, or Google holds the most opportunity in 2012. Industry leaders agreed that Facebook is still going strong, though not without some issues. Apple is the leading platform for mobile development, and Google's Android is coming up fast, while Google+ seems likely to become more important in the future even though it's only about 10% of Facebook's size right now.
Not surprisingly, much of the discussion centered around Facebook, due to the nature of the conference. There still seems to be plenty of life left in Facebook, even after several years of astounding growth. Jens Begemann, founder and CEO of leading European social games developer Wooga said, “We are very happy with the growth we see on Facebook. Our four largest games had their all time highs last week, and some of them are two years old.” According to Begemann, Wooga has 40 million monthly average users (MAU), about three times the number they had last year. (That may seem like a lot, but remember Zynga has in the neighborhood of 250 million MAU.) Most of Wooga's growth is organic, according to Begemann. He breaks down the source of new users as 5% from advertising, 55% cross-marketing from their own games, and 40% viral. As a consequence, they spend little on marketing, relying instead on the viral marketing power of Facebook and their own considerable user base.
Other participants, while still seeing Facebook as their major source of revenue, had some qualms, particularly when the subject of Facebook Credits was raised. With only two quarters of Facebook Credits in existence, some still look fondly back to the days when Facebook didn't take 30% of every in-game transaction. Kevin Chou, CEO and Cofounder of Kabam said they are “still very excited about Facebook.” When asked if Facebook Credits have impacted his business, Chou was straightforward. Kabam thought conversions would go up by 15% to 20%, but as they look at it now “I think Facebook Credits have probably helped our growth rate by 5% to 10%, which means we're taking a 20% net tax.” In other words, Facebook Credits have cost Kabam some 20% of their revenue, as he sees it.
For Funzio, “Facebook Credits have been a wash,” according to Anil Dharni, President and COO. “The percentage of users that is paying is increasing, but the total volume is flat.”
Begemann had no complaints about Facebook, and scolded other participants who were complaining about the cost of Facebook Credits. “You should appreciate more that the Facebook platform is completely free. I've never heard anyone complain about Apple's 30% share. Only if you're successful do you give 30% to Facebook.”
The panel turned to discussion of mobile platforms, and how social games were making the transition. John Spinale, SVP of social games for Disney Interactive, noted that Playdom's social and mobile games are colliding. “We started off with two very separate efforts that are starting to meet in the middle,” Spinale said. “People have more devices in their hands these days that don't have keyboards than do. We're making sure our existing social games extend out to mobile.” Spinale was definite about mobile platform choices for development. “Largely that means iOS, but we're seeing incredible revenue growth on Android.”
All the panelists agreed that iOS monetizes better than Android right now, but that Android is an important platform for the future even though it's harder to develop for, due to the fragmentation of the hardware and the operating system.
Asked about future development platforms, the panelists agreed that HTML 5 was going to be important, but that it would be years before it's a major platform. Bergemann was clear: “HTML 5 is not as good as native development.” He pegs 2015 as the year HTML 5 becomes the platform of choice, though others felt that 2014 or even 2013 was possible depending on the progress of tools.
