If the goal of James Brightman’s interview with Denis Dyack was to stir the pot last week, mission accomplished. I’m getting a bit tired of the disdain that social gaming companies receive from “traditional” game companies like Silicon Knights, particularly when the opinions spouted stem from speculation. So let’s infuse the discussion with some facts.
First, a disclaimer. No Facebook game will ever compete with a core game like Metal Gear Solid in terms of gameplay or graphics. But you’d better believe that a greater number of social game studios will achieve profitability faster than “traditional” game publishers could ever hope to. The proof is in the numbers behind the valuations.
Will Harbin, shown here clearly playing King to Dyack's 'Knights'
Sure, $10 billion may seem like a crazy valuation for Zynga – but look at their player stats: CityVille hit 100 million monthly players, eclipsing FarmVille, which previously held the record with over 80 million. And it’s not just playing: games like FarmVille and CityVille enable Zynga to earn revenues north of $1B this year.
Consumers are clearly voting with their time and their pocketbooks by logging in on Facebook, playing and paying for these games. This is why Zynga’s valuation rivals or eclipses that of bigger, traditional game companies; it’s more efficient. The efficiency means social game studios can also afford to pay staffers better than a bigger company like EA or Activision can.
Need a more “down to Earth” example? At Kixeye, we have 40 employees and need to hire 50 more. We’ve raised less than $5 million in funding and we don’t need to raise more … oh, and we’ve been profitable for a while now. That’s the kind of math that has investors foaming at the mouth, but not because of some “bubble” - it’s just plain smart business.
And that’s what core game companies are afraid of. A group of serial entrepreneurs from the Valley have conquered the market with a business model and sensibility they’re completely unfamiliar with. We’re smaller and more nimble, and we will out execute them every time.
That’s why they’re coming to us with game development requests, because they can’t do it themselves and they don’t understand this platform. They’re struggling to adapt to the pace of the market, and lack a deep understanding of performance marketing and online product management.
So let’s not jump on the “Facebook games are just a fad” bandwagon just yet. There are definitely some poorly designed, boring Facebook games out there – but there are also some that are ridiculously fun. Let’s recognize the underlying fear: “We can’t adapt to what we don’t understand … So we’ll kick dirt on it.” That’s fine. Companies like us will keep laughing all the way to the bank.
