THE
MONEY
FARM
Investigating the real cost of
free games. By Dan Griliopoulos
ast year the games
industry shrank,
just a touch. We all
attributed it to the
economy. Industry analysts in suits
said that Modern Warfare 2 had scared
off all the other big releases, so the
first quarter of 2010 was going to be
hugely profitable for everyone. They
praised the industry for its resilience.
That huge spring of 2010 has come
and gone, and the market hasn’t
recovered. Lots of awesome games
came out – Just Cause 2, Bad Company
2, Assassin’s Creed II – but the market
is even lower than it was at
Christmas. What’s happened?
66 AUGUST
AUGUST2010
2010
PCG216.feat_social 66
One theory
is that the monster
eating our babies is what
was once called casual gaming,
back when we wanted a word for
rubbish games played by cubicle-
slaves. Now it’s called social gaming.
It’s hard to put a bracket around all
of these games, but they do share
two things: they’re free to play (with
optional microtransactions), and
they integrate with the real world
through social networks. Other
recurring characteristics include
simple mechanics, being
programmed in Flash, and a design
that favours short bursts of play.
14/6/10 12:44:21 pm
 AUGUST 2010 67

PCG216.feat_social 67 14/6/10 12:44:42 pm

 Who plays social games? Steve
Shipton, of gaming site Playfish:
“Our core social gamers are 20-34
years old, with an even gender split.
However, it pretty much reflects the
wider demographic of Facebook,
which is our primary platform.”
The makers of Evony, though it has
a heavier male bias due to its Civ-like
theme and genesis outside Facebook,
are finding that older women are
their fastest growing demographic.
“They’re the glue of the alliance, the
organisers and motivators,” says Walt
Yarbrough, the Turbine and Mythic
veteran who hopes to change the
perception of this strangely-loathed
game. “Their numbers are small, but
their impact is huge. The same could
be said of real life.”
Mark Skagg of Zynga, developers
of Farmville among others, takes
another slant. “Our users tell us that
there’s an untracked demographic of
kids playing on their parents’ laps, as
it’s an enjoyable bonding time... and
produces a wonderful connection
between family members.”
This really is a market that attracts
everyone, from tots to teens to
tottering old-timers. (Everyone, that
is, except for hardcore gamers.) The
three gentlemen I’ve just quoted
probably have about 180 million
people playing their games every
month. “Our biggest game,” says
Shipton, “Pet Society, has 21 million
monthly active users, with four
million daily active users, but we have
ten games on Facebook – that’s just
the most popular one.” Zynga,
meanwhile, can claim even more
startling statistics: “Farmville does 30
million a day, by itself. Our new title
Treasure Isle has six million daily
gamers – it’s been out for two weeks.”
68 AUGUST 2010
PCG216.feat_social 68
VIRTUAL GOODS
These companies are rolling in money – the
first Facebook social game, Mob Wars, is still
rumoured to be generating $1 million a month
– and it all comes from players buying either
in-game money, or in-game items
(companies prefer the former, as players often
end up with odd amounts left over). But
supposing you do spend your money on these
virtual items – what are you actually buying?
Jas Purewal of GamerLaw.com: “The
critical issue is this: are virtual goods and
money ‘property’? On the one hand, they are
‘things’ just like a house or car, they are
purchased for real money, and – crucially –
Couch Potatoes: guess what players are encouraged to think they are
it’s about. Go on, guess. ‘buying’ something. On the other hand, virtual
goods/money are in infinite supply and are,
well, ‘virtual’ - so maybe they’re not property
Demographically, access to these at all, but something like a service instead?”
games is limited to where social This is serious business, although it may
networks have sprung up – Playfish, sound like a boring legal debate. If virtual
goods/money are property, who owns them?
for example, are primarily Facebook- “Is it the games company (which is effectively
orientated, tapping its 450 million how the current legal framework is set up) or
users, whereas Evony and the player?” asks Purewal. “If the latter, what
Portalarium’s products are designed rights do players have in them – the right to
turn them into cash? To mass-copy that
to work across any social network and virtual cow? To destroy that l33t sword? Do
as standalone games. other laws then become involved, like tax?
Big translates to profitable. Mob Clearly, if – and it’s a big if – any of that was
Wars, one of the earliest social games, right, it could fundamentally change the way
games companies treat virtual goods.”
was already making $1,000,000 a Does this really matter? “Definitely,” says
Purewal. “The more money pours into virtual
“Our biggest game, Pet Society, has goods and money, the higher the prospects
that sooner or later someone is going to turn
21 million monthly users. And we around and st art asking questions about
what they ‘own’ in return for their money. And
have ten games on Facebook” that’s when the lawyers get involved.”
month back in 2008, and this was
before Playfish and Zynga refined make each game with a tiny team,
the game design. Allfacebook.com more akin to indie or mod
estimates that the latter are making development than the big AAA
around $100m in annual revenue, all games. Both Playfish and Zynga start
from microtransactions. their games with three or four
Understandably, none of these people, and have larger temporary
companies are that keen to talk about teams of 15-30 ready for their regular
the huge sums these games are launches. “Most of the work is done
generating, but let’s take a quick look after launch,” says Stagg. “There’s
at the development model. They nothing like having a million people
playing your game to test it.”
Country Story would work “We launch the game at about 20%
better with zombies. of development,” agrees Shipton,
“it’s about seeing games as a service.”
With two-three month development
cycles and such tiny overheads, these
games are a licence to print money
(more on which later).
So, the social games industry is
growing hugely fast, is massively
moreish, and hugely profitable. Why
aren’t hardcore gamers playing – and
why has it got such a bad reputation
so quickly? The reason is that social
gaming is the Wild West, with Red
Indies roaming the wastes,
independent townships setting up
home in strange new lands, and large
corporations laying track down and
railroading their way into the heart of
the continent. No one’s really sure
who’s going to win out.
Like any undiscovered country, it’s
14/6/10 12:44:45 pm

fields are fecund with controversy.
The aggressive way players are
acquired has come under scrutiny, as
well as the endless copycatting
between companies, and the invasive
Facebook spam. Most damningly, the
companies have been accused of
making games that are not fun, but
merely compelling, actively antisocial
and greedy for user’s money.
Cashcade
There’s a big incentive to spend.
Primarily, to speed up progression.
Thankfully most games have
removed their dodgy Offer Walls,
promising in-game funds in return
for clicking on advertising links or
performing unsalubrious tasks, but
there are still problems.
Take the case (reported in The
Guardian) of a 12-year-old who ran
up a £900 bill on Farmville. The
problem here wasn’t just that he spent
the money – it was that it wasn’t his
but his mother’s. Other people out
there are spending equally huge
amounts of money, but it’s OK
because they’re adults. These people
have problems and need help, but
they’re hugely profitable – and these
are businesses, not charities. As Jesse
Schell of Schell Games says, “Is it
crazy to use these techniques? It’s
crazy to use them in the long term,
but in the short term, it will get you
money and players, so it would be
crazy not to use them! You can always
change techniques later – in fact, you
definitely will, since players, games,
and technology are changing so fast.”
Well, at least we’re playing with our
friends... right? Hang on. We don’t
assume that just because politicians
call themselves socialists they’re the
best at socialising, so should we
assume that social gaming is, y’know
PCG216.feat_social 69
FIELDS OF GOLD
THE GURUS OF CASUAL GAMING
STEVE SHIPTON
(Technical director worldwide
studios) - Playfish.
Playfish were one of the biggest
social gaming pioneers and,
though they’ve fallen behind
Zynga in recent months, were
still bought up by Electronic Arts
for the princely sum of $300
million dollars. Which just goes
to show how much money there
is to be made from something
that’s free. They’re only two
years old, but already have
offices around the world.
JESSE SCHELL
(Founder) - Schell Games
One of the keenest analysts of
Tsk, these people must social gaming, Schell paints a
lead sad, empty lives. picture of a near future that’s
somewhere between utopian
and dystopian. He spoke to us
‘social’? Most of the time you’re not about the game design
techniques social developers
playing with people as people, but as use to draw money from their
in-game tokens of success. players. The short: it’s profitable,
In fact, are social games anti- but faintly terrifying. For a full
social? A critic would say their design explanation of his ideas, watch
his excellent TED talk at tinyurl.
is derived from cynical, amoral stuff, com/schellpcg.
like the ’50s social science
experiments of Skinner and WALT YARBROUGH
Milgram. The games use random (Vice-president) – Evony
mechanisms and ‘variable ratio Evony is a Civilization-like city-
rewards’ with the mechanics of a slot building game, which you may
recognise as “Come play, my
machine, to encourage you to do Lord” from a series of
things you don’t necessarily enjoy to increasingly bizarre adverts
get items that, strictly speaking, are featuring buxom women not
worthless (ie, virtual), and that may included in the game. These ads
left The Guardian asking “ is this
even degenerate if you don’t return. the most despised game on the
The mechanism is made addictive Web?” and garnered it 18 million
through random drops that get less players. Evony have just
frequent as the game goes on, an relaunched Evony Age II, making
the game more fair and social.
absence of stopping points, nebulous
win-lose conditions, and an illusion
of satisfaction. These challenges are DALLAS SNELL
(Co-founder, chairman,
simpler and easier than the real world development director) –
– and hence undermine the Portalarium
accomplishments of real life. Braid- A small but rapidly growing
creator Jonathan Blow has called this social game developer,
Portalarium boast such huge
‘addiction-based gaming’. Schell: figures of gaming as Richard
“Remember, games don’t have to be ‘Lord British’ Garriott and Snell
‘fun’ all the time, they just have to be from Origin among its staff. It
engaging... All a good game needs is a aims to build a series of casual
games that can be played
simple interaction with someone standalone or through a larger
whose opinion I care about.” world-cum-social-network
Do they feature real relationships? called Centreport.
Schell: “If they didn’t, Facebook
games would work just as well with MARK SKAGGS
strangers as they do with your real (Vice president, product
development) – Zynga
friends. But they don’t. We don’t Zynga is the biggest of the social
want to be ashamed in front of our games companies, having been
real friends, and we want to feel quick to move to Facebook and
equal, or superior, to our real friends, corner its broad userbase. As of
December 2009, they had 60
there are powerful forces at work that million daily active users on
make us want to succeed at games their games, and Skaggs told us
when our real friends are involved. Farmville currently has as many
So, real relationships are at the fore. as 30 million on its own. Those
are astonishing figures . This is a
The games don’t develop these company making money hand
relationships, but they do use them.” over fist.
Is this done intentionally? After all,
AUGUST 2010 69
14/6/10 12:44:46 pm
 the same charge could be laid at the
door of World of Warcraft and other
MMOs with Skinner mechanisms.
Yarbrough: “People ascribe a little
too much intelligence to game
designers – in most cases you tend to
put in something that you feel is
going to be fun, and as people test
your game you reinforce the things
that people spend their time doing.
I’ve never been a part of a game where
there’s a conscious decision to make
the game more addictive through
Mechanism X.”
Either game developers are
deluding themselves, or social games
are just evolving this way in a high-
pressure environment. Schell: “The
social gaming universe right now is a
Darwinian experiment, evolving at
100x the speed of traditional
videogaming, to find out what people
find rewarding to play, and what
they’ll spend money on.”
There’s definitely a survival of the
fittest going on – if you look at the
major three companies’ portfolios
you’ll feel like you’re seeing treble.
Playdom have Mobsters, Playfish have
Gangster City and Zynga have Mafia
Wars – all of them modelled after Mob
Wars. Though the Mob Wars
developer got an out-of-court
settlement from Zynga estimated to
be a substantial figure, this is the
exception rather than the rule.
“It reminds me a lot of beginnings
of the Apple II, PC and arcade
games,” says Stagg. “Genres are
being established. A farm game is a
“Social gaming is a Darwinian
experiment, evolving at 100x the
speed of traditional videogaming”
genre – casual players don’t just play
one, they play lots.” Shipton agrees:
“The FPS has been done over and
over – you only notice this because
our development times are much
shorter.” Yarbrough is a little more
despondent: “it’s relatively sad that
most of America’s popular TV shows
started out in Britain, but it’s less
risky to copy off something that has
been successful and polish it.”
The other notable feature of social
games is the crapulent spam that fills
up Facebook. Facebook has made this
easier to filter out now, but it’s still
highly invasive. Shipton: “We have to
spend a lot of time keeping up to date
with the Facebook policy changes
and being respectful to their users;
it’s very similar to console gaming.
We don’t want players to be spammed
either.” Schell is more brusque:
“Well, part of what we’re doing at
Schell Games are Facebook games
and other social network games. And
for those to succeed, they have to be
viral. And to be viral, you have to risk
being annoying.”
This viral marketing is the main
source of new players, via invitations
from friends or targeted advertising.
The queens of targeted advertising
are, obviously, Evony. “The ads were
and are very effective,” says
Yarbrough. “They’re the primary
means by which we acquire
customers, and we’ve got 18 million
players through it. In fact, we’ve only
just moved into Facebook, but we
remain focused on advertising to
drive new customers.” Playfish, on
the other hand, have always used
pure viral techniques. “Our very first
game was Who has the biggest brain,”

NIGHTMARE FUTURE What social games could look like in ten years

MINORITY RETORT
2 On-demand, personalised advertising will
use game design mechanics to co-opt people’s
subconscious. Its success will depend on how
malleable the global population proves to be.

OPT-OUTS
4 Some people will have
either opted out of the system or
possess ad-blocking technology.
The former are likely to be fed
generic ‘old-fashioned” adverts,
due to their lack of a profile.

THE TERMINALS
3 All mobile devices will have
super-HD cameras and mini-
projectors. Decisions about social
networking will become about
when to turn off devices, not to
turn them on.

THE NEXUS
1 All social games will be
played through your mobile device
by this time. Users much prefer to
© istockphoto.com/ iLexx

access social networks through

mobile devices.

70 AUGUST 2010

PCG216.feat_social 70 14/6/10 12:45:26 pm


says Shipton, “which we only
distributed within Playfish to our
friends. Within weeks, the number of
players had grown from 100 to
100,000 and carried on exponentially.
In essence, it’s an incredible
disruption happening from social
media into traditional marketing. If
you have a relationship with
someone, there’s a reason you’ve done
that. If they recommend something,
it has cred and 90% of people will
take that recommendation. Yet an
advert only affects 10% of people.”
Getting a single recommendation is
“The big brands will
move in... and social
gaming will move into
the wider world”
therefore worth more than ten
people seeing your advert.
This sector is changing so quickly
that relevant stories were coming
through quicker than I could write
them down. ‘Korea to ban overnight
play in Freemium MMOs’, ‘Shanda
looking to buy social games
company’, ‘Offer Walls introduced –
and removed – in D&D Online.”
The future consists of two things –
this niche being saturated with
startups until the bubble bursts (from
the levelling off of user numbers, I
think we may be nearly there) – and
the deeper, more comprehensive
integration of social gaming into
every aspect of our lives.
All parties agree that the market is
going to shift in the coming year –
but everyone has a different story.
Shipton talks about the arrival of the
big brands: “Firstly, there’s going to
Totally different to
matching gems.
PCG216.feat_social 71
be a shake-out as the sector
consolidates. Then well-known
brands will come to dominate. In
2008, two of the top ten games on
iPhone were well-known brands – it
was mostly indie. Fast-forward one
year and seven of the top ten are well-
known brands – and predominantly
EA... simplistically, if you have a
branded sports game you’re clearly in
an advantageous position over a
generic sports game.”
Industry veteran Dallas Snell does
voice a warning, however: “Is the
market going to get saturated? Hell,
yes. It’s going to saturate because
everyone and their mother is going to
be out panning for that gold, and
there’s going to be a lot of stuff that’s
just not premium.” As Yarbrough
points out, even with the financial
markets in the state they’re in, there’s
lots of venture capital going into
social gaming right now.
Social life
Not only are we going to see the big
brands moving into social gaming,
but social gaming is going to move
into the wider world. Already there
are teachers using experience point
systems to incentivise their classes.
But when direct marketing and social
gaming clash, the world gets weird,
fast. Schell envisages a world where
your every action is monitored by
brand-enabled devices that reward
you for brand-friendly behaviour –
such as saying their catchphrase – and
use game mechanics to encourage
FIELDS OF GOLD
FishVille: it lets you give
fish love. Not like that.
you to spend more money and time
on the brand. “There will be lots and
lots and lots of annoying marketing
games, in shapes and forms we can
only start to imagine,” he says. “‘Buy
a 24 pack of Coca-Cola, and get 100
free gold in World of Warcraft!’ ‘Tweet
about NBC TV shows five times this
week, and get 20 farmcash, and a
coupon for MacDonalds!’ And on,
and on, and on...”
Buy a PC Gamer-approved product
every day this week and you get
reward points. You’ve levelled up,
now you’re a PCG Ambassador, so
you get a PCG fan kit. Meanwhile,
your health insurance is incentivising
you to walk as it’s worried about your
heart rate, and a tobacco firm is
incentivising you not to read The
Guardian because of its coverage of
cancer risk. You get an achievement
from the local council for not giving
money to a tramp, and your eye-
tracking device is giving you bonus
points for reading every line of an
advert (but not the small print). It’s a
nightmare and it’s coming.
What no one is mentioning is a
crash, a bubble bursting. There’s a
risk that social gaming could collapse
overnight. Yet this is unlikely,
because the place where it’s based,
Facebook, is now so central to our
lives. Instead, social gaming is
spilling out virally into the world, and
its effectiveness in altering our
behaviour means it’s soon going to be
affecting you in ways you may not
even notice.
AUGUST 2010 71
14/6/10 12:45:29 pm