I just wrapped up the week at Casual Connect in Seattle. Overall, a great conference and big kudos to Jessica Tams and the Casual Games Association team for putting it on and growing the attendance to new highs in a difficult economy. 🙂 I’m not planning to spend too much time summarizing the content, though there’s some great overviews of the content out there already — Gamezebo has some nice roundups and there are some good summaries of sessions like how Corpse Craft turned RTS Casual and Jim and Greg from Kongregate on Fatal Flaws in Flash Game Design and Development. Instead, here’s a couple different observations on the “pulse” of the games industry from walking around the conference and talking to people.
1) Casual games come in all shapes and sizes
There was a big lift in non-downloadable casual games companies this year compared to last. While there was a continued strong presence from the standard casual downloadable companies such as Big Fish Games, RealGames, and PopCap, there was a much larger representation from companies specializing in Facebook games, iPhone games, mobile games, and online games. There are quite a lot of companies that fit under the casual games umbrella, including Nintendo which participated as the keynote speaker at this year’s conference. I’m still not seeing a large number of the virtual worlds hanging out at this conference, but there was quite a lot of cross-pollination of information going on this year from companies trying to learn more about adjacent casual gaming spaces to expand their development efforts into.
2) Social games are the year’s darling in casual games
With Zynga’s rumored $100 million in annual revenues, there’s renewed interest in social games. Zynga, Playfish, and RockYou were among the companies that attended the show. Zynga notably had a huge booth and a lot of recruiters hanging out. Social games are generating excitement because they are transcending traditional gamer demographics, moving beyond “casual” as middle-aged women or or “core” as male gamers. Many of the social gamers aren’t the usual set of gamers, but instead first-time gamers that are expanding the industry instead of cannibalizing it.
Along with social games companies comes the trend of trying to directly monetize this new expanded segment of users that have various levels of willingness to pay. Instead of charging $20 for a downloadable game or $60 for a console game, there’s increasing interest in monetizing users through micro-payments and direct transactions. We’re on the bandwagon with this (and very excited about it!), as my company Mochi Media launched Mochi Coins this week, a platform for Flash games micro-transactions at Casual Connect this week. To capitalize on this trend, I saw many payment providers taking meetings at the show including the whole market of the incentivized offer providers (SuperRewards, OfferPal Media, Peanut Labs, TrialPay and Gambit) as well as various retail payment card providers such as the PaySafeCard with a presence.
3) The dream of having a game live across multiple screens is still alive and kicking
Games across many screens is not really a new concept, but it’s definitely alive and in force this year, particularly in mobile. From my own corner of the industry, we’re definitely seeing Flash games move to iPhone (Ninja Kiwi, Gimme5games, Armor Games, and AddictingGames are just a few examples of this) as well as onto the social games platform (e.g., the cloning of Boomshine for Chain Rxn). Mass audience appeal can be proved relatively cheaply through Flash games metrics, and the simple game mechanics of Flash games are pretty easily transferred to other platforms. With big platforms like Facebook connect beginning to emerge, there’s real possibilities of extending games onto multiple platforms and building an engaging experience that transcends the space.
There’s a couple factors that are starting to enable games to move to mobile. There’s been an increase in consumers that have access to high-end phones that are capable of supporting games; prior to this, these phones were mostly for business use. There’s a couple blocking factors that seem to be standing in the way though — mobile has a notoriety problem which is partially founded in truth, in particular with the difficulty it is to get games normalized to handsets. There’s still quite a challenge around standardization and fragmentation of platforms and languages, but also a lot of solutions emerging on how games can be consistently ported to across. That said, it’s also a great opportunity — one great stat that I heard from AT&T was that there’s a significant overlap in the audience for these high-end mobile phones with older women, which are also the monetizable demographic that is currently casual downloadable games. Mobile also has less purchase friction from web-based games in that transactions can take place easily through the carrier, and just show up on consumer bills.
4) Anxiety around pricing pressure in the casual downloadable market
A lot of the interest from the casual games community in crossing gamer platforms and selling directly to users seems to be stemming from anxiety around the downward pricing pressure that’s occuring in the industry. Many publishers of downloadable games are looking for alternative revenue streams when so much of the market is largely dominated and controlled by big portals such as Big Fish Games and RealGames. The portals are increasingly experimenting with discounting, subscriptions and low price points to drive large volumes of sales for consumers. While this increases conversions among users that aren’t willing to pay full price, overall this is trending toward diminishing the returns for the actual developers that are spending just as much money in developing their games. Incidentally, this issue is also cropping up in related industries such iPhone with the downward pressure to price at $0.99 to drive volume and rank in the charts at the expense of price.
In light of this, it’s great to see PopCap’s success with differentiating itself with things like Plants vs. Zombies. I definitely give them best schwag of the show for their sunflower seeds in the tote bags!
5) Analytics and optimization as core competencies, versus brand and IP
One of the things which I admire about Big Fish Games is the idea that at net, they are an extremely effective CRM machine in terms of acquiring, retaining and converting their consumers. They focus on really creating a well-tuned conversion funnel and segmenting their consumers through varying pricing strategies for games. To offset #4, the downside of this efficiency seems to be the downward pressure on pricing overall as games become more commoditized. It seems worthwhile to note that there’s a real division between companies with core competencies stemming from analytics/CRM, or competencies based on branding/IP. Big Fish and many of the social games are on one side — these companies are focused on ARPU, conversion funnels, and hard-core data-mining to drive consumer segmentation. These guys don’t care so much about graphics. On the other side, the more traditional game company is focused on brand, IP, and creating great games that attract press and attention. The latter is really effective in a world where word of mouth and buzz drives distribution. However, online distribution and virality is providing the opportunity for lots of brand new IP to quickly gain ground and buzz (Playfish is a great example of this). Traditional companies that want to adopt these new mediums really need to come around and reconcile the difference to move from the more “packaged goods” view focused on brand to thinking more about analytics, funnels and distribution.
Learned a lot of great things at this year’s conference, and it’s exciting to see that there’s so much change afoot in the industry even since last year. The casual games industry and space is definitely growing overall — thanks again to the CGA for bringing everyone together!