Two weeks ago I moved from a job moonlighting as a VC to the full blown title – and so far, it’s been like drinking from a firehose.
And the primary taste I get is that of game companies.
Clearly, the success of Zynga has not been lost on anybody – and competitors are popping out of the woodwork to take them on.
The pitches seem somewhat similar: a group of smart guys with some game experience would like to take on Zynga – if only you would invest $5M for the development and marketing of their new games. Game development is not all that expensive – but marketing to players is – and cutting through the clutter is getting more and more expensive.
Inevitably the conversation turns to two basic facts: 1. Zynga has bought up just about anybody with traction and will likely continue to do so and 2. there’s no accounting for taste: Angry Birds cost something like $100K to make (maybe less) and has taken in tens of millions.
Truth is – unless you have an already huge audience in place and you are serving up a great game – you are likely to get lost – and predicting who is going to make a splash is anything but easy.
Add to this the distribution platforms like Facebook (who will force you to use FB Credits and take a 20% fee) or Apple with its new 30% vig on distribution and the margins get leaner still. So where to turn and what to do – how do you make this business successful for the developers and the investors.
My thought is in the title – in game marketing.
Every time I see my kids playing Webkinz – they are flipping burgers or making pizzas – or their characters are running around a track or trying on great fashions. Is there some reason why those burgers are not sponsored by McDonald’s or Burger King – or the pizzas are not skinned by Dominos or Pizza Hut. Why aren’t the shoes Nike’s or Adidas? Heck I have a paid of Adidas Barricade III shoes that my kids refer to as Webkinz shoes. Farmville is an absolute sensation. But why aren’t the seeds sponsored by Burpee or the tractors a John Deere? Why isn’t all of Cafe Society sponsored? And why aren’t those sponsorships leading to more engagement in the real world?
What has consistently amazed me is the average time spent playing these games. Sessions can last from 20 minutes to well over an hour – and that is game play with complete immersion – complete engagement with the world you are inhabiting. Only a few % of people are generating all of the revenue buying up items to increase their game play – so why not try and mine the other 99%?
Why not monetize the attention of the majority? Why not let people buy virtual goods and opt out of the advertising if necessary? My guess is that companies like Zynga are so profitable right now – it makes no sense to change things up – but in the social gaming world, my guess is that we are in the 2nd inning – and yeah Zynga scored like 25 runs in the first inning and most people feel like the mercy rule should be invoked – but there is a lot of games yet to be played.
We’ve seen some innovation – but there is a heck of a long way to go.