Inside Social Apps 2010: Sebastien de Halleux Says Brands Rule, and Social Gaming Will Consolidate
Our second gaming-related talk at Inside Social Apps was given by Sebastien de Halleux the co-founder and COO of Playfish, which was acquired for $400 million last year by EA. Halleux, who also previously a director at Glu Mobile, wanted to give a retrospective of gaming, with a view to predicting the future.
The take-home message: social games will very quickly balloon out into gaming as a whole, so that the industry is expanded for everyone. But at the same time, the idea of “social games” will quickly disappear. “Nobody ever talked about social games outside this room, so this was a short-lived phenomenon,” Halleux said.
Note: You can check out tweets from this and other conference sessions via the #isa2010 hashtag on Twitter.
Halleux, of course, has a very different view from most of our other panelists. While social gaming companies have hired a number of executives away from Electronic Arts, Halleux went the other direction, joining the gaming giant after it bought Playfish. So when he says that traditional games will take on a social component that rivals what’s on Facebook, he may be talking about something that’s already happening inside EA.
The merger between traditional and social gaming is creating what Halleux calls the Moore’s Law of gaming. “Access barriers are coming down at a fantastic rate,” he says. “This isn’t about destroying value, it’s about expanding the game industry beyond $20 billion. You lower the barriers, increase the audience, and build a bigger industry.”
Right now, social gaming makes up about $1 billion of that US total, whereas some individual franchises in the traditional world, like Grand Theft Auto, make that much by themselves. Halleux put up a slide showing his calculation that a social game with 100 to 200 million monthly active users (MAU) and 40 to 80 cents of average revenue per user (ARPU) could make a billion. FarmVille, for reference, is at 81 million MAU.
But the changes won’t be good for everyone — larger players are already advantaged, and independent developers will be increasingly marginalized. That’s partially because, as we covered in the first panel, the indies can’t invest as much in advertising or engineering as their larger competitors. The other side of the equation is brands.
In 2008, according to Halleux, the biggest game on a mobile platform was Koi Pond, which was independently developed and relatively shallow. In 2009, the top mobile game had become a major franchise: the Sims 3, by EA. And in the first month of 2010, while eight of the top 10 iPhone apps were games, seven of those eight were major pre-existing brands.
People naturally gravitate to brands, but there may be a feeling among social game developers that there’s more of an open field in their industry. To date that has been true, but Halleux clearly thinks that brand recognition and loyalty will quickly take over on Facebook, just as it has in the broader gaming industry. For a young social gaming company hoping to become the next Zynga, that could be bad news.
Halleux finished off his talk by recapping his four specific predictions for the future:
- In 24 months, almost all Facebook games will be recognizable brands
- There will be much more consolidation in the space as smaller players have a tougher time
- We’ll stop talking about social games — instead, all games will gain a social component
- Innovation and growth will take off in a way that nobody can predict
That last point is the ray of hope for both indies and larger gaming companies. The traditional gaming industry plays to a well-known crowd of gamers. But with the explosion of interest in social gaming, the industry has become a hundred times larger, and thus open to new things. “In an industry that’s very formulaic, we have a wide open green field in front of us,” said Halleux.