[Editor's note: We've been covering how social game developers are being affected by Facebook's ongoing changes to its communication channels and monetization. While some developers say the changes are hurting them, Germany-based wooga is doing well, as cofounder and chief executive officer Jens Begemann explains below. As he tells us, he has an insider's view of the social gaming industry, but from outside of Silicon Valley.]

Over the past few weeks tension between Facebook and game developers has increased. With rumors of a tense relationship between Zynga and Facebook, complaints about removed “viral” channels and the introduction of Facebook Credits, it seems Facebook has become unattractive for game developers.

I don’t share this view.

Instead, I see Facebook taking bold steps to make quality more important. I strongly believe that these changes – disruptive as they might be for the incumbent players – will help strengthen Facebook as a gaming platform and benefit the companies that produce the best games and customer experience – not the ones best at exploiting Facebooks messaging opportunities.

How big is the problem?

Looking at AppData, it seems that there is a paradigm shift happening right now. Out of the top 25 games only 8 were released since November 2009 (when Facebook started tightening up policies) and all except one are from the top 5 developers, who have big pockets for marketing spend and millions of users to cross-link (the exception being our game Bubble Island).

This is very different from like a year ago when new games entered the MAU leader-boards much quicker. It is quite natural that as the industry matures the barriers of entry become higher, but the changes by Facebook have accelerated this shift.

Virality – still there but much harder than before

It is much more difficult to grow a game now than it was a year ago.

Not only is the space way more crowded with many more high quality games for users to pick from, but Facebook has taken countless small steps limiting almost all viral channels. Most recently Invitations were given decreased visibility now appearing lower on the homepage.

Today it is very hard to launch a new game without spending more than $100,000 to “seed” it and attract a critical mass of users, unless the game is of exceptional quality and you can cross link from existing apps. Bubble Island, for example, launched in February and we cross-linked from our first title Brain Buddies. This brought the first users, but since then the game has grown organically to 1 million DAU (less than 3% of users came via paid marketing).

The demise of the app-to-user notifications

For many developers, notifications were one of the main channels to get players back to the game. By being very aggressive and pushing the limits towards a “spam” approach, some rumors say that during the third quarter of 2009, more than 75% of all notifications on Facebook were “app to user” notifications.

Since their removal on March 1st all of the incumbent top 5 developers have seen big drops in MAU and DAU. There have been many loud complaints about this removal and this is allegedly one of the things that are “killing” the Facebook gaming platform.

Our experience is very different. If a user stops playing a game simply because he/she (probably a she – we have 70% female players) does not receive daily reminders the game is simply not good enough to keep that particular user coming back to the game. Bubble Island never used notifications and has maintained a healthy 15-20% “sticky factor” (DAU/MAU ratio) since launch.

It is also fair to assume that the users that were lost after notifications were removed had very low monetization value and lower than normal virality. So one could argue that the actual impact of the removed notifications is and adjustment of artificially inflated DAU/MAU numbers.

Engagement

Earlier developers could rely on unlimited, free and fairly effective methods to get users to return to their games on a daily basis. Today, these possibilities have been limited and there has been an increased focus from Facebook to reward “positive interactions” from the user such as becoming a fan (or a “liker”) of the game, bookmarking the game etc.

Again – this seems to be a move that is clearly aimed at rewarding high quality games with a high intrinsic engagement factor, not an artificial engagement based on relentless communication.

The games dashboard would be great if…

The Games Dashboard was supposed to replace and improve on Notifications and other channels that have been limited or removed over the past months. On paper it looked like a great tool for both discovery of new games (virality) and users returning to old games (engagement). So far the Games Dashboard has been a letdown, but we hope Facebook will take the opportunity and turn it into a driver of Facebook as a gaming platform:

1) Give it a permanent box on the homepage showing the user’s 5 most recent games
2) Give it a permanent place in the top bar navigation. (Example: Home | Games | Profile | Account)
3) Fix loading times! It often takes 10-15 seconds for the dashboard to load and quite often it does not load at all.

Enter Facebook Credits

Besides Facebook taking steps to reduce spam by limiting the virality and engagement channels across the platform, its Credits virtual currency is the other product making a big splash on the social gaming scene. With a 30% revenue share going to Facebook and plenty of rumors that Facebook will force developers using it, the concept has become a big issue for many developers.

We recently started our monetization efforts on Bubble Island and Monster World. We are exclusively using Facebook Credits (FBC) at the moment and so far the results have been quite good. We have every reason to believe that it will continue to improve and that the conversion will ultimately more than offsets Facebooks 30% share.

The reason is that Facebook Credits will make it easy for users to start spending more money on more (different) games. Once a user has once completed a Credits purchase the payment information is stored by Facebook so a returning user has an extremely streamlined and high-converting flow where two clicks is all it takes to complete a transaction – it is a great customer experience for micro- transactions!

Conclusion

In spite of all the recent noise and complaints we are very confident in Facebook’s future as a social gaming platform. With the introduction of Facebook Credits and hopefully some changes to the games dashboard, hungry developers who focus on doing polished and engaging Facebook games will have plenty of opportunities to get a strong presence on Facebook.

Jens Begemann is cofounder and CEO of wooga. He was previously an executive at mobile entertainment company Jamba (Jamster).