The Future Looks Bright for Small Social Game Developers on Facebook

In the social gaming world, whether at a conference or a more informal gathering, it’s not uncommon to hear that small developers are in for trouble. Leading companies like Zynga and Electronic Arts, the common wisdom goes, have too much power and money for independents to be able to put up a fight.

When this theory comes up, the evidence that’s usually offered is that social games are already undergoing a squeeze. Growth was highest near the end of 2009, and has fallen since it peaked in the spring of 2010.

Declining traffic means more intense competition for the existing pool of players, and more cutthroat tactics for viral distribution of the games. A company like Zynga, with over half a billion dollars raised, huge daily revenue and (some say) a close relationship to Facebook, is too much of a threat to small companies.

Earlier this year, we began to wonder how accurate this “common wisdom” take on the social game industry truly is. The source of the worries was clear. Zynga’s own traffic is often used as a barometer; its hit FarmVille is down from 84 million monthly active users and 32 million daily active users, to a its current 62 million MAU and 16 million DAU. Smaller Zynga titles like Roller Coaster Kingdom have been closed altogether.

Worse than FarmVille’s decline from its peak is the fact that no other company has stepped in with a comparable hit. Several of the biggest games released in 2009 easily topped 30 million MAU. In 2010, two Zynga releases — FrontierVille and Treasure Isle — have gone over 20 million MAU, but no other game has come close, while Treasure Isle quickly declined. The highest point reached by any other company was Playdom with Social City, which maxed out at 12.6 million MAU and 3.1 million DAU. The title is now under six million MAU and has only 663,823 DAU.

These sort of data points have led many to worry about the potential of social gaming. Zynga, Electronic Arts, CrowdStar and Playdom are already profitable, and have the advantage of circulating their existing playerbase between their games; even without growth, they will survive. But other companies clearly need new growth.

Reconsidering Growth

As the title of this post implies, the pessimistic take on the social gaming market is belied by a higher-level view. Since we rolled out AppData Pro a few months ago, we’ve been building in tools that allow us to more easily detect broad market trends. One of our newest tools is the ability to look at the historical leaderboard for any given day, going back to AppData’s inception in 2008. Using this tool, we’ve found clear evidence that the common wisdom that social gaming is in a holding pattern is simply wrong.

That’s not immediately obvious, even from the high level. Starting on September 10th, we recorded the top 250 games for the same day of every month, going back a full year. We looked at daily active user counts rather than MAU, because developers find DAUs more valuable.

Here’s what growth looked like for all 250 games (note that we’ve removed the Y-axis labels of these graphs):

The above view seems to confirm the thesis that social game traffic is declining. From a February high point traffic has declined about 18 percent in just seven months to 113 million DAU — not a good sign, for what’s supposed to be a growing market.

The growth lies elsewhere. For a different view, we removed all games from the five developers with the largest audiences — in order of their current size, those are Zynga, Electronic Arts, CrowdStar, Playdom and RockYou. Once we were done, we were down to a set of 175 games for each month. The next chart shows traffic growth for both small and mid-sized developers like Digital Chocolate and Wooga:

As you can see above, a December peak was followed by a dip into May, then a recovery. September will be the best month ever for social games by developers other than the top five.

It’s worth acknowledging here that 175 games by dozens of developers share just 63 percent of the DAU enjoyed by five companies led by Zynga. But many of these smaller games are potentially able to be sustainable themselves. The smallest value for any game in our September measurements was 38K DAU, and the median was almost three times as large.

Some of this growth is certainly driven by a set of games that is winning through a combination of good timing and execution. Some of the largest titles pull in over a million DAU by themselves. We’ve talked about many of these successful, independently-produced games throughout the year, like Kingdoms of Camelot, Family Feud, Baking Life, Millionaire City and Mall World.

Each of these growing games tends to be offset by a declining older game — Farm Town, the precursor to FarmVille, being an example that many would recognize. But there are, at this point, more growing games than shrinking.

The last question we had was what the numbers would look like if we removed surprise hits like Baking Life and Millionaire City from the rankings. How are smaller games by independent developers, which rarely get any attention, doing?

As it turns out, this group of smaller games (by smaller developers) is the healthiest of all. We removed the top 50 games from our sample of 175, which left us with a sample of 125 games, each of which had no more than 200,000 DAU:

Our extended look at the games on the list suggests that these scrappy smaller games are the real trend on Facebook. Back in October 2009, the first month of the sample, the games in these leaderboard rankings were not only much smaller — many of them were also rudimentary, or direct copies of other, far more successful games.

Now there are a wide variety of more full-featured social titles. Check out Lucky Train, Ameba Pico, or Chocolatier for an example of what we mean.

Conclusion

Facebook is clearly not an easy platform to become successful on — but few are. The period from late 2009 to spring of 2010 saw unrealistically high growth across the Facebook platform, often driven by out-of-control virality and questionable marketing tactics. Normal growth processes were short-circuited, and a handful of young startups grew at a rate almost without precedent.

The unsustainable components of that growth have now somewhat faded away. But their presence through spring obscured the undercurrent of gains we show above. Many small developers have told us that they have done well since Facebook tuned down notifications this spring, while some of the larger companies have declined or remained flat. Those same small developers are largely confident in their ability to create compelling new games.

However, fears about the platform will never completely abate. The latest example is the recent change to the feed, which caused fresh concerns that Facebook has again hampered organic growth for small developers, leaving the field to larger competitors who can pour millions into advertising.

We are seeing a broader trend of players moving to more niche offerings, ranging from Nightclub City to Monster World. The larger companies are still picking their areas of emphasis, leaving some openings for creative small developers.

We’ll continue to examine these trends in coming weeks, as well as in our Inside Virtual Goods reports on the future of social gaming.

The data used in this post is sourced from AppData Pro, our membership service that includes in-depth categorization, historical reports, trend analysis, and more. If you’re an AppData Pro subscriber, you will receive an email followup with full data and research notes today.

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Leave a Reply

22 Responses to “The Future Looks Bright for Small Social Game Developers on Facebook”

  1. Bart says:

    Good point of view on this article. I think we are on the verge of seeing the rise of the independent designers. Doesn’t matter how big a company is, if the game rocks, people will play. The little guys are the true innovators.. the big expensive cows just only copy.

  2. Jane Crandal says:

    http://www.next-gen.biz/news/popcap-great-content-will-beat-zynga’s-marketing-muscle

    No disrespect to anyone’s monster success…but we think cross linked (we’re launching an app soon) sites/apps with solid creative and well defined audiences should thrive and prosper.

    Thanks for the charts.

    JC

  3. Revlry says:

    It’s no coincidence that the “big” company games are faltering and the independent games are thriving since Facebook removed all of the shortcuts to success. A game’s success or failure on Facebook is now more closely tied to its actual merits, and not on its ability to abuse the system.

  4. Siqi says:

    This seems statistically suspect. Historically it has always been easier to grow smaller DAUs, so these patterns would hold no matter what the time period is.

  5. Chris Morrison says:

    I’m not sure what you mean, Siqi. Are you reading the graphs as showing growth for a specific set of apps that grew over time? We’ve showing growth for a class of apps, not specific named apps.

  6. 猪猡记公园 » Blog Archive » 有关社交游戏的短评 says:

    [...] Inside Social Games今天发了一篇名为《The Future Looks Bright for Small Social Game Developers on Facebook》的文章,游戏邦做了中文翻译。文中提到的现象很有意思,但标题观点我认为走偏了方向,根据文中提到的数据,我的基本分析与观点如下: [...]

  7. Macguffin says:

    I think he’s asserting that getting smaller initial numbers of players has, historically, been easier than achieving the large numbers.

    So, if that bias is there, the question is if your graphs are illustrating something that has always been the case.

  8. Bart says:

    I think the merit of this article is.. if you build it they will come and if they come, you have a *chance* to grow it into something big. Being small and maneuverable with low overhead makes that chance to grow a lot easier. Zynga et al, will still be around for a while I have no doubt and I am glad they are as its nice to set a standard. However with that said, I am looking forward to competing with them.

  9. Chris Morrison says:

    A simpler way of putting it is simply that the average “small” game today is much larger than it would have been a year ago. I was (and am) unsure of what Siqi means when he says there’s a pattern that would hold, unless he’s simply saying that it’s easier to hit 100,000 DAU than a million. My point was that the total pool of players among these games has grown.

  10. Есть ли жизнь вне топов? « inSocialPlay — блог об играх для социальных сетей says:

    [...] ли жизнь вне топов? Авторы Inside Social Games провели анализ посещаемости игр на Facebook за целый год, чтобы подтвердить или [...]

  11. Facebook数据:小型社会化游戏开发公司前途光明 « 编程王网站 says:

    [...]  Inside Social Games网站9月28日发表了一篇名为《The Future Looks Bright for Small Social Game Developers on Facebook》的文章,游戏邦做了中文翻译。全文如下,文字经过CSDN编辑校对: [...]

  12. Is it still possible to be a successful developer on Facebook? | Aymeric Gaurat-Apelli says:

    [...] InsideSocialGames published the article “the future looks bright for small developers on facebook” where it analyses the growth of the top small developers on [...]

  13. Kevin Chou says:

    Agreed with Siqi. Is the list of 250 games A) taken on Sep 2010 and then looking backwards at the past 12 months of performance for the same set of 250 games? This is my guess at what your data represents. Or B) top 250 games on Oct 2009 and looking at the same set going forwards 12 months? or C) top 250 games for each month aggregated, with potentially different games in the top 250 each month?

    My thoughts is that A) will have a heavy selection bias, B) will show a pretty bad downward sloping graph and represent lots of indie developers getting crushed and C) would give a good representative view of the market evolving.

  14. Top 25 Facebook Games for October 2010 says:

    [...] seen many of the largest social games experience traffic losses in recent months, even as many smaller ones have grown. Over the course of September, 15 of the largest titles have shed monthly active users. That [...]

  15. Chris Morrison says:

    Kevin, it’s option C). The set of games changes each month.

  16. Quora says:

    Is there room for a new company in the social gaming space?…

    There are constantly new companies that are making a name for themselves in the Social Gaming space.  In fact, it is the small guys that are growing most aggressively right now, while the major players stagnate.  Source:  http://www.insidesocialgames.c…

  17. thomas lackner says:

    What a great post – one of the most interesting I’ve seen about social gaming these past few weeks.

    I’m really surprised that the results you observed seem to contradict the viral growth curve that everyone expects to see on Facebook. Larger games should grow even larger, and smaller games should have a flatter curve, right?

    Have users really changed their tastes so much that they are abandoning gaming products from the big 5?

    I look forward to more research!

  18. A Look at Trends in Social Games’ User Ratings on Facebook says:

    [...] One of the major developments of 2010 in social gaming is the rising quality of games on Facebook. While games in 2009 were often rough-hewn affairs, with a focus on often-spammy viral techniques, 2010 has seen rapidly  improving production values — or so we’ve said throughout the year, in our game reviews and market analysis. [...]

  19. Hope For Indy Freemium Game Developers - W3i Blog says:

    [...] to Inside Social Games (September 28th), FarmVille is down from 84 million monthly active users and 32 million daily [...]

  20. ISA 2011: How Will Small and Medium Social Game and App Developers Grow on Facebook Next Year? says:

    [...] A few big social game developers, like Zynga and Playfish, might seem to be the big winners on the Facebook Platform so far. But there is both a range of successful smaller gaming companies and a healthy group of non-gaming applications doing well alongside the biggest players. In fact, even as the largest incumbents have lost users or stayed flat over the past year, many others have grown. [...]

  21. ISA 2011: How Will Small and Medium Social Game Developers Grow on Facebook Next Year? says:

    [...] A few big social game developers, like Zynga and Playfish, might seem to be the big winners on the Facebook Platform so far. But there is both a range of successful smaller gaming companies and a healthy group of non-gaming applications doing well alongside the biggest players. In fact, even as the largest incumbents have lost users or stayed flat over the past year, many others have grown. [...]

  22. Latest Update to Facebook’s Official Stats Shows Surge in Off-Site Traffic says:

    [...] in the past year as Facebook has altered features and policies. At the same time, we’ve seen evidence of many smaller developers prospering. Given the information available, the platform is clearly entering a slower-growing, mature stage, [...]

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