The Red Ocean of Social Games
[Editor's note: How can social game developers create unique new products? In the first of a two part series below, guest author Tadhg Kelly discusses how the social gaming industry fits into the "red ocean/blue ocean" business framework -- basically, why social games are so often copies of each other and what developers can do differently in order to succeed. He covers the red ocean aspects below, and will get into the blue ocean part in a follow-up post.]
I was inspired to write this article by Blue Ocean Strategy. In the book, authors W. Chan Kim and Renee Mauborgne explore methods that companies can use to understand how everything that their competition is doing falls into well-defined types, and then create completely new ways to overcome them and consequently new markets.
Most companies, they contend, are locked into competition with each other in the red ocean (i.e. bloody) side of the economy. This means that most of the time they are trying to compete along well-understood existing lines, and that the results of this kind of competition are angry and merciless. In studying red ocean companies, they observe how they all tend to study competitors’ tactics and then emulate or attempt to differentiate themselves. Such tactics seem to be the main way that red ocean companies think and act, as though they are at war, and this leads to a lot of very similar products created, marketed and sold in much the same way.
One particularly effective example that the book cites is the US wine industry: Wine is sold along two lines, premium and budget, and all of the participants in the market tend to compete using the same factors. Premium wine makers talk about heritage, complexity of taste and image. Budget wines also use image, but they talk less about complexity of taste and more about price. While each wine works hard to differentiate itself, Blue Ocean Strategy argues that most of it tries to differentiate itself in the same way. Wine X has 12% more medals than Wine Y, while Wine A has 50 years more heritage than Wine B.
The authors produce a diagram to illustrate the strategic profile of the wine industry, called a Strategy Canvas. The horizontal axis shows the various factors, whereas the vertical reflects the offering level for buyers (meaning the amount invested by the winemakers in the factor, or the price to the buyer).
Their wine canvas looks something like this:
The book’s conclusion about red ocean markets is that they are a result of focusing on competition for existing customers, or existing types of customer. Red ocean companies offer better solutions for existing problems rather than alternatives solutions for new problems, so wine makers try to win medals and plaudits for the complexity of their product in order to win existing customers away from their competitors. Their customers, consequently, are educated enough in wine to look for more and better of those traits, and wine makers by and large ignore non customers entirely.
I think that Facebook game developers find themselves in a newly red ocean. While it was blue in all directions a few years ago, increasingly it has become dominated by key factors and competition that are analogous to the wine industry. It may not be blood red yet, but it is certainly a reddish purple.
There are a lot of games from a lot of developers, some heavy hitters, one huge hitter in particular (Zynga). While many of the smaller developers (championed by Inside Social Games and others) certainly have grown to interesting audience sizes, the top of the end of the market outside Zynga has actually been declining for a while, with no obvious new competitor to shake things up. The Facebook market seems to reward financial muscle more than anything else in terms of raw marketing and distribution power.
Yet at the same time even the smallest developers are competing along much the same lines as the big boys. Like small wine makers talking up their own heritage and complexity, smaller Facebook developers commonly make games that are very similar to those of their larger brethren.
99% of the developers in the market are convinced that they are hunting after the same customer, and most of the successes are happening purely because the tide is still rising. Facebook itself is still growing, so in those conditions many clone games will still do well. A rising tide may raise all ships, but the problem with high tides is that they do eventually peak, leaving many boats stranded on the rocks.
Most of the games in the Facebook ocean are virtually identical as a product category. They look identical, are marketed the same way and try to engage the player in the same sort of relationship. They are also branded very similarly. Like wine, they seem to be trying to differentiate in the same way.
If true, then that would mean that Facebook games are also competing along well defined lines. So what would the lines be on the Facebook canvas, and what would the corresponding factors for those lines be?
Types of Games and Apps on Facebook
Broadly speaking, I think Facebook games fall into three easily-understood lines:
* Social apps
* Casual games
* Extended games
Social apps can achieve very high MAU for short periods of time, but even at their height they rarely see more than 5% DAU/MAU engagement from users. Early social apps featuring a single quiz or a top-movies list have long since given way to aggregator applications that allow users to create their own content. Aggregator applications are much more sustainable than their forebearers, but still pretty un-engaging on a DAU/MAU basis. They primarily monetize through advertising or cross-promotional activities.
Casual games are games which are meant to serve as single-play experiences. They may retain high scores, but their focus is largely based on skill. Bejewelled Blitz, Texas Hold’Em or the variety of games offered by Mindjolt are all in the casual ballpark. They monetise with a combination of virtual goods for things like chips, play bonuses or advertising for the game aggregators.
Extended games are the farm, mafia, city and pet simulators. They are the largely time management games that encourage players to creatively invest in them, but also meter play out to encourage virtual economy participation. Most of the very successful games on Facebook are extended games, mostly because they invite a considerable quantity of daily visits and just-checking-in behaviour. Early versions of this kind of game were PHP-built role-playing games, but in the last 24 months they have moved over into isometric sim games instead. This category also includes sports sims like Bola and FIFA Superstars.
So if those are the strategic lines, then perhaps these are the factors:
Virality: Social games, goes the conventional wisdom, are built on virality. What this pretty much means is that they are hooked into the Facebook graph, and they use whatever free marketing channels are available to publish, notify, email or otherwise message new and existing users on a constant basis. This makes virality a high priority for all social applications, and virtually every game on Facebook prompts its users to Publish at least once every 5 minutes, usually to announce a high score or ask for help.
Gameplay: Casual games use skill-based gameplay the most, social apps the least, and extended games are somewhere toward the bottom of the middle. What’s interesting within these three categories is how similar the gameplay is. Casual games will typically have a minutes-length gameplay with tight actions and dynamics (Poker may count as a bit of an exception here). Extended games are entirely based on timed activities such as spending energy, acquiring levels and completing gated tasks, requiring neither strategy nor skill. And social apps may have a simple test (like a quiz) with the objective of creating a socially relevant viral publishing action. There really are very few games outside those types.
Character: Facebook games are almost universally friendly. There is no bad language, no violent imagery, and a surfeit of cute characters. They generally have no dark side, nor much of a sense of humour. Both are unusual traits in comparison to many other kinds of video game but may well make sense given the tone of the site itself and the international nature of its audience. Certainly in comparison to many other kinds of game, the character of social games could at best be described as mainstream, or at worst bland. Regardless, it doesn’t seem to be of high concern to most of the existing players in the market.
Play Area: All Facebook games operate within a constricted page of 760 pixels width, and most are between 600 and 700 pixels tall. Most social apps are built with standard Facebook API components, while games are built in Flash. There are a very large number of commonalities across games, including isometric landscapes, social friend bars, lower action bars, right-side high scores tables, upper bar level and energy meters, and purely mouse-driven controls. Very few games (if indeed any) make innovative use of the play area, however, with games simply squashed in to the available space.
Financial Model: There are, broadly speaking, three distinctive business models in social games: Advertising (which is low value), Power-ups (medium) and Property (high). Social apps focus on the former, casual games on power-ups with some property, and extended games on property with some power-ups. Financial innovations were a big feature of why social games took off in the first place, and considerable investment is made by many companies in making sure that they are on top of their e-commercial activities
Branding: The game concepts in Facebook are generally describable by their names (in what the British call Ronseal marketing), and require the audience to understand nothing beyond that to immediately grasp the game idea. Level of recognition is based more on visibility than through marketing stories. More typical game branding (celebrities, licenses, movies and TV shows) are mostly not effective, yet at the same time the brands that have come through from Facebook are largely not well regarded nor sought after. FarmVille is probably still the most famous social game by brand, but it’s not exactly loved.
Advertising: Most companies (thought not all) take advantage of as many advertising channels as possible. Given the nature of the Facebook advertising space, advertisements tend to have to be immediate and blunt, with a variation of a Come Play Now message. Advertising content tends not to be too broad in terms of tone. Extended games tend to feature more heavily in advertising than any other, most probably because they can afford it with their revenue model.
Cross Promotion: Nearly every Facebook application cross-promotes. Cross promotion is conventionally held to be the best way to create visibility within the platform because of the positioning and the largely visual content. Big developers learned to cross-promote early, while later or smaller developers use Applifier or Appstrip to cross promote among one another. The positioning and type of cross promotion in all Facebook games is virtually identical, consisting of a long strip across the top of the game (this makes sense because of the width restrictions) showing 5 or 6 icons of other games. Social apps’ primary purpose is arguably to cross promote into other games, while extended games have used tactics to encourage audiences to move from one game to another. Casual games cross-promote, but feel like they don’t entirely want to send users away.
Reward-Drivers: Social apps have almost no real reward drivers, which is why their retention is generally very low. Casual games tend to make rewards all around skill, which is a compelling way for many players to pass some time, but has its limits as most players will reach their maximum mastery with most casual games early unless the game has a particularly good game dynamic. Weekly high scores competitions and special upgrades help. Extended games, on the other hand, use time as a factor to make players wait, obliging them to keep returning to tend their gardens, kill mob bosses or perhaps acquire more energy to do more of the same. It’s very clever, but also copied by many games in an identical fashion to the point that energy-and-levels are regarded as de-facto parts of making social game retention work.
The result is something like this:
Why Has the Red Ocean Developed?
While Facebook developers may talk a good game about using metrics to validate users and develop minimum viable products, the reality is – like most businesses – they tend to just copy each other. It’s simply faster and cheaper for companies to ape each others’ products where possible because successful standard bearers take all the risk, while more risk averse investors simply hang back and wait to see what’s a proven idea or not. We see this all time in technology, from tablets to netbooks, and also in games.
Conventional wisdom forms around the leaders in the market, and the choices that they make become baked in regardless of whether they actually are a good idea or not, nor whether later metrics then tell the developers that the idea doesn’t actually work. Red oceans develop because companies become convinced that their job is to compete along existing lines and for existing customers, so the market tends to calcify around certain ‘known knowns’ because it makes the business easier to understand.
In social games, my favourite example of this is the use of isometric perspectives. Since Restaurant City and Farm Town, almost all extended games from FarmVille to Crime City have incorporated isometric perspectives to give a sense of three dimensionality to their games. But if you stop and look at some of the more silly examples, such as Monopoly Millionaires, it simply makes no sense from a user perspective.
The Facebook environment is the most constricted in terms of screen real estate, and the most competitive in terms of distracting content around a game. And yet these developers go ahead making isometric games in which the players cannot see any meaningful amount of game real estate. Why? Because that’s just what everyone does, so there must be some reason to do it that way. Right?
In the real world of course, nobody knows. And that’s where Blue Ocean thinking first begins.
Tadhg Kelly is the author of a challenging book about, as he describes it, “Reclaiming games as an art, craft and industry on its own terms”, entitled What Games Are. The blog for the book is whatgamesare.com. You can also follow his tweets on Twitter (@tiedtiger).