Inside Social Games

Zynga has been pretty quiet over the past few months. The last game the company launched was PetVille, back in early December, and it has recently allowed some of its less successful titles to shed users, focusing in on a handful of big hits. This emerging strategy makes the release of Poker Blitz, a new casino game, all the more significant.

Poker Blitz follows in the footsteps of Zynga’s first-ever hit, Texas HoldEm Poker. Today, Texas HoldEm is Zynga’s third-biggest game, with 28 million monthly active users — that makes it Facebook’s seventh-largest app overall.

But there’s one problem with Texas HoldEm: it’s a skill game that requires deep expertise and strategy to master. Even playing a few casual hands requires more knowledge than, say, planting your first seeds in FarmVille. Texas Hold’em has a devoted following of many millions worldwide, but Zynga’s version, HoldEm, is ultimately unlikely to break out — especially as expert players graduate on to playing for real money.

The solution in Poker Blitz is cutting down on the skill gaming elements to make Hold’em more welcoming to inexperienced and casual players. Let’s take a quick tour of the game.

Graphically, Blitz has much in common with Zynga’s YoVille, from the initial setup of an avatar to play with to the dealers and casinos. Building up a character need only take a few moments, and then you’re on to the tutorial.

Next, Zynga hits players with a forced email subscription screen. This is a calculated violation of Facebook’s latest developer rules, which insist on giving users the ability to opt out [Update: This is not clearly a violation, but it's also not clearly in compliance. More here.]. The game isn’t fully released yet, though; this feature will likely disappear soon.

As in Hold’em, you’re dealt two cards, while five more are laid out on the table. But the differences begin there. As most hands are dealt, you’ll have the option to swap your cards if you don’t like them. You can also fold without betting. Some rounds will offer the option of flipping over one of your opponent’s cards, others a “four leaf clover” special power that gives you a “luckier” hand.

Unlike Hold’em, there are no rounds of betting before the fourth and fifth cards are laid out on the table. And at lower levels of Blitz, you’ll get to see the likelihood that your hand will win the match. All told, the odds are heavily stacked against the dealer. You’re also playing one on one instead of against a table of other players — though there’s a “team” element of the game that’s yet to be released.

As you win hands, you’ll unlock mystery crates that hold prizes. Each round of play is timed at 60 seconds, though winning a hand will add to the timer.

Perhaps most importantly, there’s a limit to how many rounds can be played each hour, along with special tokens that only appear every few hours. At the moment, there’s nothing players can do to buy more time, but Zynga obviously has the option of letting people pay for or earn more time. There are also inventories and a virtual home that are only marked “Coming Soon”.

All of Zynga’s changes make Blitz more of a video game than a casino game like Texas Hold’em. In recent years, as Hold’em players have gained notoriety through massive tournaments held on ESPN and other channels, they’ve replaced the seedy image of gamblers with one of glamor and excitement. Blitz is an attempt to give players the powers and high lifestyle of a pro player without doing any of the work to get there.

Meanwhile, players who do want to take Blitz to the next level will doubtless be nudged on over to Texas HoldEm, with its more serious atmosphere and standard rules of play. This two-for-one strategy isn’t just canny; it’s the latest way to promote games, since Facebook tightened up its viral distribution rules.

We’ll keep an eye on Blitz as it grows, and review the game again once Zynga unlocks some of the special features mentioned above.

FarmVille Wins Major Award – In only a few years, social games have changed the video game industry as a whole. However, now that change has been officially recognized as this past week hosted the Interactive Achievement Awards in Las Vegas. At the event, the first-ever award for excellence in social gaming was given out by the Academy of Interactive Arts and Sciences. The winner was Zynga’s ever popular FarmVille who was granted the title of social game of the year. Currently, the social game has over 80 million monthly active users.

Vegas, the Dating Market, and Making Serious Business a Success — Siqi Chen talks about founding and growing his social gaming company, coming up with the idea behind its formative social game, “Friends for Sale,” moving to Silicon Valley, and much more in this in-depth interview with Kim Ngo of Intimate Math. Chen’s company sold to Zynga for an undisclosed amount in a deal announced last week — his story includes a lot of good advice for entrepreneurs building Facebook games. Check out the video below for more:

World of Warcraft Partially Resumes in China – Having been in censorship battles for over a year, NetEase has obtained a license to operate World of Warcraft in China; the last expansion, anyway. While The Burning Crusade is now reactivated in the country, word on the most recent expansion, Wrath of the Lich King, has yet to be heard.

Pandaren Pet Sales Raise $1.1 Million for the Make-A-Wish Foundation – In other Warcraft related news, Blizzard’s first major use of virtual goods, a pair of digital pets for World of Warcraft, raised a nice bit of money for a good cause. Of the two pets, the Pandaren Monk, had 50% of its sales donated to the Make-A-Wish Foundation between November and December of last year. The benevolent little critter’s sales led to a donation of over $1.1 million to the charity.

Apple Gets Strict on Sexual Content – While sex does sell, it would seem like it’s going to sell a little bit less often in the App Store. According to reports from TechCrunch earlier this week, a number of sexually oriented applications have been removed from iTunes completely. Based on an email to Jon Atherton, the developer of Wobble iBoobs, his app (and, likely, many others) was removed due to “overtly sexual content.” Oddly enough, some similar apps, such as Sexy Girls Uncovered, still work, leaving the that “overtly sexual” line a bit obscure.

Rixty Announces 13 & Under Payment Service – Payment service provider Rixty says it can now safely and anonymously provide payment services for children under the age of 13. In adherence to the Children’s Online Privacy and Protection Act (COPPA) and with the help of Coinstar, Rixty users under 13 can sign up without having to give out any personally identifiable information. All that is required is a username, password, birth date, gender, zip code, and a parent’s email address. Upon the latter’s entering, the parent will receive immediate notification with the options to delete the account or to be notified whenever the child tries to make a purchase.

Ultimate Game Card Expands – Popular prepaid card, the Ultimate Game Card (UGC), from PlaySpan is expanding. Earlier in the week, the card was made available in the regions of Taiwan, South Africa, Israel, Egypt, Saudi Arabia, and the United Arab Emirates. With the expansion, the UGC is now available in over 70,000 retail locations around the world and can be used to purchase virtual goods and premium services in over 300 online games, and over 700 social, Facebook and MySpace games.

Topps Forgives Mom With One Major League Virtual Good (But Don’t Keep This One Virtual) - With the slogan, “We’re giving you back the cards your mom threw out,” trading card company Topps announced its Million Card Giveaway. For every sixth pack of Topps trading cards, there will be special cards with a nine-digit code redeemable at toppsmillion.com. The digital code will then reveal either an ordinary card from last year, or a vintage 1952 card that can be delivered, kept in online Topps accounts to trade, or used in sweepstakes.

Of course, of all the possible cards to get, the company states there are at least three Mickey Mantle rookie cards up for grabs.

Android Gets Flash Support - The Android has, unfortunately, taken a back seat to the iPhone in times past; especially in the realm of gaming. However, expect some changes in the future in how developers create their mobile Android games and apps as Adobe officially announced at the Mobile World Congress that both Flash Player 10.1 and Adobe AIR are now supported on Android.

Richard Garriot Launches Portalarium – Creator of the Ultima game series, game designer Richard Garriot has launched a new social games company by the name of Portalarium. By the looks of things, the company will be creating a social games platform that will support games of higher quality than the current Flash standard and will make use of a plugin called the “Portalarium Player.” Already, the company is getting under way with the development of a social suite of casino games, starting with Sweet @$! Poker.

Gas Powered Games Gives Behind-the-Scenes Looks – Game designer Chris Taylor announced the latest game coming out of studio Gas Powered Games this week. The new real time strategy game will be dubbed Kings and Castles will be coming out on the PC and “next-gen consoles,” but the real treat for fans is that Taylor will be making use of kingsandcastles.com, Twitter @DeathBot9, and Facebook let show the development of the title until its release.

Zynga’s Texas Hold’Em Poker has proven to be one of the more durable social games on Facebook. Most newer card games that have sought to dethrone it have also limited themselves the same style of poker play. Well, a new app by the name of Broadway Poker is changing that by offering not one, but four ways to play. The developer, notably, is the Agarwalla brothers, the folks behind early social gaming hit Scrabulous, a title that helped show the potential of social gaming before running into intellectual property issues.

In a nutshell, Hold’Em is a game where two cards are dealt to all players with five community cards placed on the table over four rounds of betting. Using basic poker rankings, the player that can make the best hand using one or two of their cards and three or four of the community cards wins. Simple enough, right? That’s why Hold’Em has always been a popular online card game.

Part of Broadway works the same. Players join a table, cards are dealt, and they call, raise, or fold as it becomes their turn. As usual, all the chips are a simple in-game currency with no monetary value. What is nice though, is that the game does have a bit of a safety net to allow users to keep playing. If you lose all your money, then you can simply go to the cashier for another 2000 credits (every three minutes).

Beyond the means to get money when you’re broke, the element of this app that makes it interesting is that it offers more than just Hold’Em poker. It actually allows three other modes of play: Omaha Hi, Omaha Hi-Lo Split, and Double Dash. As far as the play is concerned, Omaha Hi requires players to use two cards from their hand and three cards from what is called the “flop” (the second round where three community cards are set on the table), and Omaha Hi-Lo Split has players making a “hi” hand and a “lo” (ace-to-five) hand using the five community cards and their two cards.

Of all the games, however, Double Dash is the most interesting. This style of poker plays more or less like Omaha Hi, but you get two “flops” instead of just the one in the second round and players must use two of the cards from the first flop and the remaining two from the second.

If this all sounds a bit confusing, that’s because it really is until you’ve tried it (or you’re an active card player). While the prospect of offering other card games is attractive, most people who aren’t avid card players are going to struggle at first. Thankfully, the developers of Broadway Poker did provide fairly detailed help section to aid beginners, but, again, it really takes some actual play to get the hang of it.

Beyond the card games themselves, Broadway Poker is a bit on the bland side visually. Other than the Las Vegas-style female character (who looks, um, almost exactly like the character used in Zynga’s Texas Hold’Em), there really isn’t that much to look at. The tables and menus are all very clean, but overall feel a bit drab and basic. Granted, it is a card game, but at least some visual spice would be nice.

Overall, Broadway Poker is a decent poker title. It isn’t too much to look at, but it offers some nice new ways to play for poker advocates. That said, though, non-poker players may have some initial trouble understanding the Omaha and Double Dash versions of the game. Of course, seeing as the game is brand new with only a handful of monthly active users (under 1000), we will have to wait and see if it catches on or not.

The United States Patent and Trademark Office has proven to be the place to watch for new Zynga titles, in the sense that the company has been busy trademarking names for future games. FishVille was one example from last fall, then PetVille was another, and now Games.com has noticed that the company has trademarked 21 new games on either December 16 or 21 of last month.

The list includes a range of new and old-sounding genres that use words like: hospitals, hotels, zoos, animals, treasures and crime. Straight from the USPTO:

Readers will note that many other games in these genres already exist. In the hospital category, we have Vojo World’s Medical Mayhem. In the animal/zoo category, we have Rekoo’s Animal Paradise, RockYou’s more recent Zoo World, and many others. We haven’t seen blockbuster hotel or “frontier” games on social networks yet, but it’s pretty easy to imagine a simulation game that lets you run your own hotel or create a frontier town. We’re also intrigued by the appearance of gambling-related titles like Poker Blitz, Casino Blitz and Casino World — Zynga had a big hit with its Texas HoldEm poker game but it has appeared to be more focused on sim games these days.

Overall, the list of trademarks suggests that Zynga is continuing its strategy of picking promising genres, then making games that are good in their own right but also tap in to Zynga’s massive cross-promotion ability on its other games and its big warchest for advertising.

Company chief executive Mark Pincus laid out his thoughts on this year in an interview with us from late last month. He emphasized that Zynga is going to try to make its games even more social — so you’re having lots of social interactions with friends inside of games, rather than on Facebook or other platforms. He also said that he expects his company’s games to stay focused on the mass market of social gamers, rather than trying to increase complexity for niche hardcore types:

I think there’s a continued trend towards greater simplicity. We learned that lesson this year. While our games are more accessible than hardcore games, nobody realized making them more simple would unlock more users. Nobody would guess that one of most popular categories would be fish swimming around in a bowl. I would be shocked if it didn’t get even more simple.

A promising range of applications has shown up in this week’s up-and-comers list, including what may be a popular new genre of game — health care.

For those who haven’t been following recently, this list is derived by looking at the apps on AppData with between 100,000 and 1 million users, that grew by the most monthly active users in the last week. Inevitably, some apps seen here are simple quizzes or gift-giving types, that have short and uninteresting life-spans. However, this list also provides an early look at high-quality apps that go on to become major hits — like LOLapps‘ string of role-playing games released in recent weeks, including Champions Online Diva Life, Yakuza Lords, and more.

	Name	MAU	Gain	Gain, %
1.	Medical Mayhem	444,487	+444,186	+99.93
2.	Band of Heroes	881,360	+191,253	+21.70
3.	The Hierarchy	550,764	+187,483	+34.04
4.	Piou Piou contre les cactus	540,930	+179,711	+33.22
5.	Ask a Friend	522,568	+171,577	+32.83
6.	魔力學堂Web	178,394	+109,746	+61.52
7.	Ninja Warz	188,815	+81,698	+43.27
8.	Ponzi, Inc.	127,113	+80,217	+63.11
9.	COLLAPSE!	331,537	+76,232	+22.99
10.	Top Fish	169,967	+65,778	+38.70
11.	GooBox – Giochi gratuiti	109,688	+57,820	+52.71
12.	BlingTown	160,758	+57,721	+35.91
13.	WHAT IS YOUR PURPOSE IN LIFE?	411,929	+45,216	+10.98
14.	Santa Yourself	102,230	+41,619	+40.71
15.	Do you think…?	372,339	+40,233	+10.81
16.	The True Age Test	426,093	+36,342	+8.53
17.	Spore Islands	154,986	+34,839	+22.48
18.	Which Classic Hollywood Actress Are You?	204,907	+32,178	+15.70
19.	Gift Creator	636,920	+31,986	+5.02
20.	Flowers 4 You!!	407,637	+30,499	+7.48

So today, at number one on the list, we have Ultimate Slot Machines, a game made by Hong Kong-based 6 Waves — or we would have it if the developer had designated it as a “game” within Facebook’s application directory, instead of putting it in the “lifestyle” category. Anyway, in it, you can choose from all sorts of slot machine games like what you’d see in a casino, except you can’t win real money. The game has gone from 0 to 484,000 within the last week, probably partially due to developer cross-promoting it across its dozens of other apps.

In second place — but first on this list — we have Medical Mayhem, made by a little-known developer called Vojo World. Interestingly, the game is being cross-promoted by 6 Waves within the toolbar it runs on various apps. And, similar to Ultimate Slot Machines, this app has grown nearly all of it 444,000 monthly active users within the past week. We’re also interested to see how the medical genre does on Facebook — especially, for American audiences, as Congress debates a major overhaul of the real-life health care system. This game makes you the boss of a hospital (we presume a private hospital, not a government-run one), and tasks you with organizing doctors and nurses to take care of patients as quickly and effectively as possible.

LOLapps has one RPG still on this list, that is close to graduation — Band of Heroes, with 191,000 new users and 881,000 total monthly actives. We expect it to have moved up into the big leagues of apps with more than 1 million users by this time next week.

Some other, previously-seen games on today’s list are spy RPG The Hierarchy, from Serious Business. It grew by 187,000 to reach 551,000 monthly actives. Other returns are Ponzi, Inc., a corporate business RPG, Top Fish from Slide, arcade-style game COLLAPSE! and Electronic Art’s Spore Islands.

Also notable are two French games, Piou Piou contre les cactus and GooBox – Giochi gratuiti, both of which have also made this list before.

Fresh off its up-to-$400-million purchase by Electronic Arts, Playfish is getting ready to roll out a Facebook poker game, called Poker Rivals.

Lots of people love to play poker online, and Zynga’s Texas Hold’Em Poker has shown they’re willing to do it on Facebook without actual cash involved. Just a few weeks ago, that game still held the #7 spot in this month’s Top 25 Facebook Games with nearly 19 million monthly active users, many months after it first launched.

Here’s what the app’s Page says:

Playfish have gone all in with Poker Rivals to take Texas Hold ‘Em Poker to a whole new level. Whether you’re a newcomer to Hold ‘Em or you’re an old hand, you’ll feel instantly at home in the ultimate poker experience. Hit the tables with your friends or try your hand in a tournament, then show everyone you’ve got the right stuff by buying new clothes, accessories, even a whole new apartment with your winnings. You can even buy your own private yacht, but that’s for the real high rollers only.

Veterans can hit the tables right away while beginners can choose to clue up in the Poker Rivals tutorial — don’t worry if you’ve never played a hand of poker, it’ll teach you everything you need to know. Have you got what it takes for Poker Rivals?

The game looks great, despite the fact that it is still in beta, and not actually intended for mass distribution yet. Players don a virtual version of themselves and play poker, leveling up as they win. While more features will likely be added before Playfish starts promoting the game, Poker Rivals already has some solid new ones that we haven’t seen in other social poker games. One is a way for players to purchase items using their winnings and decorate their avatars. Another is the ability to animate their characters in the game — so you can wave your avatar’s arms if you’re not happy about the cards you were dealt, for example.

Bigger picture, it’s also notable that Zynga has been going after some of Playfish’s game portfolio, launching Café World to compete against Restaurant City, and possibly planning PetVille (more here) to go against Pet Society. So, it’s easy to interpret Poker Rivals as a shot back at Zynga — but now with the resources of EA to back Playfish up.

Baseball Superstars 2010 is the second in an iPhone social basebasll game series from Korean developer Gamevil, and it’s so fun that when we reviewed it we forgot about lunch.

There’s more to the game than typical baseball video game features, like seasonal play mode or home run derbies. Gamevil is known for its RPGs (i.e. the still growing HYBRID: Eternal Whisper), and evidently that prowess carries over into this portable sports title.

Players are able to create their own pitcher and batter and build up these characters in a game mode called “My League.” In order to improve said characters, one must put them through a myriad of training exercises. Okay, realistic, but dull… until you get to the rest of the RPG features. You actually need to keep your players happy (4 batters and 2 pitchers), help them work together, and build moral by participating in social events (i.e. dates) and spending your annual game salary on everything from new bats to new shoes. It seems silly, but it is strangely alluring and actually allows the player to connect with their team of avatars on some personal level – something that cannot be said about other sports games.

Of course, despite the draw from this RPG element, the game gets even better. Superstars almost feels like a satire on baseball, because this game has a collection of some of the most outlandish characters and game mechanics you will ever see in a video game. Not wanting to spoil any surprises, but some of the more memorable moments include a robot-looking space man… thing, a demon, and a pitcher that decided to turn the baseball into a bomb. Yes… a bomb. Don’t ask how… just go with it.

Wait, there‘s more: This game is fun to play alone, and thankfully, it can be made better with multiplayer. Unfortunately, the game is not multiplayer in the sense that Madden Football is multiplayer (live) but Gamevil utilizes an asynchronous versus system that lets you go online and play against another player’s team. Granted, you don’t play them, per say, but you do download all of their players’ statistics and pit your team leveling, as it were, against theirs.

Suffice to say, this game is fantastic fun, whether you like sports games or not. It has all of the sporting elements of a traditional baseball game, but the RPG features are so out there, it certainly doesn’t feel like one. It’s fun. It’s addictive. It’s memorable. And it’s well worth the $6 price tag.

[Editor's Note: This is a guest post by David Bailey, a partner at Kauth, Pomeroy, Peck, & Bailey LLP.]

The saga of the Facebook hit game Mafia Wars has made the issue of intellectual property obvious to any serious social game creator. But given how these laws have developed in the rest of the gaming industry, many games likely contain intellectual property. This will gradually reshape social gaming.

In 2008, Mob Wars creator David Maestri — a developer at top social gaming company SGN — left to launch the game on his own. He was sued by SGN, and settled amicably: He owns the game but SGN has some rights. Then, he sued top social gaming companies, Zynga and Playdom, for creating quite similar games called Mafia Wars and Mobsters. Those cases were settled earlier this year. Meanwhile, these companies and many others have continued building mafia role-playing games and expanding them to other platforms, like the iPhone.

Today, social game developers are increasingly focusing on strategies to prevent imitators from luring away potential users.

A mixed IP history

Unfortunately, games inspired by the successes of others have plagued the entire industry since its inception and the courts have rarely intervened. This inability to prevent imitation, however, has led mainstream game developers to devise a number of successful strategies for preventing imitators from gaining a significant user base. More “traditional” strategies pioneered by console gaming developers are based upon copyright and trademark law, and are equally applicable to social games. Newer strategies are also emerging in the Massively Multiplayer Online (MMO) and social gaming industries that leverage innovation in underlying technical infrastructure as the basis for seeking patent protection for game features.

A great deal of experience in preserving the distinctiveness of a title was obtained in the arcade and console gaming space during the 80s and early 90s. Developers of successful games initially attempted to stop imitators by claiming violation of copyrights in the successful game concepts. However, the courts were persuaded that no copyrights existed in the game concepts under the scenes a faire doctrine — it prevents copyright in incidents, characters, or settings that are common in the treatment of a given topic. These rulings and subsequent affirmation by the courts have green-lighted imitation in a succession of titles including Asteroids, Street Fighter II, and Golden Tee. Even in the most egregious cases, where an imitator specifically set out to create a game so similar that users could switch without difficulty, the courts were willing to permit the imitation. Only the copying of distinct characters from a game was considered sufficient for the courts to intercede.

Starting a franchise

Console and arcade game developers frustrated in their attempts to prevent competition from imitators turned to releasing new titles tied to built-in audiences in hopes of rising above the noise and achieving commercial success. The majority of top-selling games on almost every console gaming platform are part of a series or franchise and many also include a tie-in to a television show, movie, comic book, sports league, or celebrities. The current notable exception is the Wii, where the platform itself has been disruptive. Accordingly, Wii game developers, much like social game developers, are enjoying a window in which success can be achieved via an innovative game concept. The prediction can be made, however, that as the market for Wii games and social games becomes increasingly crowded franchises and tie-ins will play a larger role in game success.

Turning a successful game into a franchise involves a title becoming recognizable enough to drive engagement with future titles. Consequently, branding is an important component of establishing a franchise. Trademark law grants powerful rights in brands that are distinctive. A game with a distinctive name or characters more readily lends itself to becoming a franchise, because trademark rights in the name or characters can be used to keep others from offering games using a similar name or characters. The ability to protect the distinctiveness of the title is ultimately more likely to result in a user playing the next title in a series instead of being lured away by a title with a similar sounding name, and look and feel.

When the broader entertainment industry took a greater interest in video games as an additional way to derive revenue from its intellectual properties, game developers were provided with opportunities to adapt television shows, movies, and comic books into video games. Developers were also able to obtain exclusive rights to use the likenesses of athletes in professional sports leagues. Many states grant individuals publicity rights to control the use of their name, signature, voice, or likeness in advetising. Securing an exclusive license to copyrights or publicity rights proved extremely lucrative. As one example, PGA Tour Golf was originally developed to imitate the game play of Golden Tee. However, the developers of PGA Tour Golf secured the rights to feature golf courses and the likenesses of professional golfers from the PGA tour. Tiger Woods PGA Tour has gone on to become an extremely successful franchise for EA Sports. Social game developers may find that the presence of existing licensing agreements with console game manufacturers complicates their ability to access the copyrights, publicity rights, and associated trademarks that have traditionally been licensed to the video gaming industry. However, opportunities exist where social game developers can form partnerships within the video gaming industry or exploit tie-ins to content that is not already licensed either because the content is too new or was unsuited to adaptation for console games.

What about patents?

Patents have not traditionally played a role in preventing imitation of video games. While hardware manufacturers held many patents, game developers submitted very few applications as their games were largely tethered to platforms created by hardware manufacturers. The landscape began to change with the advent of MMOs and to a lesser extent Internet-connected console gaming systems.

Starting around the 2003-2004 time frame, MMO developers began to realize the potential for obtaining patents with respect to features within their MMOs. The implementation of many of the features involved overcoming technical challenges that had not previously been encountered, which meant that the solutions to those technical challenges and the resulting game features were candidates for patent protection. Delays inherent to the patent system have meant that, to date, very few of the patent applications have actually issued.

Assuming the Patent and Trademark Office grants the applications at some point, the developers holding the patents will be at a significant advantage with respect to their competitors and the overall effect will likely be to significantly raise the barrier to entry in the MMO space. A similar opportunity exists for social game developers to “own” features of their games. A new feature that could only be implemented by overcoming a technical challenge is, more often than not, capable of receiving patent protection. The decision to seek patent protection should hinge upon whether securing exclusive rights to the feature preserves a core part of the distinctiveness of a particular title’s game play. Unfortunately, the ability to obtain patents in a space means that there is a greater risk that social game developers will become targets for patent trolls as has been the case in the MMO space. Therefore, maintaining accurate records and code base backups to preserve prior art today could be vital to proving the invalidity of someone else’s patent at some point in the future and avoiding a costly lawsuit.

Conclusion

Ultimately, the history of the video gaming industry is one of innovation and imitation. While the copyright laws continue to permit the imitation of successful social games, the developers of those games should seriously consider imitating the manner in which copyrights, patents, and trademarks have been used in other contexts to build successful game franchises.

David Bailey is a founding partner of KPPB, a California-based intellectual property boutique law firm that services a global clientele across a broad range of industries and technologies. David has extensive experience in representing clients in all aspects of the video game and digital video industries and his current practice focuses on developing IP strategies for rapidly growing start-up companies including social gaming, social application, iPhone and Android developers. David holds degrees in electrical engineering and law and is admitted to practice in California, New York, and before the United States Patent and Trademark Office.

When it comes to social game monetization, usually you expect to hear about advertising, virtual goods or currency, or occasionally something a little more creative. However, New York-based PayoutHub is taking a different approach entirely: the new startup has built a service allowing online game developers to actually monetize using cash prize-based tournaments.

The concept is simple: People like money, and some are willing to “wager” a little bit to try to prove their mettle and win more cash. Game creators are able to quickly integrate the PayoutHub service into their games and start hosting tournaments quickly. Once a tournament begins, players buy-in to add to a prize pool using either credit cards, Paypal, or completing free offers. When someone wins, the jackpot is distributed to the winners via check or electronic payment, with both PayoutHub and the developer taking a cut.

To keep things simple, PayoutHub handles all payments and payouts on their side so long as the game is capable of sending them some sort of player score. Currently, the service supports mobile, web, and social network games. Despite its short existence, the monetization service has already launched with 20 games from 7 developers, including two from Facebook and one from the iPhone (Edit: as clarified by the developer of PayoutHub, the stated “iPhone” game is actually a title for Sony PSP called Kitty Cannon. The current negotiations with various iPhone developers has not yet been sealed.).

Regarding potential legal questions, it’s important to note that the service is not the equivalent of traditional gambling. These tournaments are considered “skill-based” and are, in fact, very legal throughout the most jurisdictions in the United States and Europe. Of course, the qualifier here is “most,” so it would be wise to research laws in your area just to be safe.

Beyond legalities, security issues could also be a challenge, but PayoutHub says it does all it can to ensure secure transfers of scores and results, and will not hesitate cancel a tournament should they suspect foul play is involved. If that happens, player buy-ins are refunded.

For developers interested in exploring alternative monetization opportunities for challenge-based games, take a look at PayoutHub.

Zynga’s counsel has been busy as of late. While Zynga has been filing and receiving multiple  IP-related lawsuits in recent months, the company has recently filed several new trademark infringement lawsuits against those copying marks found in its top games.

The first of the two suits was filed on July 1st against Philip Labrasca for both the stated infringement and violation of Terms of Service for the top Zynga game, Texas Hold’Em Poker. According the case (Zynga Game Network, Inc. v. Labrasca), the defendant owns and operates 13 different websites that make use of the “ZYNGA” trademark to sell virtual poker chips. The very next day, a second lawsuit was filed against Duc Doan for the same allegations (Zynga Game Network, Inc. v. Doan).

Zynga also filed a couple of other suits earlier in June.

The first, Zynga Game Network, Inc. v. John Does 1-5 was filed on June 2nd. Then, on June 19th,  Zynga Game Network, Inc. v. John Does 1-50 was filed (the term “John Does” means the domain names in question registered “using the Domain by Proxy privacy protection service, preventing Zynga from accessing the name and contact information Defendants used to register the domain names”).

Each of these cases have similar claims. The first five claims below can be found in all four lawsuits (the last two are not charged in John Does 1-5):

• Trademark Infringement – False Designation of Origin Regarding the Mark: The complaint alleges that consumers may be confused or misled into thinking a connection exists between Zynga and the defendants by the defendants’ use of the ZYNGA mark.
• Trademark Infringement – Federal Cybersquatting Regarding the Mark: The complaint alleges that the defendants registered domain names with the bad faith intent to profit from use of the ZYNGA mark.
• California Statutory Unfair Competition: The complaint alleges that by using the ZYNGA mark and selling the virtual chips required for the game the defendants are attempting to trade on Zynga’s goodwill and have gained an unfair advantage.
• Common Law Trademark Infringement of the Mark: The complaint alleges that the defendants’ use of the ZYNGA mark causes confusion or deception as to the source of, and authorization for, the defendants’ products in violation of California common law.
• California Common Law Passing Off and Unfair Competition: Zynga is seeking punitive damages for the defendants’ allegedly intentional and malicious actions which Zynga says resulted in an unfair advantage.
• Breach of Contract: Zynga claims the defendants agreed to be bound by the game’s Terms of Service by participating in the poker game. “By selling ‘chips’ for use in the Game through the Infringing Websites, and by using the Game itself to transfer the ‘chips’ they sell, Defendants have breached the Terms of Service, which specifically prohibit Game users from exchanging ‘chips’ “for ‘real-world’ money or otherwise exchange items for value outside of the Game.”
• Intentional Interference with Contractual Relations: Zynga alleges that the defendants intentionally acted to induce consumers to breach their contracts with Zynga by selling chips without authorization at a lower price than Zynga offered and by distributing the chips in a manner prohibited by the Terms of Service.

Suffice to say, Zynga is out with a vengeance when it comes to others infringing upon their intellectual property. It’s certainly an interesting time in the space, as a multitude IP-related issues remain far from settled. We’re sure to see many more in the industry in the weeks and months ahead.

[via Patent Arcade]