Facebook seems like the last platform on which a small, independent games developer would want to get started. Cost per acquisition is rising, competition is fierce and when someone does come up with a unique game concept, the clones aren’t far behind. It is where 5th Planet Games got started, however, and its story is proof that indies can make it on Facebook despite the odds. At three years old and with just 300,000 monthly active users, the developer is on track to make over $10 million in annual revenue this year.
Here’s what the odds on Facebook look like going into 2012. Zynga dominates the market, projecting up to $1.5 billion in annual bookings for 2012. As of its first quarter earnings report, Zynga makes 5 and a half cents average revenue per daily active user, with 65 million daily active users across social and mobile platforms. Farther down the developer leaderboard, the picture is less clear as private companies avoid disclosing revenue and ARPDAU. Mid-market developer Kixeye, however, recently told TechCrunch it’s expecting $100 million in 2012 revenue at something like 80 cents ARPDAU. Cost per acquisition is lower for Zynga than for Kixeye by virtue of its massive cross-promotion network; but we’ve heard the average CPA on Facebook is around one dollar.
This picture was very different when 5th Planet launched its first game, Dawn of the Dragons, on Facebook in 2009. For one thing, Facebook Credits were not mandated for game developers back then. The social network had also clamped down on virality, cutting off social games from posting stories in News Feed. To get its hardcore collectible card game off the ground with no funding to its name and no actual marketing budget, the 5th Planet had to get creative.
“The only choice we had was guerilla marketing,” CEO Rob Winkler tells us. “We set up our official forums and started talking to people, then we started talking to them on their walls, then in Facebook groups they had for other games and so on. What began touching as many message boards as possible, which grew into over 1,000 posts and messages across hundreds of forums and walls to drive that initial traffic surge.”
Dawn of the Dragons peaked on Facebook at over 300,000 MAU and 54,000 DAU in August of 2010, as tracked by our AppData traffic monitoring service. Those are not big numbers compared to other games of the day, but they were enough to keep retention north of 15 percent (which indicates a reasonably healthy social game). A second game, Legacy of a Thousand Suns, launched later that year and managed to climb to over 500,000 MAU and 60,000 DAU at peak traffic — but retention slipped below 10 percent. Its third game, Clash of the Dragons, launched on Facebook in July of 2011 and didn’t even break 100,000 MAU. The platform had changed so much that 5th Planet was forced to change the way it did business.
“Facebook Credits and rising CPAs certainly changed the way we viewed the platform,” Chief Business Officer Braden Moulton says. “Our CPA [in 2011 was] in the $.50 range, so we were better than most. Today that same user would be well over $1.”
This led the developer to look at expanding to new platforms and games networks. For its first expansion, 5th Planet settled on Kongregate, a games portal purchased by brick-and-mortar video game retailer GameStop in 2010.
“The integration was very easy,” Moulton explains. “One of the main differences (and attractions) for working with Kongregate is that they handle promotion themselves. So while they take their cut of revenue, we aren’t burdened with driving users to our games. When we launched Clash of the Dragons there in December 2011, Kongregate poured a ton of traffic into our game — 300,000 installs in just 30 days. We had never seen numbers like that.”
At the 2012 Game Developer Conference in San Francisco, Kongregate broke some of those metrics out for the audience — highlight an average spend per paying user of $120 per month and 90 percent of revenue from players spending over $100. Moulton updated us to say that spend per paying user is now closer to $160. Even so, average revenue per monthly active user is still higher on Facebook than Kongregate for Dawn of the Dragons — a little over $3 compared to $2. Across Facebook, Kongregate and its destination site, 5th Planet sees around 70,000 daily active users and calculates ARPDAU at about 40 cents.
5th Planet Games is planning to debut its fourth game exclusively on Kongregate in June before expanding it to Facebook and European platforms. It also plans to release mobile versions of its game sometime this year. Beyond games, 5th Planet recently acquired collectible card game developer To Be Continued and will likely look for other indie studios to acquire as it expands. The developer is still proudly boostrapped, but Moulton says 5th Planet would explore funding if the right opportunity to accelerate growth came along.
As for other small studios looking to get onto Facebook, Moulton advises, “Make something completely unique or make a good slots game. Facebook can still be profitable, but it’s going to be tough.”