Not much is talked about fund raising for Video Game companies. The simple reason is not that many video game companies choose to raise external investment. Most video game companies choose the easier route of obtaining publishing funding to develop games. This has many pros and cons (far too many to be detailed in this post) but generally means that the publisher will ask for complete ownership of the games that they finance (completely reasonable) with the main effect the game company doesn’t own the games they make which naturally means they don’t get to reap the biggest financial rewards if the game is successful. This type of funding is more relevant to the big multi-million dollar online and console games and not the types of games we wanted to make.

It also wasn’t the right time or place to be courting publishers to the opportunities of the Social Games market as they themselves were facing massive financial uncertainty due to the financial crisis and every single one of them was shedding market capitalisation like it was going out of style. Not a good time for those guys you’ll have to agree.

When we started Simple Lifeforms our main objectives were;

• Self Funded – We had a lot of games we wanted to make and it was very important for us to be in complete control of the games we made.
• Self Published – We wanted to give our players the best experience possible this meant we absolutely had to publish our own games and making sure we managed customer support, feedback, billing, websites, marketing and PR for our fans.
• Publisher – We wanted to become a publisher ourselves and use what we already knew as developers and publishers and what we were going to learn about social games to help other companies make better social games.

So with these objectives in mind we had only one choice in front of us. We had to go and raise money to fund our ambitious plans. This didn’t seem that daunting. When we started planning Simple Lifeforms Tadhg and I both had very senior roles in the games industry and funding for games companies had been at an all time high (See: $1.7 Billion Invested into Online Games).  So whilst we thought the task was going to be hard we certainly didn’t imagine it wasn’t going to be as hard as it turned out to be.

There’s a huge difference between creating a game company that needs outside investment compared to a company that works for publishers. Some of the key differences and the things we have learned throughout the process are as follows.

Business Plan

Finding investors meant that the first thing we had to do was write a business plan. I’m not going to go into how to write a business plan for a games company as that’s an ENTIRLY different conversation but rest assured it’s hard, time consuming, soul destroying, exhilarating, humiliating but immeasurably worthwhile.

Be prepared to rewrite your plan several times and quite extensively, adapting it to feedback from investors, comments from advisors or to react to  major competitor, market or industry activity. I have always found that the most import thing you do with your business plan is get as much critical feedback as possible from people you trust first before you place it in the hands of investors.

Your business plan is something that gives investors a critical first impression and overview of your business and is being circulated to people who are spoilt for choice for investment opportunities. To stand out from the crowd you should actively seek critical feedback. Ask people to be very tough and critical in their feedback as that is really the only way that your plan, your assumptions and your ideas will get better.

Help and Support

When you’re setting up a company to obtain funding a lot of success will rest on the quality of your team, your business plan, your passion, choice of market, core idea, product(s) and most importantly finding people that are willing to invest in your business. That you will agree is a lot of things to get right ever before people will review your plan and hand over their hard earned money to bet on you, your team and your ideas.

An instinct you will have to fight is to believe that because you have expertise in your chosen area and have worked at a senior level in your industry that you have to do everything yourself and also that you have all the skills necessary to do it yourself. That instinct is both dangerously wrong and hard to fight. When setting up a new business the first thing I would advise is creating a list of people who can help you plan the business. This list should include potential mentors, advisors, investors and people that have expertise in areas that can help your business.

When we set up Simple Lifeforms the first person I contacted was Paul Jenkinson of Connect Midlands. Connect Midlands is an investment readiness program based in the East Midlands. The programme takes you through the entire process of planning a business and will help you create a business plan and then pitch and fine tune that pitch in front of real investors. This process is invaluable and its extraordinary good value for money. Paul is a great guy and he started the process by providing me with a business mentor. My business mentor became my first investor so there was a lot of value in starting the process this way for us. Through the connect midlands process we created our first business plan and investor pitch and with the feedback we received pitching to real investors we secured our initial funding from local angels and the regional screen agency EM-Media.

EM-Media invest in lots of media projects and companies and they have been a great supporter of video games. Most of the UK screen agencies provide some sort of funding for video game companies and projects so it’s well worth approaching them if you’re looking to fund a games company.

Fund Raising

Fund raising is that much harder now but expect some of the following to apply to your quest to find money to start and grow your business

Less Money

Expect to raise much less money at start-up than you imagine you’ll want, need or expect. When we started the business we were planning to raise between £500K and £1 million to fund a fully formed development studio, a portfolio of games, a big marketing budget, top shelf development team and enough resources to make large scale strategic moves into the social games industry. If we had started the business in 2008 or before that would have been both possible and realistic but absolutely no one is putting that sort of money into start-ups and that’s not going to change in the short to medium term.

Smaller Valuations

Expect to be hammered on your company valuation. The time for getting high company valuations based just on the quality of your business plan, team and idea are gone. Your company valuation will be a fraction of what it was pre financial crisis. You will have to accept that people will simply not value your business anyway near what you expect unless you are already in market, have users and are generating revenue. If you are the very early stage and have no product or market traction you will simple not get an investor to commit to a high valuation.

Investor Material

Your investor material will have to be at an even higher level of quality than normal. It is really competitive environment with a lot of excellent companies, teams and ideas pitching a smaller group of investors with less money to invest. Expect to spend a great deal more time on writing business plan, pitches, researching your market, reassessing your ideas, developing a working prototype and doing much more with less money and resources to stand out from the crowed. This is actually a great opportunity for new businesses. If you can manage to get all this material right, your business will be much better off in the long run.

Team

Many people have used the financial crisis as an opportunity to form new businesses or find opportunities to grow in the market gaps that have been created in the turmoil. You will be in competition with these companies that have excellent teams, ideas and products. It is important to get the right team for your start-up. A modern game company can use the best technology, media, creative and business ideas to capture global market opportunity. Investors invest in businesses they won’t really care that much about your game so make sure your team has strong financial, business and marketing skills or advisors (these can be part time) that will be able to run or advise you on running those essential parts of the business.

The greatest single lesson I can share is that your team is by far the most important component of planning and running your business and getting funded. If you get the team right you will have people that can help you plan the business, prepare your investor material, help you find investors and support you when things are tough. 

Progress, Progress, Progress

So assume you will raise less money, the money you raise will be at a much lower valuation that your want and that you’ll be expected to perform miracles with the money you do raise. Now I relish challenges so this is actually the fun part of the job for me. I love having little or nothing and finding creative solutions to problems and still being able to achieve great things. In fact most video game companies don’t have a lot of money anyway so you learn to do a lot with a little. But you have a really tough challenge ahead of you. Investors will expect a working product, paying customers and a scalable business model before they will even consider parting with any of their money so you will have to find very creative ways to reduce costs, develop products, build a team and prove your business idea with little or no money before you will be taken seriously and that is a very hard thing to do.

(best viewed in ‘Open in New Window mode)

Comments welcome.

(You can follow me @tadhgk on Twitter)

We don’t want them to design the game from the ground up (that work is already done). What we want to do instead is a little experiment in crowd-sourcing for some user interface ideas. Crowd-sourcing is something that normal game developers would never dream of doing for fear of theft, but we work in a sector of the games industry that is not exactly normal.

One of the differences between the web industry and the games industry is that the open standards and low tech barriers of the web encourage a culture of sharing. Every successful website has dozens of imitators, most web innovation is essentially built on the ideas that others laid out, and they even use open-source or crowd-source schemes to build up whole platforms of technology that nobody really owns. A lot of web developers are downright communist about this sort of thing in fact.

The games industry, by contrast, has a lot of proprietary barriers and silo-size studios that are used to being much more defensive about their technology, their ideas and their intellectual property.

There is often a very good reason for being defensive: game developers tend to clone each other, use each others’ ideas as a basis for their own, and many developers feel in this multi-million budget marketplace that they need to protect themselves.

It is in the nature of software that it attracts imitators and second-stage innovators, just as it is in the nature of film-making or novel-writing. For some it’s because there’s a cheap opportunity of exploitationto make a fast buck, but for many it comes from a desire to evolve, build and grow something even better.

What should really determine a company’s attitude to imitation is where the value is located in the software. So for game developers, still reliant on retail revenues, cloning and copying are scary. However for web developers such activities are often helpful to raising your own profile. A lot of it is about retail versus service.

My company is primarily a service-based company rather than a retailer. We are not looking to sell copies of Spell Souls in the shops, we are creating our game to work on Facebook and to be available for everyone to play for free.

Our game, like a search engine, will give you access free gratis, and we’ll look to build our profits in other ways. In service-based markets the issue is not whether you make a big splash with users. It’s all about whether you retain users. Retention comes in many ways and for many reasons, but the bottom line is that the objective behind Spell Souls is to build long term relationships with players rather than the fire-or-forget of retail.

So put it this way: If the game is successful then some developers are going to take the ideas and use them to try and build something better. I’m satisfied that the core of the game design will remain protected because, like any web application, it’s a unique and endlessly-updateable database of algorithms and rules. However if the user interface of the game is going to invite imitation, why not get ahead of that and invite people to contribute directly?

So that’s what we’ve done. We ran a competition via the 99designs.com website for designers to help create the look and feel of the game. The prize? was $1,000. Youll see the results in a few weeks when we launch Spell Souls onto Facebook.

You can follow tadhg on twitter at @tadhgk

In Spell Souls every player is one of the Magi, a secret society of wizards, sorcerers and shamans. They compete in an ancient ritual contest called Spell Souls to see who among them is the most powerful. The game features strategic turn-based play combined with social features to allow players to compete, befriend and socialise with each other.

Tadhg Kelly, designer of Spell Souls, said “Working on Spell Souls at Simple Lifeforms is very exciting because it is so different to anything else we have done before. Spell Souls is both a social game and a strategy game, which presents unique challenges and fun gameplay opportunities. For example: You can use your friends as a part of your game by literally turning them into playing pieces that you use to battle other players.

Another aspect of Spell Souls is competition: You directly compete against other players. This is pretty unusual for a social game. Games on Facebook often tend to be essentially single player games that tangentially involve your friends as a means to promote the game, but we wanted to make the social aspect of Spell Souls important and a fun part of the game itself. Competition with real people is challenging and usually more fun than single player gaming.

It’s not all about competition and winning though: We want you to make new friends through Spell Souls, find people who share similar interests as you, and allow you to be creative in the game. We have a ton of cool social features in development as we continue to expand the game. So there’s always a reason to come back, to explore further and to meet new people.

We’ve been working away on Spell Souls for the last few months and it is now time for you to join in the fun, tell us what you want, what you hate and help us grow the game and make it better for you. ”

If you are interested in helping Simple Lifeforms develop and test Spell Souls, you can sign up to the official newsletter at the Spell Souls website or subscribe here directly.

You can also follow Spell Souls on Twitter: http://www.twitter.com/spellsouls for more updates and news on the game.

Spell Souls

Every player is one of the Magi, a secret society of wizards, sorcerers and shamans that have been battling over the fate of the world since the dawn of time. They compete in an ancient ritual contest. The name of this contest is Spell Souls. Spell Souls is like a magical jousting tournament whose origins are lost in the distant past. Some say that it was invented as a game between God and the Devil, others that it has its roots in medieval times. In China, many Magi believe that Spell Souls was inspired in the court of the Emperors as a way of settling disputes between rival Magi houses.

The form of the contest is simple: Two Magi face each other at either end of a great arena, casting spells at each other and summoning the souls of their friends to capture magical points of power called Orbs. She who captures the Orbs controls the arena, and she that controls the arena wins the match, leaving her opponent defeated and shamed.

In addition to actively competing against other Magi, every player cares for their souls. They create them, develop their abilities, equip them with items, and develop unique teams of souls for use in the arena. Over time every player acquires a reputation, becomes more powerful and able to battle in larger and much more complex arenas.

Community

However the life of the Magi is not all matches and combat. Our ambition is to create a game that brings strategy gaming and a social community together.

As a Mage, you’ll also be involved in community activities, like inventing spells and items that others Magi can use. You’ll sometimes play against your friends, sometimes against complete strangers, but in time you’ll make friends through the game, perhaps chat with them while playing, and just have a lot of fun in the process.

Oh, and by the way: All this will be free.

What’s Next?

In the coming weeks and months we’ll go into detail about some of the features and how they’ll work. Our hope is that you’ll become involved, tell us what you think rocks about the game and also what sucks. Our second hope is that you’ll meet other like-minded players and make some friends while enjoying this site. Lastly, our third hope is that you’ll spread the word about this cool new Spell Souls game. We think it’s cool and we’re pretty sure that you will too. The more people that join the community, the better the feedback, suggestions and conversation will be. And that’s all the better for everyone.

Let Spell Souls begin!

Marketing is also not just broadcasting, it is research: Where are your audience, how do you find them? How do you engage with them? How does a social games startup manage its marketing, spread its message and engage with users?

This is an article about some ideas we’re trying out and how we’re looking to approach users.

For a small company like ours, the Internet is life itself: Our games exist on the internet as do our users. The Internet represents many new marketing opportunities and is often called the inheritor of television and other mass media. This is likely true, but if it is then its shape is radically different to its forbearers. Television and other forms of publishing are broadcast media but the Internet is conversational. Television perpetuates the idea of a mainstream culture but the Internet has no mainstream and is a blizzard of infinite niches. Television is a one-sided monologue but the Internet is a billion dialogues.

Internet-based games are no different; it is a mistake to think of them as an extension of retail games. Retail games are another broadcast mainstream model. On the Internet there are no mainstream; only ever evolving niches aggregating towards particular destinations for a time before moving on. Channels are irrelevant. Categories are irrelevant. Genres are irrelevant. Genre is a useful term to help understand the landscape, but reliance on it is irrelevant to companies like us who are working trying to build something new.

Social games companies are not broadcasters: We’re user aggregators, collective builders, conversation enablers and niche creators. When we market we are lot looking for the transient attention of the huddled masses, as television does, we are looking for the one in a thousand user who finds relevance in our message. That person wants to build a relationship with us. They want to have a conversation with us, and we want to have a conversation with them.

So we use the Internet as a means of distributing our products, engaging with our community and conducting an ongoing conversation with the people interested in playing our games. We don’t just want to talk at them, we want to talk with them. We also want them to talk with each other.

And we also want to talk about the social games industry with our peers, to see where it stands and see what interesting insights we can find. That’s why we’ve started #socialgames on Twitter, a Linkedin group, and this blog.

Wordpress

Our primary marketing tool is this website and its blog. A blog is essential for any company, regardless of size, and creating and publishing one helps to get your message out. A basic mistake that many bloggers make is that they treat their blog as an extension of their press release channel. We have republished a press release or two as a part of the blog, but the blog cannot simply be a press channel. To write a blog means you have to continuously provide material that starts and maintains conversation and debate.

Our blog is really the core tool of our present marketing effort. We use our blog to talk about our products, our ongoing quest to build a new type of social games company and provide research and analysis about the social games industry. Our blog also allows readers to comment on our articles and get in contact with us which directly. Or blog articles also distribute further than just the blog itself through social networks (see below).

This site cost nearly nothing to develop other than time. We chose WordPress.org (the version that you install on your own server) along with several plug-ins. The WordPress developers describe it as “a state-of-the-art publishing platform with a focus on aesthetics, web standards, and usability” and it is. It’s well supported by many applications (including blogging tools such as Windows Live Writer) and there are many plug-in tools that you can install to extend the power of your blog.

Among the plug-ins that we use are:

• Akismet to manage comment spam
• Google Analytics to track site performance
• All In One SEO which is good for providing summary snippets and tags for search engines
• Feedburner to create a more sophisticated RSS feed. WordPress, like all blogs, supports syndication of posts, but it is usually better to use a service like Feedburner for all the extras that it affords.
• A Twitter plug-in
• A Friendfeed plug-in
• ShareThis, a plug-in that allows easy submission of articles to services like Digg, Reddit and StumbleUpon
• Disqus, for commenting
• Facebook Connect, also for commenting

We’ve also begun appending #socialgames to every article to help the twitterati find our latest posts.

Social Networks

There are four social networks that we use: Twitter, Friendfeed, Facebook and LinkedIn.

Twitter

Aside from the wall of noise that this produces, Twitter is actually a smart tool for those that know how to use it correctly. In a recent post we talked briefly about how to use Twitter and some of the tools that work well with it like TweetDeck.

Twitter is really a publishing platform, because of the way that it allows users to easily follow anyone they like without the need for approvals. With Twitter the person tends to carry more value than the company so there is an element of self-promotion involved. The twitterati (a nickname for Twitter users) are less interested in companies spooling press releases compared to flesh-and-blood people with whom they can connect. Simple Lifeforms’ own Twitter account does not yet have many followers. Alan (@alanodea) likes to keep his tweet stream low and only really consist of members of the business community. I (@tadhgk) on the other hand, have gained about 800 followers and is quite active on Twitter.

With Twitter it is easy to publish a link and get a few readers to generously re-share it. It is also easy to reply to a post, send a direct message or otherwise contact a poster. What Twitter lacks is the ability to thread replies into conversations. All too often we’ll get replies back to posts that make no sense or we can’t remember what the replier is referring to. So Twitter is great for broadcast (which is why a lot of celebrities are jumping on board) but not for conversation.

Friendfeed

Friendfeed is similar but different to Twitter. Friendfeed automates the publishing of links from services that you add to your account and its definition of ‘friends’ is similar to that of Twitter’s followers (i.e. anybody). The Friendfeed community tends to be more reticent about to connect to a new friend unless they are recommended by others for sharing quality material. Nonetheless it is essentially a broadcast tool in the Twitter vein. Friendfeed’s biggest advantage over Twitter is that it threads conversations and allows users to register likes, dislikes and comments in a logical manner. Friendfeed is thus more conversational and tends to build themed topics rather than fire-and-forget posts like Twitter.

However while Friendfeed is been popular with the early adopter technology crowd (like Robert Scoble and Louis Gray), it is not with business people, game players or normal internet users. Friendfeed’s biggest flaw is essentially that it has an image problem. Many prospective users (such as those on social networks like Facebook) don’t really know that sites have feeds that can be imported into other sites, and when they do they don’t always know how to get Friendfeed to work in their favour. Friendfeed’s primary usefulness is often relegated to a republishing service. We use Friendfeed to pass posts from the blog or twitter to each other, into Facebook and other similar tricks, but we don’t use it to hold conversations that much as the users don’t seem to be there.

Facebook

Facebook is well known to everyone as both a sharing site and where social games are actually played. However as a marketing tool Facebook is more challenging than Twitter or Friendfeed. Facebook has 180m+ users but those users are organised around a person’s real life friends and not followers as in Twitter and Friendfeed’s case. Marketing to your friends is not really the same activity as marketing to the public because friends don’t always share the same likes and dislikes, and they can find friend promotion off-putting. So Facebook marketing between friends can’t be too message-driven.

However Facebook does offer the capacity to set up a company identity, with its Facebook Pages and Groups. By signalling themselves as Fans of a Page, Facebook users are tacitly acknowledging an openness to information. Recent changes to Facebook’s design also mean that content published to Pages of which a user is a fan will start to appear in their own Facebook feed as well, which will help to acquire more fans. Facebook fans are thus becoming more like Friendfeed friends. We have a Facebook Page where people can find out about our company and our games.

LinkedIn

Lastly, we’re using LinkedIn. LinkedIn is an odd network in some respects. It graphs professional communications rather than friendships or broadcasts, and people use it mostly to find jobs or telephone numbers of potential clients. LinkedIn has a small amount of sharing functionality (such as their equivalent of status updates and blog republishing) but it seems largely unread by users. One thing that LinkedIn does not have is a strong set of external tools to help bring its groups to the desktop, whereas Twitter, Friendfeed and Facebook all do.

Where LinkedIn may become interesting is in its use of groups. We’ve set up a LinkedIn group to discuss social games but it remains to be seen whether groups in LinkedIn really have any marketing value or not. The prospect of being able to share into the business community is strong, but it depends on whether the community is actively using groups or simply attracting members who want to be seen.

Conclusion

It used to be the case that companies struggled to market and advertise their message,  paying considerable sums for advertising or attracting free media journalists in some way such as through controversy. That paradigm still exists but its influence is being destabilised by the conversational Internet. There now exist many tools that you can use to get your message out so the challenge becomes having something interesting to say and being willing to talk to people who respond. Traditional games companies have held their users at arm’s length (this applies to any kind of company really) but the value of word-of-mouth and social marketing is now such that nobody can afford to be so reserved any more.

You can follow more of our immediate thoughts, hopes and dreams on Twitter:

@tadhgk @alanodea @simplelifeforms

Using Twitter’s own search facility or a tool like TweetDeck it is possible to filter out much of the noise and get to what you want. When Battlestar Galactica’s finale was broadcast a few days ago the place to be was on Twitter and watching the #bsg tag for comments and reviews. Similarly, every Friday Twitter now has a sort of party called #followfriday in which users suggest other users that they think everyone should follow.

So the #socialgames tag is to help gather shared links and posts about social games. The tag has also been added to the Tagalus tag dictionary (here). Read on for a simple guide on how to use the tag.

How to Use the Tag

Any time that you post a link or thought that is relevant to social games, all you need to do is write #socialgames to the end of the post. (Macbook users, your # key is alt+3).

You can also tag blog posts from the title. Many bloggers have something set up that re-posts their articles directly into Twitter. We do this through Friendfeed.  The issue is that most of these services do not yet have the ability to hash tag posts automatically. The solution is to place #socialgames in the post title of any article that you post, and it will get picked up within Twitter and be tagged accordingly.

That’s all there is to tagging.

How to Follow the Tag

Most people encounter Twitter as a website first and foremost, but after a while regular users realise that it’s actually not the best way to use the service. There are others (such as Twitter’s Search) that can help find related articles but the best way is to use the service with a desktop client such as TweetDeck.

TweetDeck (and Twhirl, an alternative) and others are very good at performing self-refreshing searches. These searches are the key to following tags properly because as new items are posted you will receive notifications in real time (or close enough) and so this is how the conversation flows.

So all you need to do is install a client and set up a search for #socialgames and the client will do all the heavy lifting for you. There’s really not much more to it than that.

(you can follow me on Twitter @tadhgk)

Social games as an industry is about the conversation. We realised recently that the  conversation about social games is still waiting to be had but it can’t be forced. Social games are still very unfamiliar terrain to most, and so this article is all about grounding that conversation so that it can begin.

We hope you find it useful.

Social RPGs

Social RPGs borrow a lot from regular video game RPGs (role playing games). There are quite a few of these kinds of games and they all follow more-or-less the same formula: Players collect money to buy items by performing ‘Jobs’ or ‘Quests’, assign bought items to members of their team or party, and do so in the confines of an energy statistic that prevents the player from doing too much too soon.

Zynga (the most successful social game developer on Facebook according to AppData) has a suite of RPGs which are built from a template they have developed. The games are the same but use different images and logos. Other RPG makers use very similar formulae. Mobsters, Mafia Wars, Mob Wars and other hoodlum-based games are the most popular of the social RPGs. Some others like Vampire Wars, Street Racing, World War and Fashion Wars also do pretty well. Dungeons and Dragons: Tiny Adventures was also an attempt to bring some old-school tabletop role playing to Facebook but has apparently ceased development. Other notables include Battle Stations, Knighthood and Might of Many.

Sports  RPG

Sport RPG games do not generally feature in the top 50 applications, but some of them are interesting games with a decent-sized audience. They are very similar to social RPGs in many respects, but the focus tends to be more competition-oriented. Sports RPGs are often reminiscent of Football Manager, Fantasy Football and so forth, with the added feature of using your friends as players in your team. One example of this is Premier Football, a game in which you manage a team of players made up of your friends.

One Sports RPG that stands out is Tennis Mania. Tennis Mania uses many of the same management mechanics of other sports RPGs and mixes them with an actual tennis game. It is, as far as we know, unique in doing so and remains one of the most interesting sports RPG games on Facebook.

Casual games

UK social developer Playfish has made quite a strong play for casual games in social networks. Unlike most other social game developers, Playfish uses Flash heavily and has a very high standard of graphics and sound compared to every other developer. Some of their games have clearly drawn their inspiration from the success stories of the Nintendo DS and Wii, with Who Has the Biggest Brain? clearly belonging to the Brain Training school of thought, and Bowling Buddies, Geo Challenge and Minigolf Party very reminiscent of the sorts of games you’d see on Wii.

Another approach is the casual portal, such as MindJolt Games, which is an application that acts as a portal to over 500 casual games (mostly simple ones). This is a good strategy given Facebook’s inherent limitations on numbers of bookmarks that users can have. Other games portal services such as Kongregate have also created a presence on social networks, although this tends to amount to a redirecting index back to the portal service, which may explain why they haven’t really taken off to any extent.

Word Games

Word games are best viewed as a special subset of casual games because they tend to attract a particular kind of player who often shows no interest in other casual games and vice versa. The first (and in some cases only) social game that most people have ever heard of was Scrabulous (now defunct), but there are several other word games that have arisen in its place.

Playfish’s Word Challenge is the most popular at the moment and also the best. It comprises several game modes. In the basic one you are given a set of letters and must find as many words from those letters in a set period of time, with a visual table on-screen giving you a means to deduce missing words. Being social, the game also shows you your performance against other friends who have played the game.

Other notable word games include Scramble (a Zynga game in which you make words out of letter patterns), Word Twist (similar to Word Challenge, but more of a versus-game) PathWords and a couple of official Scrabble games (Scrabble seems to have complicated licensing arrangements, which have resulted in different versions for different geographical reasons). Lastly, the original inventors of Scrabulous came back with a different game called Wordscraper which allows a customisable kind of Scrabble game rather than the official version.

Virtual Villages

A number of social games operate on the ideas of creating a presence in a defined area, giving gifts to your friends and essentially hanging out. They are among the most popular social games and function purely on their social interaction mixed with a creative mentality. They tend to form communities as a result, whether explicitly represented by the game, or implicitly in the form of a club or association.

First is Lil Green Patch. The idea behind Lil Green Patch (and its sister application Lil Blue Cove) is that the player has a garden in which they plant flowers. They give plants to each other and the application promises that the gifting of plants to others helps save actual rainforest in the real world. Players tend their gardens, de-weeding and looking after them. Another application in the same vein is myFarm.

Pet Society is another. In this game, the player has a Pet. They can take care of it, seeing to its needs, dressing it, petting it etc. They can take their pet out into town and meet other pets, arranged in a kind of village structure. There’s a whole community, the opportunity to visit other players pet homes, and generally interact. Pet Society is a Playfish game and as such is very animated and vivid.

Yoville also follows the little town structure motif, but instead of pets the player has a personal avatar. Yoville is essentially a combination isometric town and chat application. You can kit your character and your apartment with various nice objects, there are specially collectible objects and coins which can be earned or bought, and you can meet many other players in the game and talk to them and otherwise just generally hang out.

Perhaps the most geeky virtual village game is My City. This SimCity style game allows players to create their own functioning city and invite their friends to contribute to it.  My City is also unusual as a social game in that it uses Microsoft’s Silverlight as a viewer rather than Adobe’s Flash.

Casino

The main difference between social network Poker and sites such as 888.com is that they are for-points games rather than gambling games played for real money. The most popular social Poker game is Zynga’s Texas Hold ‘Em. It’s a competent if visually unexciting version of the game in which players can buy or earn chips. The game is very good at making it easy for you to jump in and out of a hand as required and also features virtual gifts, which you can buy with your excess game chips if you have any.

Zynga’s game is the most popular of all the games on Facebook at the moment. However Playdom (who claim to be the number one social game developer on Myspace) recently announced that they are making a move into Facebook by taking over the popular Poker Palace game. This will likely see a lot of competition between the two games and Playdom bring with them a sizeable war chest of investment.

For those who have no interest in Poker, there’s always Blackjack.

Just for Laughs

In the early days of Facebook Platform the first applications that really broke out of the gate were just-for-laughs games. These sorts of games are essentially a virtual joke that invites users to get their friends in for a few goes before they move on. Just-for-laughs games tend to rise and fall quickly in popularity. In the first few months every Facebook user was swamped with messages such as “you have just been bitten” by games like Vampires vs Werewolves. Users actually became quite annoyed at the level of noisy traffic that these games generated to the point that Facebook stepped in and clamped down on them.

Today the just for laughs games still exist and thrive but they are not as annoying as they once were. A good example is the game KickMania. The game is simple enough: You choose to place one of your friends’ photos on the head of a dummy model, which you then proceed to kick as hard as you can and score some points. Your friend then receives a message that they have been kicked.

Kidnap is an evolution of the just for laughs game. It uses a combination of light RPG with a social mechanic which involves essentially ‘kidnapping’ your friends and showing them different cities around the world. The game is a promotional vehicle for the Travel Channel and has been very successful to date, building a loyal fan base.

Compare People (and a variety of similar friend rating games) would also count as a just for laughs game. The game invites you to complete questions about which of your friends is smartest, funniest, sexiest and so on. Your friends then get notified that they have been compared and either found strong or wanting. This game and similar ones of its type are really just a social giggle. Other examples are is cool, Water Gun Fight and Pillow Fight.

Ownership Games

An ownership game is one in which players establish ownership over each other in complicated networks, and gift and otherwise generally look after their new-found charges. Ownership games have their origin in the just for laughs style of game but tend to establish longer terms of ownership and build much more resilient communities as a result. These communities are examples of social networking and gaming behaving synonymously.

The most popular and well known of these games is Friends For Sale. Friends for Sale allows you to buy your friends, treat them well, give them gifts, make them do amusing things and other light-hearted activities. There’s an element of gamesmanship in it in that the objective of the game is to profit on the buying and selling of your friends.

Slightly more on the fringe is another game called Human Pets. Like Friends For Sale, the goal is to establish patterns of ownership with your friends and make new friends, but unlike Friends For Sale the gifting system is creative. Players upload their own pictures, add tag lines to them, create their own little shops and so on. This feature got Human Pets into some trouble with Facebook (and prompted an off-platform move to its own dotcom destination site) because the game attracted a much more adult audience than Friends For Sale as a result, beyond the point of risqué and into erotica.

Ownership games are on some level essentially dating games. The compulsion behind them is popularity to an extent, but they’re more about meeting people and creating social structures as a game itself. They are in many ways quite fringe compared to what most people regard as gaming, but their appearance and has made social games undeniably more interesting in many ways.

Conclusion

Some of these categories are heavily over-subscribed, especially the RPG, and it would be difficult to achieve any traction with a new RPG without a serious advertising push. As Facebook itself grows rapidly cannibalisation probably isn’t a major issue for the RPG just yet, but it likely will be.

Highly casual games (including word games) have questions over them as regards their economics. Users love them (Playfish’s games are among the stickiest on Facebook) but they are difficult to monetise indirectly. If you’re giving a casual game away for free, what incentive is there for players to pay? Virtual property in a game like this is meaningless, advertising tends to be irrelevant to the game content (and thus ignored), and the only sort of investment that players have in them are high score sharing and other viral activities, which are socially uninteresting. Playfish are trying to monetise their casual games with a traditional upgrade model (get the first levels free, pay for the pro version). This has always been a difficult business model for users to accept because there are so many other free games available.

Some categories are under-subscribed, such as Casino, Sports RPG and Ownership games. While each has established one or two major proponents, this really does not exclude others from making a go of it. The history of games markets has always been one of newcomers and surprise challengers, so it would be premature to regard any of them as locked up and untouchable. The low barriers to entry of social game especially make this likely. Of course, some categories do not yet exist. Nobody’s thought of them or nobody’s done a good enough job executing on one of them yet to make any impact. We at Simple Lifeforms like to think that our forthcoming game (Spell Souls) is just such a game. Stay tuned.

While it’s an exciting time to be a social game developer, the scene has developed such that the initial rush is now over and now is the time for more focused strategies, better targeted games and a drive to improve quality. Social games have crossed the threshold into a properly-developing sector of the games industry now, and it’s a great time to get into it. This is not a complete list of games or game types. It is, like all such articles, open to questions of whether a particular games really belongs in one category or another, whether categories run the risk of shoe-horning content and whether it is a good idea to categorise games in genres in the first place. However it is useful to be able to explain social games in an imperfect context than no context at all. That’s how the conversation starts.

Thanks are due to AppData.com for providing useful data for all of the example games in this article.

You can follow many of my more instant thoughts @tadhgk on Twitter.

Here are some initial facts that you may find interesting:

• Only one of the top-ten MMOs (Lineage) was launched in the 1990’s whereas all others have been launched in this decade.
• MMOs are distributed fairly equitably around the most significant global market territories i.e. North America, Europe, Asia (Korea, Japan and China). Many of these games target global markets and are active in various territories.
• MMOs have a wide diversity of styles and demographically targeted groups with children, teenage and young adult markets all well-represented.
• The majority of the top-ten MMOS are in the fantasy genre. This is typical of emerging game markets. Fantasy is typically the first successful genre to be commercialised because it tends to attract early-adopter gamers first. Subsequent genres such as sports, children, family, adventure, action genres find their place in the market as new entrants carve out niches and segment the market for second and third tier adopters.

Retail

The early stages of the MMO market were dominated by a traditional and relatively unsophisticated commercial model. Retail was a dominant factor in the industry value chain and large game publishers (i.e. EA, Sony, Ubisoft) were the principle financing source for the majority of MMO products. Publishers sold a boxed version of their product in established retail channels, which was then played and updated online, with revenue coming from a combination of retail sales and subscription fees. This model is still quite popular with World of Warcraft the primary example.

This model was developed in the time between the cross-over from dial-up to broadband. It made sense to distribute on CD or DVD because there was no other way to distribute the required large amounts of data files to enough users. Early generation MMOs such as Everquest and Ultima Online had to be concerned over the download speeds that most users had and tailor their technology accordingly. Those restrictions still exist today (World of Warcraft updates come on multiple DVDs and most users still don’t have the means to download so many gigabytes of data in one sitting) but are for most practical concerns considered irrelevant in the modern market.

Now that operators have the ability to develop sophisticated and targeted MMOs and a means to distribute them, the business model is very different. Distribution may be cheaper, but MMOs are increasingly competing for user attention, and so user expectations of what they exchange for their attention have changed.

Within this context there are two new mechanisms by which MMOs in todays market typically monetise: Subscriptions and Virtual Goods.

Subscriptions

A large proportion of western (i.e. USA, Europe) based MMOs are based on monthly subscriptions. Customers pay the operator a monthly fee typically ranging from about £5-£15 GBP. The difference between this model and the older retail model is that the initial install version of the game is free. Users typically are given a gratis period in which to try out the game, or a limited sub-set of features, and they are encouraged to become subscribers.

Virtual Goods Sales

This mechanism was popularised in the East (i.e. China and Korea). In a virtual-goods based game, users are typically allowed to play the game as long as they want, but have the option of buying some form of property within the game. A virtual good might be something of tangible benefit to a player’s character or a visual customisation. Virtual good items are typical of small monetary (01p – £5.00) value but enhance the player’s experience, accessibility or individuality within the game significantly. This model is sometimes called micro-transactions.

Hybrid

Some MMOs use a hybrid approach of subscription and virtual goods, either offering different versions of a game for subscribers or virtual goods buyers, or combining the two. This trend toward sophistication throughout the methods available to monetise customers of MMOs is ongoing, but the hazard of a hybrid approach is that it can over-complicate the value proposition for the customer.  

Top Ten MMOs

1. World of Warcraft, launched 2004

• Genre/Platform: Western MMORPG; client install with 3D graphics
• Revenue sources: Monthly subscription, retails sales, prepaid cards (in Asia)
• DFC estimated 2008 revenue: $500 million-plus

2. Fantasy Westward Journey, launched 2004

• Genre/Platform: Asian MMORPG, client install with 2.5D graphics
• Revenue sources: Prepaid cards
• DFC estimated 2008 revenue: $150-$500 million

3. Maple Story, launched 2003

• Genre/Platform: Asian MMORPG for kids, client install with 2D graphics
• Revenue sources: Microtransactions, prepaid cards, international licensing
• DFC estimated 2008 revenue: $150-$500 million

4. Shanda (company, includes Legend of Mir and World of Legend series), launched 2003

• Genre/Platform: Asian MMORPG, client install with 2.5 graphics
• Revenue sources: Prepaid cards, virtual item sales, Freemium, subscriptions
• DFC estimated 2008 revenue: $150-$500 million

5. Lineage I and Lineage II , launched 1998 and 2003

• Genre/Platform: Asian MMORPG, client install with 2.5 graphics (Lineage) and 3D graphics (Lineage II)
• Revenue sources: Subscription, prepaid cards
• DFC estimated 2008 revenue: $150-$500 million

6. Runescape

• Genre/Platform: Western MMORPG for kids, web-based with 2.5D graphics
• Revenue sources: Premium subscription, prepaid cards, real-world advertising
• DFC estimated 2008 revenue: $50-$150 million

7. Club Penguin, launched 2006

• Genre/Platform: Virtual world for kids, web-based 2.5D graphics
• Revenue sources: Premium subscriptions, prepaid game cards
• DFC estimated 2008 revenue: $50-$150 million

8. Lord of the Ring Online

• Genre/Platform: Western MMORPG, client install with 3D graphics
• Revenue sources: Subscription, retail sales
• DFC estimated 2008 revenue: $50-$150 million

9. Warhammer Online

• Genre/Platform: Western MMORPG, client install with 3D graphics
• Revenue sources: Subscription, retail sales
• DFC estimated 2008 revenue: $50-$150 million

10. Age of Conan

• Genre/Platform: Western MMORPG, client install with 3D graphics
• Revenue sources: Subscription, retail sales
• DFC estimated 2008 revenue: $50-$150 million

* even with extremely conservative estimates

Sources : http://gigaom.com/2009/02/01/top-10-money-making-mmos-2008/, DFC Intelligence

I like the redesign direction that Facebook is taking and think it will continue to drive their growth. However, as with all redesigns, alterations to the Facebook design cause changes in user behaviour and that can have unintended consequences. This is an article examining Facebook from the application discovery and retention perspective and asking the question of whether the new design will be an overall positive or negative influence.

App Discovery

Application discovery and retention in the current Facebook design is a bit of a UI muddle. There are several ways to discover applications such as:

• Search
• Sponsored Links and advertising
• App-to-App linking (Playfish, Zynga and SGN all do some version of this)
• Shares through Friends
• Applications button

Searching is okay but it relies on the user wanting to search and therefore knowing what they’re after. Sponsored Links are nicely prominent, featuring as they do on the user’s profile, but they are paid advertising and so not necessarily in reach for developers operating on a recession-economy shoestring.

App-to-App linking is essentially a smart hack. Zynga calls theirs a ‘social bar’. Once a player chances their way into your application, the bar presents them with many others. It’s a useful innovation on the part of developers to overcome the inherent issues of discoverability, but it can result in stealing Peter to pay Paul.

Sharing applications works reasonably well if it’s tied up in reasons for both the sharer and shared to make the link. Sharing has acquired the reputation of being spammy. This is largely the fault of the zombie-biting and other chain games that appeared early in the life of Facebook Platform. It is thus uncommon to see many app shares these days, and I suspect that for most applications they do not really work too well unless they’re directly related to the relationship that a player has with their friends (for example We’re Related).

The Applications button offers the most obvious route for finding applications. The Find More option leads through to recommended apps as well as showing apps that are most active and by category. It does not present a full directory so it tends to reward apps that have already gained some amount of traction.

The problem that Facebook has with app content is that they have so much of it that they can never really produce a system that will encompass everything. As startup developers making games on the platform this makes our life a bit harder but I can understand why it may be so. The issue isn’t so much that there is volume competition, it’s that none of the systems above does a good job of assisting the discovery of new applications as opposed to those that already established a foothold. For a brand new developer like Simple Lifeforms that doesn’t yet have the financial muscle to fund mass advertising these systems present challenges as well as opportunities.

New application discovery relies on users to haphazardly run across an app somehow, and as the user base grows massively, the issue is whether new users really understand the discovery options above. My mother, a recent Facebook user, doesn’t even realise that there are applications on Facebook at all or what that’s supposed to mean.

App Retention

Whatever about the impediments of finding apps in the first place (c’est la vie). Remembering to return to an application and finding an easy route to do so is Facebook’s biggest issue (for app developers). As with discovery, there is no one solution:

• Bookmarks bar
• Applications menu on home page
• Notifications
• Wall Tabs
• Boxes
• Application Settings

The Bookmarks Bar has the wonderful quality of being persistent while the user is inside Facebook. It consists of two parts, the bar itself (which resembles Quick Launch in Windows) and the Applications button (which is rather a lot like Windows ‘Start’ button) which opens a menu. The bar is powerful, but also has some odd limitations.

The main one is that the number of bookmarks allowed on the quick-launching bar is only 6. When you consider that Events, Photos, Page Manager and other core functions of Facebook typically occupy the bar (and most users would struggle to find them without those links), in reality the bar only offers room for 1 or 2 game or other applications for the average user. Changing what appears on the bar is a matter of either manually dragging and dropping items on the Applications menu (which is not very intuitive and not ideal) or an application offering the chance to Bookmark, which forces another bookmark off the bar. Neither is a good experience for dealing with this artificial limit. Why 6 slots? Why not 15?

The apps stored in the Bookmarks bar also feature on the home page in the top-right corner, but with the same 6-icon limitation. So while this presentation is more visual (icon-and-text versus icon-and-rollover on the bar) it’s still far from ideal.

Then there are Notifications. Notifications are simply the best way for apps to remind players that they exist. Notifications have high visibility because they have a snazzy red label. Colour in this instance matters because that little red dot stands in stark contrast to the blue Facebook interface. Good job.

The problem with Notifications is that they can become irritating and spammy. Both are a negative user experience and run the risk of incurring Terms-of-Service wrath if abused. A Facebook developer has to tread a fine line between wanting to be seen versus users wanting them stop annoying them. Some applications (Mafia Wars for example) skirt pretty close to this line.

Wall tabs and Boxes allow users to add applications to their profile pages but are very confusingly implemented. The Wall tabs allow for the installation of multiple applications but many of them seem excluded for no readily apparent reason. Boxes represent a sub-set of the Wall tab applications and likewise allow for the installation of applications, but the layout and navigability of the Boxes page is poor and it’s not at all clear how you install a Box or why they appear as narrow or fat, and in what order. Boxes feels pretty DOA in the rest of the interface as a result.

Lastly, users can access all of their applications (and their settings) via the Settings menu. This requires two clicks (Settings > Application Settings) and is likely not a particularly well-worn route. I’d be very surprised if most users even realised that applications have any settings at all.

The New Homepage

Facebook is easily the market leader in social networks and not just because of its size. It is also the platform that other platforms look to for leadership in the innovation race. Nobody had applications until Facebook had them and now all the major and many of the minor networks have them. Nobody had a comprehensive external logging-in facility until Facebook introduced Facebook Connect, and now everyone is following that idea. As such, what Facebook does really matters and it will precipitate change throughout the other platforms. The good news is that they seem to be focused on live publishing and openness.

The new home page is not as dramatic a re-design as last year’s. Aside from some of the structural changes such as Facebook Pages becoming more like Profiles, the issue for us is whether it will make new application discovery more or less difficult for users. In this, the most interesting development is a new left-side menu that seems to offer a list of useful things, including applications. It shows what seems to be a list of three applications with an inviting ‘More’ button underneath.

What does this mean?

It is unclear at this stage, but this little menu seems to replace the Applications menu on top right of the current home page. It think this makes applications subtly more visible as a result. It’s more easily seen by users according to the F-patterns of web page reading.

The question is whether this new placement for Applications is simply a shortcut menu for bookmarked applications or whether it is a proper list of all applications that a user has installed.

If it’s the former then the issues of discoverability go on and may even grow more difficult. The redesign is probably going a way toward eliminating such features as Boxes which, bad as they are, means losing soe amount of discovery unless a suitable replacement is implemented.

If on the other hand it’s a proper list then I think that we may be on to something. Even better, if it were showing a compressed news feed from that application (a less intrusive gathering of Notifications) then that would be a really nice addition. I suspect that it is not that yet, but Facebook have at least opened the door for that kind of functionality with this move.

Conclusion

There are no conclusions to reach yet, as we haven’t received the new design to play with and assess. However I would say that the signs are promising. The key factor with application retention and discovery is that users should find it simple to the point of natural. Rather than rely esoteric solutions in the past (such as Boxes) that require users to divine how they are supposed to work, a simple list in pain sight shows the platform working to make a user’s life easy. That is how it is supposed to work.

Given how far Facebook have come with their efforts to date, I am pretty confident that this is something that they themselves are realising and taking steps to solve so that their network doesn’t become a chore to use like some of its competitors.