Parks Associates Blog

Tuesday, October 28, 2008

Are Flash Gaming and Social Gaming the "New Casual?"

The casual gaming industry, already a billion dollar business, is still firing on all cylinders. Companies focusing on traditional business models such as try and download and subscription services are doing just fine. Big Fish Games recently got $83 million in new funding and Oberon Media got another $20 million to scale its business. As an industry, however, these business models are experiencing slower growth rates. The two high-growth areas are social gaming and flash gaming. These two phenomena are intertwined, since many social games are developed using Flash and many flash gaming sites are introducing social networking features. Most of these games are free to play, easy to access, and have multiplayer features. Sites and publishers monetize the games through advertising and sometimes virtual goods. The games are frequently very simple to play and can be served in small bites. If retail games are five-course Italian dinners and downloadable casual games are hamburger and fries, flash and social games are the Tapas. In a certain way, they are the new casual games.

Flash gaming sites, such as Miniclip and Addictinggames, have been around for quite a few years. They've attracted tens of millions of young Internet users and seen explosive revenue growth. Several new companies banking on the flash gaming phenomenon, including Mochi Media and Kongregate, are also having great success.

Social gaming is relatively new to the scene. Playfish is a great example. The company just received $17 million fresh funding, in addition to the $4 million VC investment it received at launch. Kristian Segerstråle, the CEO and Co-founder of the company, is an industry veteran and a smart guy. He served as the managing director of Glu Mobile before founding Playfish. In less than a year, Playfish has amassed more than 10 million monthly actives, including 1.5 million daily users, who spent more than two billion monthly minutes of play time. That equals 200 minutes a month per user. The secret sauce is easy but high-quality games and a highly-viral distribution channel that's literally free to use. Another interesting fact about social games is that players play the games with people in their network, instead of strangers. They play the games to keep in touch. In the meantime, they can avoid the frustrating problem of opponents quitting the game. Other highly visible social gaming companies include Zynga, Social Gaming Network, and Serious Business. Almost all of them have received significant VC funding in the last 12 months.

Partially because of the success of these flash and social gaming companies, a new crop of companies have recently emerged to leverage Flash/Java/lightweight proprietary technologies and social networks to take 3D virtual worlds mainstream. These companies include Vivaty, Metaplace, Electric Sheep, Small Worlds, Just Leap In, and Google.

The cost is rising for downloadable casual games. It's becoming increasingly challenging to bootstrap a downloadable casual game. Some of the latest games costs high six figures or even seven figures. The barrier to entry is also becoming higher for new players due to market consolidation. Inevitably many independent developers will shift their attention to flash and social gaming. With Flash 11 supporting full 3D capabilities, we'll also see much fancier games. Social games will soon find their ways to other platforms, especially mobile phones. Social games not only fit the play pattern of mobile players but also help solve the discovery problems. I won't be surprised if Kristian makes a triumphant return to the mobile gaming industry.

So are social and flash gaming the "new casual?" You bet. And all you game publishers and casual gaming companies need to pay attention!

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2 Comments:

Anonymous Anonymous said...

Your article is inaccurate and misleading. Vivaty, Just Leap In and Google do not use lightweight Flash or Java technologies. Each uses a proprietary 3D engine and plug-in that must be explicitly downloaded by the end user. In the case of Vivaty and Lively, their plug-ins only support Windows/PC computers.

5:41 AM  
Blogger Michael Cai said...

Sorry if it appears to be misleading. I understand most of them use proprietary technologies and that's why I wrote "flash/Java/proprietary." The key point was to say that they are browser embeddable.

12:12 PM  

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