23 APRIL 2009
Hi Everybody in Milan at the Developer Garage. Sorry I can’t be there. My name is John Earner. I am VP product management at Playfish. We are a Social Games company. We make four of the top ten games on Facebook. We are really looking forward to talking with you guys about what we’ve learned on Facebook so far. We are really excited about the turnout in Italy. It is our fastest growing and one of our largest markets so we are really happy about that.
Like I said is, Playfish is a social games company. What that means is, is that we make games for friends to play with each other online. We were founded in October of 2007 . The founders are mobile game developers veterans. They had previously created a company called macrospace which had merged with another US mobile gaming company to form gluemobile. They took it public and have a lot of experience in gaming. They saw an opportunity that we have all jumped on and that opportunity is really that Facebook has a social graph that makes online gaming much more fun. It brings gaming back to its roots. Which is to say gaming had been historically about a board game, two friends maybe more and the interaction of the game was really about the friends more than the game itself. With the social graph that Facebook provides we are now able to recreate that sort of gaming experience. So we set out to do that on Facebook. We launched our first game in January it was called “Who has the biggest brain?”. Basically, a brain training game. Not a new concept I think the novel part of it was the competitive nature of the game, with your friends. So now it actually mattered what your score was because your friends would see it on a leader board and obviously if one of my friends gets a higher score than me or is smarter than me I wanna try and beat them. So it really tapped into this social competitive element. We’ve gone on to launch 6 other games. The most recent of which actually just launched in the last few days called “restaurant city”. I think I said earlier we’ve got about 4 of the top 10 games on Facebook. With a total of about 4.5 million daily active users and we have about 25 Million monthly active users cumulatively. So things are going great for us and we are really looking forward to the next year where we plan on launching a lot more games and continuing to create things that people can really enjoy to play with their friends.
Our business model is a combination of micro transactions and advertising. Our target demographic is everyone. Not just people who traditionally consider themselves gamers but the entire mass market of people we think can enjoy games with their friends.
Thanks! Now we want to talk about the power of the platforms. The Facebook ecosystem seems better, almost sometimes better than the web about spreading applications or services. What do you think about the virality of the Social Platforms?
Yeah, I mean first of all, certainly for what we are doing the kinds of games we make, its much better than the web for us. I would agree with your point that it is more viral, the numbers are the evidence there. We’ve only been around a little over a year and we’ve got the 25 million monthly active users. And so that’s important, its a very tough struggle historically if you are trying to make a casual games portal to get people to find out about you, even if you have a great product. We really think that the various viral channels that Facebook has created allows for friends to communicate with one another. We have no marketing budget. We entirely getting our users from word of mouth. So that’s great but I guess a point I also want to make is social networks like Facebook provide something other than just virality and I think there is a tendency in our community to purely think of it as a viral play. It also provides a social graph that can create a whole new way of interacting with friends instead of strangers. So in the case of social gaming as I have said a few times what really makes these games stand out is that unlike Xbox Live you are not playing against some stranger 14 year old who kicks your ass every time. You are now playing against your mom or your friend or your college roommate. So its not just about virality, Facebook is about bringing together with the people who matter most, your friends.
Do you guys also do games not on Facebook or are you guys exclusively a Facebook game producer?
Yeah, our primary goal is to develop games wherever there is a social graph. Facebook is the most mature of those right now but we are on a total of four social networks and we are also on the iphone. But presumably, we think social graphs and Facebook in particulare will be a powerful tool in the future and as those social graphs go to different places we hope to follow them.
You spoke briefly also about the business model and as far as the economic situation for the games what do you think is the best way to make money, Not necessarily your guys’ in particular but the way that money can be profited off of these games, systems, services, everything.
Sure, well first of all I think you can make money as an App developer on Facebook. We are profitable and each of our titles is profitable. So we are managing to do it and do it in quite a big way. We think there is a great market out there. My answers are very much focused on gaming just because thats what we do that what all of our backgrounds are. But if you look at the gaming market I think its a better perspective to say that the entire sum total of the gaming market right now is over 50 Billion US Dollars every year. So if someone were to approach this from the angle of Social media and to say well its very small nascent market of trying to monetize apps thats one thing but if you were to say we can grab a few percent of a 50 billion dollar world wide gaming industry you’re talking about real money and that’s not a far fetched goal. We are actually managing to begin to do that as are some others. So in terms of how to make that specific, I think everyone knows the basics there is an advertising pay, there’s a micro transactions pay and then there’s some incentivized offers: CPA ’s as its called. We are having luck with all of those. I think that it is important when you are starting your business out to have a variety of business models and to experiment and see what works. Certainly for gaming we know that micro transactions work well. The premise of the model is that the games are very easy to access. You can play them for free so there really is no barrier to purchase. In the old gaming world you would have to spend up to 60 dollars on a console game before you knew if you even liked it or not. And to make that purchase you would have to go to a store that only gamers went to. So now we have really democratized this entire industry. Anybody can download this game, its on flash, in a matter of seconds and be playing it. Some small percentage of those people who love the game so much that they will be willing to spend a small amount of dollars or maybe even a large amount of dollars to make that game experience better. Maybe for one game that means buying items like in Pet society for example to make your pet or our pets apartment look nicer. Or down the road it will be for more competitive games as we have already seen in Korea in their market where someone will spend money to make their character more powerful. So we know thats a powerful market. In terms of communication apps or productivity apps I think the micro transaction pay is more difficult but it seems to us from our own personal experience like there are a number of ways to monetize these apps. That even if your average revenue per user is lower than say a world of warcraft you have so many more users that you can more than make up for it.
As you said before Italy is one of the fastest growing Facebook markets. Is there anything in particular that you guys would use to take advantage of the situation here?
Yeah, well we haven’t made any announcements about that, other than to say that, Localization is extremely important. We already translate our games into efigs: so French, Italian, German, Spanish and English. We are having a lot of success. I think that we can continue to do further localization at a community level. We have a volunteer community monitor team and Italy is a big part of that. We can localize through more payment methods. So for example, we recently launched OneBip. Which is really not popular at all in our traditional markets, the US and UK where we live. But we learned its extremely popular in Italy and so we launched that exclusively to go after the Italian Market as a payment method that is relevant to you. That’s worked great so far. So the more we can localize the community, the game itself, the payment methods we think the more success we are going to have. I think that at the core this is a global business and Playfish in particular is configured with that in mind in the long run. We’ve got offices already in four countries. The headquarters is in the UK, I’m in San Fransisco, we have a studio in Norway and another in China. Italy is going to be a big part of that. It is pretty clear from the numbers already and at a per capita level it is unbelievable how much activity there is in Facebook in general and our games specifically. When you run the numbers it seems that everyone between the ages of 18-24 in Italy must be on Pet Society. I’d love to hear from you if that is really true but certainly looking at the numbers it feels that way.
I think that sums it up. Thanks!
Thanks a lot I appreciate it and I hope you have a great developer garage.
