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How social games make money: Lessons from Farmville

Farmville The Web is fantastic at many things -- e-mail, e-commerce, e-vites, for example. But unless your name is Amazon or Google, making money there has proved elusive.

But Brian Reynolds, chief game designer for Zynga, the company that made the social game Farmville, this week shed a little light on how to get people to buy the farm online during his talk at the Design Innovate Communicate Entertain Summit in Las Vegas.

To start with, Reynolds threw out some bare bones data: 
  • Social games cost between $100,000 to $300,000 to make. 
  • Between 3% and 5% of people who play social games pay money for virtual goods in the game or sign up for advertising "offers" that generate cash for the developer.
  • Farmville is played by about 31 million people every day.

Now let's suppose that, given these ballpark figures, that each person who plays a social game generates, on average, a penny a day. Multiply that penny by the number of days in a year, 365, and you get an average of $3.65 generated per year per person.

If you are Farmville, you multiply that by the number of people who play your game on a daily basis: 

  • $3.65 x 31 million people = $113 million a year

Not bad for a game that perhaps cost $300,000, maximum, to make. Of course, That doesn't include the salaries for a team of about 40 designers and programmers to continuously update and maintain the game (tack on $4 million to the annual budget).

Reynolds did not disclose how many pennies per day Farmville generates. But if it's a penny, one could conclude that it's a $100 million-a-year game. Perhaps that's why some have valued Zynga as a $3-billion company.

Now let's say you were especially clever and you figured out...

Brian Reynolds ... ways to get each person to generate two pennies a day. The numbers then begin to look even more compelling. This is where game designers such as Reynolds come in.

Reynolds, whose credits include Age of Empires 3 and Sid Meier's Civilization II, talked about a couple of tricks Farmville uses to get players to part with their cash. (He had other tips related to game design that do things such as hook people into the game and then keep them engaged, but which aren't directly related to monetization.)

The first is to sell items that let players differentiate themselves from the crowd (flamingo-shaped topiaries, which need to be purchased, have been especially popular on Farmville).

The second is to let players pay to advance faster in the game, thereby saving time, which is, after all, money.

-- Alex Pham

Photo: Brian Reynolds. Credit: Alex Pham


 
Comments () | Archives (7)

I play zynga games and I must say if these numbers are correct as a player I would certainly expect better performance from these games. I have been playing zynga games since about June of 2009. The issues I and many others that have been technical have been to numerous to count. Many people who at one time were loyal players have left zynga and their glitches behind. Even I have come very close to refusing to play their games again.

Very weak journalism here. First, the author postulates, "Now let's suppose that, given these ballpark figures, that each person who plays a social game generates, on average, a penny a day." Based upon what? He didn't provide any data to arrive on amount of one penny; he just threw that number out. Let's suppose each gamer generates $10 a day. Zynga's could be a gajillion dollar a year company!

Also, this article fails to explore any of the accusations surrounding Zynga and it's products or its advertisements being scams. A simple wikipedia search turns up information on accusations of replication of existing games, copyright infringement, and scamming (including an admission of such by Zynga's CEO).

Furthermore, Pham only includes the costs of "about 40 designers and programmers" to the company's overhead when considering Zynga's potential value. What about the other departments that are necessary to running a company, like HR, legal, security, etc? I hope Pham never considers going into business himself.

Honestly, this was very shoddy reporting. Did you throw this little article together in 30 minutes? Did anyone read it before it was published. The LA Times deserves to be losing readers, with lazy journalism like this.

These are "blogs" not "articles". So yes, the qualifications for a "blogger" is significantly lower than for a "journalist", mostly because there is no "editor" involved for quality control.

If I'm not mistaken, the purpose of blogs is to throw out ideas/topics/soundbites for readers to respond and reflect.

Sadly, blogs were originally created so that everyday amateur Joe's can throw out their 2 cents worth of opinion, but for a newspaper to employ blogs as a viable source of information is an admission that their articles are worth... 2 cents

people actually pay money for a virtual flamingo-shaped topiary? shaving a bush into the shape of a flamingo isn't too hard - just wait for my soon-to-be-released social game "hookerville". you'll see some ingenious topiary all right, but you'll have to pay to touch.

I find this very interesting. How do they actually get the game out to 39 mm people? I know it is launched through Facebook but how does it grow so quickly? Wouldn't they have advertising costs and marketing costs? I wonder what the initial steps are they take to actually make the game happen and become viral?
Regards,
Jack

An addendum should have been added which mentioned the many FarmVille users which have been left in the lurch by Zynga for 9+ days. Many players are affected by an “out of sync with the server” error which interferes with game play. Zynga has so far publicly ignored the issue, offering no wide acknowledgment of the problem and not offering affected users even a small measure of restitution, such as turning off crop withering.

This issue has been documented on Zynga’s own FarmVille forum:

http://forums.zynga.com/showthread.php?t=277721&page=843

I have found on FarmVille that lately I have been losing gifts that neighbors have been sending me. Once I click on "Accept" they weren't credited to my "Gifts". I have contacted Zynga and all they can tell me is that problems "are oftentimes related to platform issues". They also say that they cannot reimburse for the lost gifts too. I was told that "If you notice similar platform issues in the future that are interfering with your game play, we highly suggest you refrain from accepting or sending gifts or bonuses until Facebook is running smoothly again." This has been happening for sometime now and it's not fixed. Save your money people and don't pay them anything! Why send money to Zynga for their game to cheat you? I don't think they care.


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