Entertainment Industry

Category: Social Games

Games publisher King.com topples EA, Wooga on Facebook, for now

Bubble Witch Saga
On Facebook, the competition for attention among game publishers from the social network's 800 million-plus users is as fast-paced and fierce as any hard-core shooter.

Tuesday's victor (of sorts) is King.com, the small British publisher of Bubble Witch Saga and other arcade titles, which toppled Wooga as the No. 2 game publisher on Facebook, according to AppData.com, a site that tracks traffic on Facebook.

Although King.com was founded eight years ago, it is a relative newcomer to Facebook, publishing its first game, Bubble Saga, on the social network a year ago. It continues to operate more than 150 games on its own site.

Now King.com has 11 games on Facebook that together racked up nearly 10 million daily players as of mid-afternoon Tuesday, with Bubble Witch Saga accounting for about two-thirds of that traffic. By comparison, No. 3-ranked Wooga garnered 9.9 million daily players, while Electronic Arts Inc. came in fourth place at 9.1 million. All three are still leagues away from Zynga Inc., which clocked 65.3 million daily players. 

Since launching Bubble Witch Saga in September, King.com has seen a 143% increase in players who check in at least once a month and a 312% increase in players who log in daily, according to AppData.com.

Why the sudden popularity?

"King.com's games are easy to learn, difficult to master," said A.J. Glasser, managing editor of Inside Network, research group focused on Facebook social games. In addition, its games aren't overly aggressive in urging players to spend money on virtual "potions" that help them advance faster in the games, she said.

King.com should relish its popularity, because it may not last, Glasser warned: "It'll take more than that to widen its daily lead on Wooga and EA."

In fact, when traffic from the last 30 days are taken into account, King.com is No. 4 with 39.1 million monthly players, behind Zynga's 285.9 million, EA's 46.1 million and Wooga's 44.8 million. It was just seven months ago when EA's Sims Social game toppled Zynga's FarmVille as the second most popular game on Facebook. On Tuesday, Sims Social was No. 26 on the charts.

King com-RiccardoZacconiWhen it comes to making money, though, King.com is an old hand. The company has been profitable since 2005, according to co-founder and Chief Executive Riccardo Zacconi (right). It's so profitable that it hasn't bothered to touch a cent of the $46 million in venture financing it has raised over the years and is preparing for a possible initial public offering in the U.S. next year, Zacconi said.

Much of King.com's revenue comes from its main site, where it hosts more than 2.5 billion game sessions a month. Its audience, 70% of whom are women, range between 35 and 45 years old.

Aside from the usual mix of advertising and virtual goods sales, King.com also generates revenue from hosting competitive, skill-based tournaments on its main site (it does not offer tournaments on Facebook).

Here's how it works. Four players each pay a 50-cent entry fee to compete for a $1.50 cash prize. (Online competitions based purely on skill are perfectly legal; only when the element of chance enters the equation do things get legally dicey.) The house, however, wins every time, with King.com collecting 50 cents from each game.

In an environment in which developers brazenly release nearly identical games, how can King.com avoid being squashed by rivals with more resources or being outdone by nimbler start-ups?

"You can't avoid that, really," Zacconi said. "But you can try to be faster, more focused."


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-- Alex Pham

Image: courtesy of King.com.

Zynga acquires mobile game developer OMGPOP

OMGPOP is acquired by Zynga

Zynga Inc., eager to fast-track its presence in mobile games, on Wednesday said it has snatched up OMGPOP, the New York-based developer of Draw Something and more than 35 other titles.

The purchase price was not disclosed, but VentureBeat reported earlier this week that Zynga and Japanese mobile company Gree were both considering buying OMGPOP for approximately $200 million. 

While OMGPOP has been around since 2006, it wasn't until it released Draw Something six weeks ago that the company vaulted into prominence. The game, sold for both Apple iOS and Google Android devices, challenges one player to draw a picture of an object while the other guesses what is being drawn. Downloaded more than 35 million times, Draw Something is currently the top title on Apple's App Store.

Though Zynga dominates the charts for Facebook games, occupying six of the top 10 titles within the social network, Zynga scores less well in mobile games. Its Scramble With Friends is the No. 10 title among top iOS paid applications, and Words With Friends is No. 42.

The San Francisco social games publisher has worked to beef up its presence outside of Facebook, looking to mobile platforms in particular. It launched more than 15 new games in the last six months and counted 15 million people who play its mobile games at least once a day as of Dec. 31. But the vast majority of Zynga's $1.1-billion annual revenue comes from players on Facebook, prompting Zynga to look to other platforms to grow.


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-- Alex Pham 

Zynga launches separate social gaming platform, still 'likes' Facebook

Zynga.com_Profile Page

Seeking to expand its footprint beyond Facebook, social gaming juggernaut Zynga Inc. on Thursday unveiled a new website that it hopes will draw players deeper into its virtual playground.

Zynga executives took pains to point out that Zynga.com is not an effort to distance itself from Facebook. In fact, the new site, for example, requires players to log in via their Facebook account. And any purchases players make on Zynga.com goes through Facebook's payment system, where Facebook takes a 30% cut of the transactions.

"We wanted it to be as easy and seamless as possible for players," said John Schappert, Zynga's chief operating officer. "We think it's complementary to Facebook."

The site is launching with five titles -- CastleVille, Words With Friends, CityVille, Hidden Chronicles and Zynga Poker. Players on Zynga.com can "friend" other people without having to share their Facebook profile information. Those connections, called "Z Friends," see only one another's game activity and are able to help one another complete their game quests. Most of Zynga's games require players to get assistance in order to progress. Zynga published a short video demo to illustrate how the site would work.

Zynga had telegraphed its move to create its own platform back in October. At the time, the effort was called "Project Z," and the company revealed few details on its plans.

The relationship between Zynga and Facebook is symbiotic -- for now. Though the social network commands an audience of more than 850 million active members, it relied on Zynga for 12% of its revenue last year, according to documents Facebook filed in conjunction with its initial public offering.

And though Zynga gets the bulk of its traffic, and revenue, from players on Facebook, the San Francisco company clearly has ambitions beyond the social network.

"Our goal is to connect the world through play and to eventually have 1 billion people play," Schappert said.

The company currently counts 240 million active monthly players.

Zynga.com is but a piece of a larger strategy to reach players wherever they happen to be, on mobile devices and online -- not just on Facebook. The company recently disclosed in its first publicly reported quarterly earnings that it spent half a billion dollars last year building out its computer infrastructure, which it dubbed the Z Cloud, to support its expansion.

Zynga.com also lets the company publish games created by other developers. Among the list of third-party developers hopping on to the Zynga platform are Mobscience, an independent social game developer in San Diego whose titles include Infamous Anarchy, MagicMall and Seapets, and Row Sham Bow, the Orlando, Fla., developer of Woodland Heroes.

Having a presence outside of Facebook could give Zynga more freedom to pursue initatives such as online gambling without having to navigate through Facebook's approval process. Zynga officials have publicly expressed an interest in online gambling, but acknowledged that it could be quite some time before state and federal regulators and courts sort out the legalities of the business.


Zynga eyeing opportunities beyond Facebook

Zynga accounts for 12% of Facebook's revenue in 2011

What are the odds of Zynga getting into online gambling?

-- Alex Pham

Screenshot of a sample Zynga.com profile page courtesy of Zynga Inc.


Has Facebook lost the magic for social games?


Is it game over for Facebook? 

A study from market research firm IHS Inc. seems to suggest that the boom in social games is about to end, if it hasn't already done so. 

The number of people playing games on Facebook remained flat in 2011 compared to 2010, even as the social network itself added hundreds of millions of new users, the report noted. As a result, the ratio of active Facebook users who played games fell from one in two at the end of 2010 to one in four a year later.

Even Zynga Inc., the biggest publisher of games on Facebook, saw a decline in the number of people who played its games at least once a month -- from 266 million at the end of September 2011 to 225 million by the end of December, according to the IHS report.

"Facebook rocketed to prominence as a gaming platform in 2009 and 2010,” said Steve Bailey, senior analyst for games at IHS. “However, with equal speed, the market then settled into a state of maturity in 2011, with conditions becoming markedly more challenging for game operators.”

Bailey noted that with so many games vying for attention on Facebook, it's become more difficult and more costly to lure new players. It's not just games that are crowding the field. As Facebook expands its footprint into other media, music and video are gaining prominence as a source of distraction. 

Finally, game development budgets are steadily growing, upping the ante for companies that want to compete in social games. Games that were whipped up in a couple of weeks for less than $60,000 are being displaced by titles that take months and millions of dollars to produce. 

"Along with the increase in marketing costs for purchasing users, there’s also a development overhead to consider," Bailey wrote. "As with any maturing video game marketplace, production values will also need to step up a notch."

That doesn't mean the party's over. It's just that the drinks cost more and the crowds have become more fickle and discerning.


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-- Alex Pham

Photo: The Facebook sign outside the company's new campus in Menlo Park, Calif. Credit:  David Paul Morris / Bloomberg 


Amazon's Kindle Fire: The next gaming console?

Amazon.com has been quietly recruiting game developers, posting dozens of jobs on its site

Amazon.com has been quietly recruiting game developers, posting dozens of jobs on its site.

Why this burst of interest in game design from the world's largest online retailer? P.J. McNealy, founder of Digital World Research, believes that Amazon is amassing resources to potentially become a force in mobile social gaming.

While traditional video games aren't going away, that part of the industry is also not growing very fast. Mobile and social games, however, are booming. Gaming on tablets, in particular, is taking off.

Amazon is well positioned to capitalize on that because it is the No. 2 player in the tablet market, with its array of rapidly selling Kindle devices trailing only Apple Inc.'s iPads, McNealy suggested in a research note published Monday.

The idea is that Amazon could become the next big gaming platform -- acting as a hardware and software gateway for games in the same way that the PlayStation, Wii and Xbox have for decades.

"Amazon is quietly lurking, and gaining strength," McNealy wrote. "And they’re hiring."

Positions being offered include level game designer, digital video game software engineer and "game changer." In one job posting, Amazon said, "We've been hard at work building various games." The post said the company wants "a creative Game Designer who knows what it takes to make a great game and has experience doing so." The jobs are generally located in Seattle and Orange County

Amazon is not new to games. Aside from being one of the largest purveyors of disc-based games, it has for years operated a digital game download service on its website -- delivering casual and hard-core computer games. It also has an App Store with more than 6,000 applications for Android and Kindle devices, including such popular games as Angry Birds.

Though Amazon did not specify in its job postings what types of games it's working on, McNealy posits that the next battleground is social games. Facebook currently reigns supreme in this genre, with hundreds of millions of people playing on its social network each month. Could Amazon be eyeing the No. 2 spot? 

The company did not reply to a message from The Times seeking comment. 


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Photo: The lineup of Kindle devices from Amazon. Credit: Amazon.com Inc.

Facebook got 12% of its revenue from Zynga


Facebook, whose initial public offering is slated to be one of the biggest debuts in U.S. stock market history, has disclosed its heavy reliance on a single customer -- Zynga Inc.

In its S-1 regulatory filing Wednesday, Facebook reported that it received 12% of its revenue in 2011 from Zynga, whose social games such as CityVille and Mafia Wars have drawn several hundred million players to Facebook over the years. Zynga launched its own IPO in December.

With $3.7 billion in total annual revenue for Facebook, that translates to roughly $444 million in direct payments from Zynga.

That figure does not include the revenue Facebook receives from displaying advertising around Zynga's games, which accounted for a "significant number of pages," according to the social network's public filing. Zynga's games pull in 56 million players a day, according to AppData.com, a site that tracks Facebook traffic. 

For Facebook, Zynga is both an asset and a potential liability: "We currently generate significant revenue as a result of our relationship with Zynga, and, if we are unable to successfully maintain this relationship, our financial results could be harmed," the Silicon Valley social network giant wrote among its "Risk Factors." 

Facebook has reason for its unease. While Zynga's fortunes are now tightly entwined with Facebook and the social network's 845 million active users, the San Francisco social gaming company has made it clear that it wants to expand its games beyond Facebook. Part of the reason is that Facebook charges a 30% levy on the sale of all virtual goods sold via applications on its platform -- including games from Zynga.

In October, Zynga unveiled a new online destination where its players can congregate outside of Facebook. It's also pushing heavily into mobile games, both on Apple's iOS platform and Google's Android Marketplace.

For now, however, Facebook and Zynga continue to "like" each other, and the friends status between the two remains unchanged.


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-- Alex Pham

Photo: Zynga general manager Erik Bethke speaks at a Zynga event in San Francisco in October. Credit: Jeff Chiu / Associated Press



Social games company Kabam acquires Fearless Studios

Fearless Haden Blackman Cedrick Collomb

Kabam, a developer of hard core social games headquartered in Redwood City, has snapped up Fearless Studios and its co-founders, veteran game producers Haden Blackman and Cedrick Collomb.

Terms of the deal weren't disclosed.

Fearless is Kabam's second acquisition -- its first being WonderHill in October 2010 for an undisclosed sum.

While Marin-based Fearless is tiny -- it has just six employees -- its two founders are well known among game developers. Blackman spent 13 years at LucasArts, the video game division of Lucasfilm, before leaving to found Fearless in 2010. He is credited as a writer, producer or director for seven Star Wars titles published by LucasArts, including Star Wars: The Force Unleashed.

Collomb has worked as a programmer for Electronic Arts, Sony Computer Entertainment and Sega before becoming director of engineering for LucasArts.

Both Collomb and Blackman bring expertise in creating console games that feature lush 3-D graphics, something Kabam and other social gaming companies are hoping to incorporate into more of their titles. 

“Their skills in game design, emerging technologies and proficiency in making the transition from 2-D to 3-D on consoles mesh perfectly with Kabam’s strategy," said Kabam chief executive, Kevin Chou. "We’ll significantly strengthen our industry leadership as the online gaming market transitions to higher fidelity, 3D gameplay."

Founded in 2006, Kabam has more than 150 employees who work on its titles, including Kingdoms of Camelot and The Godfather: Five Families, a licensed game based on the film series. 


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-- Alex Pham

Photo: Fearless Studios co-founders Haden Blackman (left) and Cedrick Collomb. Credit: Fearless Studios.




What are the odds of Zynga getting into online gambling?

Zynga Casino

Zynga may be weighing its odds of succeeding in the online gambling business, but the smart money is on the San Francisco company staying out of the potentially lucrative but legally murky world of online betting -- at least in the near future.

The maker of FarmVille and Zynga Poker stirred up a great deal of discussion when it issued the following statement Thursday to AllThingsD

“We build games and experiences that our players want and love. Zynga Poker is the world’s largest online poker game with more than seven million people playing every day and over 30 million each month. We know from listening to our players that there’s an interest in the real money gambling market. We’re in active conversations with potential partners to better understand and explore this new opportunity.”

A Zynga spokesman would not elaborate beyond the statement. But company officials who declined to talk on the record said the social gaming company is merely exploring the option of online gambling and that it has no plans in place to dive in.

Part of what is holding Zynga back are the legal uncertainties. While some 39 states, including California, allow online betting games with cash prizes, others do not. The U.S. Department of Justice in December issued a legal opinion that stated proposals by states to sell lottery tickets online would not violate the 1961 federal Wire Act banning sports betting.

Some argued that the opinion paved the way for states to move into online gambling, but others aren't so sure the narrowly crafted opinion would extend beyond state-sponsored lotteries. Until the legal boundaries are clarified, Zynga is unlikely to cash in its virtual chips for the real deal, company executives said.

Another potential area of concern is the stigma associated with gambling. Historically, many online game companies take pains to distance themselves from online casinos and betting sites, preferring to align their brands as more wholesome, family-friendly entertainment.

That hasn't stopped some daring entrepreneurs from exploring the boundaries, including Richard Branson, who partnered with WorldGaming.com, a Canadian online start-up, to launch Virgin Gaming, which lets video game jockeys compete for cash prizes.

But Branson's move into online betting is rare within the games industry, which is struggling to prove itself as a media, entertainment and art form that is just as legitimate as movies, music or books.

Still, Zynga has broken the mold before -- by eschewing hard-core gamers and successfully going after mainstream consumers who previously had not spent much money on games. Who's to say it won't throw out a few more traditions and delve into online casinos? 

Zynga is already partially there. The company last year said it was building a "casino franchise" that would aggregate its current and future competitive games such as Zynga Poker and Zynga Bingo.


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-- Alex Pham

Photo: Zynga General Manager Lo Toney, speaking at a Zynga event in October. Credit: Zynga

Seismic seizes $2 million in funding for social games

Greg Borrud_Seismic GamesSeismic Games Inc. became the latest start-up company to dive into social games, announcing Tuesday that it had snagged $2 million in funding from DFJ Frontier, investor Tom Matlack and others.

The funding came before the company has even released its first title, signalling just how eager investors are to place their bets on the small but fast-growing social games market currently dominated by Zynga Inc. and Electronic Arts Inc.

In the last few years, numerous start-ups have jumped into social games, including Rumble, MindJolt SGA and Kabam — all backed by funding from heavy hitters in the venture crowd.

Seismic's investors include DFJ Frontier, a division of SIlicon Valley's Draper Fisher Jurvetson, which has invested in Skype, Hotmail and hundreds of other technology companies. Also in the mix is Craig Silverstein, a television producer whose credits include "Nikita," "Bones" and "Terra Nova."

Based near Culver City, the 23-person game studio may be spanking new, but its founders are old hands in the world of games. Its chief executive, Greg Borrud, co-founded Pandemic Studios, where he managed a team of 500 game developers who produced big-budget console titles such as Star Wars: Battlefront, Mercenaries and Destroy All Humans. The Santa Monica studio, along with its sister company BioWare, was sold to Electronic Arts in 2007 for $860 million. Its president, Chris Miller, was a vice president at Vivendi Universal Games, and co-founder Eric Gerwitz was a lead game designer at Activision Blizzard Inc.

But enough with the name-dropping. What's really so bewitching about Seismic that compels rational investors to part with their millions? Borrud believes his yet-unannounced social game would tap into new ways to play social games by drawing on lessons learned from his years in producing traditional video games.

"We think there’s an opportunity to focus on letting people play with identity, customization and character development," Borrud said in an interview. "It ties into Facebook as a platform, where it’s a reflection of you as an individual. It starts with letting you build your character, giving yourself a name, determining what you look like, what you like to do, who you'd like to be. Traditional games have been doing this for years, because people love doing that. I’m surprised at how shallow that aspect of play is in most social games, and we see an opportunity in that." 

For now, that promise will just have to suffice because Seismic's first title, a casual role-playing social game, isn't expected to hit Facebook for at least several months.


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— Alex Pham

Photo: Greg Borrud, a veteran game producer, has co-founded a new social games company, Seismic Games, based in Los Angeles. Credit: Seismic Games.

Zynga on schedule to price its IPO Thursday

For Zynga Inc. and its chief executive Mark Pincus, Christmas Eve could arrive Thursday night, when its shares are expected to be priced for an initial public offering on Nasdaq and begin trading Friday.

The company two weeks ago said it expected its stock would fetch between $8.50 and $10 a share, giving the San Francisco social game developer a total valuation upwards of $9 billion, including the options and grants that have been doled out to senior management.

Since then, executives have crisscrossed the country attempting to drum up investor enthusiasm for its IPO. On Thursday night, the company will see whether they've been deemed naughty or nice as Zynga's shares are slated for official pricing as mutual funds and other institutional investors place their buy orders.

Already, analysts are divided over whether Zynga is a good bet. BTIG's Richard Greenfield on Wednesday gushed that Zynga's debut would be "the biggest IPO since Google," and recommended investors jump on the stock because the company's games -- including FarmVille, Words With Friends and Mafia Wars -- are a "cure for boredom" whose popularity would "outpace TV." 

Other analysts are more reserved. Arvind Bhatia of Sterne Agee cautioned against getting caught up in the social gaming craze.

"Zynga's growth is slowing even faster than what is obvious at first, its margins are under pressure and free cash flow has been declining recently," Bhatia wrote in a note released on Tuesday. "Thus we believe the implied valuation in the IPO is not justified."

Bhatia said a fairer price for Zynga's shares would be closer to $7 a share, versus rate Zynga had projected.

That leaves the market to decide on Friday whether Zynga's stock is worth a diamond, or a piece of coal.


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-- Alex Pham

Twitter/ @AlexPham

Photo: Zynga Chief Executive Mark Pincus. Credit: Associated Press


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