Mark Pincus On Zynga’s Facebook Addiction: “We’ve Never Thought Of It In Terms Of Attachment (Or Detachment)”

Zynga CEO Mark Pincus took the stage today at D10, and of course because Facebook is all people can talk about after its IPO two weeks ago, he got asked and asked and asked again about Zynga’s “attachment to Facebook.”
“Zynga is very tied to Facebook,” Kara Swisher brought up immediately, describing the two stocks as “tethered together.” Indeed, Zynga makes up 15% of Facebook’s revenue, and Facebook makes up most of Zynga’s.
“They’re really important not just to us.” Pincus said, “Facebook is providing a new part of [the ecosystem's] stack, there is now a social stack and an app stack.” Pincus went on to describe the social graph as “magical” but expressed concern at Facebook’s pace of innovation on mobile, “On the web they’ve been really important with regards to distribution.”
Pincus called out for more mobile discovery options, and referred to Android and iOS as platforms that held just as much importance for the future of Zynga. “Discovery and the return path to apps still needs innovation on mobile,” he emphasized.
In order to address the lack of a unified place to discover apps of mobile, Pincus brought up that Zynga had aspirations to become this platform, aiding third parties in the distribution of social games, an ambition that Swisher compared to that of Xbox Live. But it’s sort of tough to become a platform while you’re still addicted to another.
Because Pincus didn’t clearly address how its reliance on Facebook for its primary revenue was being dealt with strategically inside Zynga, The Verge’s Josh Topolsky asked the CEO again about Facebook during Q&A, “How are you going to get detached from Facebook?” Topolsky said, “What is your actual strategy for being a business on your own?”
“We’ve never thought in terms of attachment or detachment,” Pincus responded, “We have a 90 to 10m rule, which means that if a platform can bring us 10m DAUs in 90 days then we invest at scale. Facebook met that rule and Android and iOS have the potential, he said.
“I think of it like the evolution of TV.” Pincus explained. “People wanted to watch TV but our desire to watch TV wasn’t created by the networks, it was a relationship between us and content. People have a latent interest in playing independent of the platform and we are willing go anywhere.”

11:13 by Robert dawne · 0

Would You Watch An Angry Birds Web Series?

Angry Birds is one of the world’s favorite mobile games with their most recent release, Angry Birds Space, garnering a whopping 10 million downloads in less than three days.  People wear Angry Birds costumes, dream of Angry Birds theme parks, eat Angry Birds pizzas, and even shop in Angry Birds stores.  Soon, fans will be able to watch an Angry Birds web series as well.

Rovio has announced that they will be launching a 52-episode, weekly Angry Birds web series this fall.  Nick Dorra, head of animation at Rovio, said at the MIPTV conference in Cannes, “Angry Birds is not just about the gameplay, and will be in the future less and less about the slingshot, actually, and more and more about the characters.”  Dorra says, “We’re going to roll it out on all possible devices.  We’re looking at building a video app for that, and we’re also looking at partnerships and so on… We want to be on all screens.”
Though still primarily known for their mobile game, Angry Birds is far from new to the online video scene.  The Rovio Entertainment YouTube channel has over 452 million views thanks to popular Angry Birds videos.  Some of the most popular Angry Birds videos include a sweet cinematic trailer, a short about Mighty Eagle, and a holiday video called ‘Season’s Greedings!’
The tens of millions of views on these videos indicate that the Angry Birds series, when it launches this fall, will be a huge success.  Will you watch?  Or will you be too busy with slingshots on your mobile?

10:43 by Robert dawne · 0

ContraVille? Konami Signs Up to Make Games for Zynga.com

There are no allegiances in gaming anymore.  There was a time when developing games for the Nintendo Entertainment System meant that you were strongly pressured not to make games for other consoles.  For me, I was on the Nintendo ship until they lost Square and Final Fantasy VII was produced for the Sony Playstation.  Well, these days platform creators like Nintendo and Sony have new competition in the form of Zynga and OnLive, and Zynga just recently announced that Konami, one of the largest console game makers in the world, will be producing games for their new Zynga.com platform.
The news was reported by Rob Dyer, the head of publishing at Zynga who’s heading up the Zynga.com platform, at GDC in San Francisco on Thursday.  In addition to Konami, Zynga has recruited Playdemic and Rebellion as well, and explained a few details of the payment process.  When using Facebook credits as most of the games use right now, these publishers will be getting 70% of the 70% of revenue that Zynga gets, putting publishers at receiving 49% of revenue from a sale on Zynga.com.
That said, games that appear on Zynga.com will take advantage of massive cross-advertising opportunities and will join one the fastest growing social gaming company on the web.  It may be a great long term strategy to join the network and make your games known to gamers as Zynga.com continues to expand and provide new offerings.  Inside Social Games points out that “Konami and Rebellion also make for strange bedfellows as both developers have little to no experience in social games.”  This is true of Zynga’s strategy at this point, and speaks to the fact that Zynga must be aggressively courting small game publishers right now to get them to join the network — it would be quite difficult to persuade even mid-size game publishers to join and give 30% of their revenue to Zynga.
We’ll see how things progress for Zynga.com, and whether they begin to mould themselves into their own social network in the future.  Are they attempting to go the route of something like OMGPOP?

07:44 by Robert dawne · 0

Zynga Moves Beyond Facebook to Zynga.com

Zynga, the casual gaming company that accounted for 12 percent of Facebook’s revenue in 2011, is starting its own gaming site at Zynga.com.

The first games to make the transition will be “CastleVille,” “Words With Friends,” “CityVille,” “Hidden Chronicles,” and “Zynga Poker” in early March.
On the new platform, gamers will be able to connect with other players outside their networks on Facebook, called “zFriends.” Other social features include real-time chat, and the ability to post achievements, or to send gifts and messages without leaving the game. The interface shows a running tally of the number of players currently online, as well as a stream of who’s playing what on the right side of the screen. No one on Facebook is particularly impressed by their friends’ casual gaming scores, so a separate environment where everyone who is there is there to play is Zynga’s best idea yet.
But this doesn’t mean that the company is severing its ties with Facebook. According to VentureBeat, Zynga gets 90 percent of its revenue from the social network by recruiting new players through Facebook Connect and collecting payments through Facebook Credits. The company will continue to use Facebook Credits as its virtual goods payment system on the new platform, even though Credits takes a 30 percent cut of the profits.
Third-party developers will also be able to use Zynga’s platforms to publish games.  It’s possible that Zynga could take an additional cut, but Zynga COO John Schappert told TechCrunch that terms with these developers were negotiated and private.
“We’ve been a web/game company delivering content to our players and developing our own internal infrastructure and technology. And now we’re transforming into a gaming and platform company,” Schappert told VentureBeat. “We’ve listened to our players, to what they want from social gaming. They want a place where they can play together, they want a place that curates and delivers the best new social games for them, where they’ll always have a friend to play with.”

09:52 by Robert dawne · 0

Led By Social, Gaming Investment, M&A More Than Doubled In 2011; Consolidation Looms

Yesterday, we took a look at the growing comfort consumers, specifically gamers, have with purchasing virtual goods and currency on the Web and mobile devices. Virtual goods are becoming a booming market thanks to the growing maturity of gaming platforms, free-to-play models and the profusion of mobile devices.
Today, international investment firm Digi-Capital published its in-depth review of the global gaming space, giving us a sense of the size, breadth, and activity of the very international gaming market last year that is contributing to the changing behavior around virtual commerce — as well as a glimpse into what we can expect from the industry over the course of 2012.
For starters, Digi-Capital found that gaming investment and M&A more than doubled in 2011, as private placements grew by 96 percent to $2 billion, the number of transactions increased by 67 percent to 152, and the average fundraising round increased by 17 percent to $13 million. When combined with the enormous IPOs of Zynga and Nexon, investment value nearly quadrupled. All in all, gaming M&A volume grew 88 percent to 113 transactions, value grew 160 percent to $3.4 billion, and the average M&A deal size grew 38 percent to $30.4 million.
In terms of which gaming sectors saw the most investment and M&A activity in 2011? Unsurprisingly, social and casual games took home the bacon, making up 57 percent of private investment and 45 percent of M&A activity. Digi-Capital believes that Zynga’s IPO was likely the “high water mark for Social Games 1.0,” as the crowded nature of the space will make it increasingly difficult for companies to sustain user acquisition and retention.
In analyzing global gaming in terms of total daily active users and individual game daily active users, the investment firm found that a small number of companies are delivering on the promise of maintaining (and growing) their user bases, specifically referencing Wooga and King.com. However, with the trend beginning in 2011, this year will likely see continued consolidating M&A activity in gaming.

Second to social and casual gaming in terms of transaction volume was social/mobile games, with 30 percent of private investment and 27 percent of M&A activity, although the value of private investment hasn’t really hit its full potential yet. Digi cited DeNA and Gree as two examples of how investment in social-mobile games can actually deliver ROI, with the former seeing more than $1.4 billion in revenues at a 50 percent operating margin, and the latter seeing equivalent revenues in the 12 months leading up to December 2011, with a 46 percent operating margin. Going forward, mobile-social and cross-platform games will continue to attract significant attention from both investors and potential acquirers.
And just as we wrote in April last year, large, profitable Chinese, Japanese, and South Korean gaming companies will continue to look for M&A opportunities in North America, as gaming continues to explode across Asia. The same will be true for some of the big American gaming companies, but both suffer from a lack of local knowledge, and cross-pollination.
Going forward, Digi-Capital expects online and mobile games to significantly contribute to the growth of the international gaming market, with the total market reaching an estimated $82 billion by 2015, and online and mobile games taking 50 percent of that revenue. (Interestingly, it expects the pure console sector to be “flat to down” over that time.) What’s more, the report forecasts that Asia and Europe will take 87 percent of the revenues for online and mobile games, with China leading at 36 percent, followed by Europe at 20 percent, South Korea at 12 percent, and Japan at 10 percent.

However, while online and mobile games are growing their scale and share of the overall market, consumer markets are expected to continue to fragment, and profitable business models will become harder to come by. Over the course of the next year, gaming companies will have to develop multiple development platforms, instead of relying on one hit game, and find multiple platform and geographical distributors. Relying solely on Facebook won’t cut it for long. Rapid, low-cost game development and redevelopment cycles, fast failure, strong analytics, and true scalability will continually become more significant as the industry matures.
That being said, Digi-Capital found that there is more demand for investment among high-growth gaming companies than there is supply, as “outside major investment deals, online and mobile games companies still find it challenging to find high quality investors, and traditional VCs are becoming increasingly selective.” The current trend among VCs, the report finds, is to go after later-stage deals, but there’s potential to change as the market changes and more people flock to mobile and social games.
All in all, it seems there are plenty of potential growth and consolidation opportunities across the gaming sectors, but there’s no doubt that mobile-social, online, and cross-platform games will continue to explode over the course of the coming year, and we can expect M&A and investment activity to increase as social gaming works toward consolidation and more mobile gaming companies rise into the spotlight.

07:28 by Robert dawne · 0

Zynga’s Earnings: Social Gaming Revenue by the Numbers [INFOGRAPHIC]

Social gaming juggernaut Zynga released its 2011 Q4 earnings on Tuesday — its first public report since hitting NASDAQ in December.
The numbers were promising for investors, but revealed that scaling might pose challenges for longterm profitability. Our friends at Statista have taken a deeper look at the report and rendered the graphs below to show the relationship between Zynga’s massive user base, wavering growth patterns, and how much users are paying for content.

Have you purchased stock in Zynga? Do you expect it to be a longterm win for your portfolio? Let us know what you think of the report in the comments below.

13:29 by Robert dawne · 0

Zynga Slingo Combines Past and Present in New Social Game [PICS]

Take a spin on Facebook with Zynga’s new Slingo game — that’s slots and bingo combined.
On Wednesday, social game creator Zynga launched Slingo for Facebook. If you’ve been a fan of online games for a long time, you might have played Slingo in the past — the game started on America Online 15 years ago.
“Anybody who’s played Slingo in the past will feel right at home,” says Rich Sawel, product manager for Zynga Slingo.
Zynga Slingo combines the classic features of Slingo with the glitz and pizzazz of Zynga games.
Players click “spin” and match numbers to fill a bingo card. They can bump up their score by earning balls and coins. Get a “bingo” by matching five numbers vertically, horizontally or diagonally. Players can wager their points — the whole loot or just a percentage — and flip the devil v. cherub coin to potentially win big or lose it all.
There are five “worlds” in which to play Slingo and lots of visual appeal — confetti, flashes, bright colors, a moving joker in the bottom right corner. Zynga kept the cherub and devil images from the original version.
And just like other social games, you can play for a bit at a time then walk away and pick up the game later on. Unless, of course you’re addicted.
“It’s like recess for adults,” Sawel said.
Slingo was one of the first free casual games on the market 15 years ago, said Slingo Inc. CEO Rich Roberts. The game has been played by more than 55 million people over the years.
“Zynga has the experience on social games and this certainly fits what Zynga does,” Roberts said. “We think that with this relationship the game will appeal to user.”
The game is available in 14 languages, including: English, Spanish, French, Dutch, Italian, Portuguese, Chinese, Korean, Japanese, Turkish, Danish, German, Swedish and Norwegian.
Click here to play.
Check out this gallery to see what the game looks like:

15:00 by Robert dawne · 0

The Facebook Platform Roadmap in 2012

For Facebook, 2012 will be the year of the third party app. News, videos, and songs streaming down your newsfeed are just a “small taste of overall vision,” said Carl Sjogreen, director of product management for Facebook at the Inside Social Apps Conference.  The focus for the coming year will be on enhancements to Open Graph, mobile and games. Facebook recently reinvented the user profile as a timeline of major life events rather than a static “about me” page. The social network also extended the Open Graph platform for third party apps to include things like Spotify playlists on users’ tickers, newsfeeds, and timelines. Said Sjogreen, the apps are “a way for you to tell your story and to discover new things.”
Each of the activity streams serves a different function. According to Sjogreen, Timeline and Ticker are on opposite ends of the spectrum. “Timeline takes everything in your life and make it digestible,” said Sjogreen, and focuses on a user’s general interests and hobbies. “Ticker and Newsfeed are much more about what’s happening right now.”
In particular, Timeline favors apps with longer-term engagement, like Spotify, where users can say something like, “Hey, I listened to these artists the most this month using this app.”
With games, Facebook can take activities like high scores and other achievements to populate users’ newsfeeds while they play. On Zynga’s “Words with Friends,” for example, players can share their highest scoring words or the words they play most often.
Because games are inherently social, Sjogreen encourages mobile developers to create Web-based rather than native applications in order to make them available to more users. “I want to play ‘Words with Friends’ with my mom,” he explained. “I don’t care what platform she’s on. If I can’t play with her, it’s not a useful application to me.”
Facebook is working on making it easier for developers to integrate their apps with Facebook using a single API. Right now, said Sjogreen, “We are trying to figure out which [connections are] going to be the most meaningful for developers, and which we are going to want to build richer experiences around.”
Added Sjogreen, “Games are a shining example of how Facebook integration and social design can really be transformative for an industry.”

10:02 by Robert dawne · 0

Facebook’s Amended S-1 Exhibits Zynga Agreement Filed Last Year

Facebook has just filed an amendment to its S-1 that exhibits the agreements between it and Zynga. These 2 developer agreement documents are the same as those filed in Zynga’s own S-1 amendment from last year and don’t include significant new information.
The exhibits do spell out how Facebook has promised to help Zynga with advertising on Zynga sites such as FarmVille.com, and share revenue from such a partnership. This should not be confused to mean sharing ad revenue from Zynga’s games on Facebook.com. Facebook also included its 2005 stock plan, and employment letters to key executives.
The developer agreement documents appear to have the same redactions as when Zynga filed them. Last year, TechCrunch writer Eric Eldon reported on these docs explaining how they show that:

Facebook also appears to have guaranteed Zynga certain growth targets in exchange for continuing to invest in games on the platform, whether web or mobile. Facebook has given Zynga permission to create some sort of “Zynga Platform”. It also has given the developer access to new features, including a proposed “Game Friends Protocol” API, apparently offering a new way for social gamers to find and play together.

Regarding ad revenue sharing:

At first glance, the terms read as if Zynga had a special deal with Facebook, where it gets a portion of the ad revenue from Facebook ad units that run alongside its games in canvas apps. However, the terms specified that it is not canvas app ad revenue — instead, it’s referring to Zynga web sites [also known as Zynga Game Pages, which do not include Canvas Pages or any other pages on www.faceboook.com.].
We asked Facebook about the matter and got this response: “We don’t have agreements with any developers, including Zynga, to share revenue from ads next to their Facebook canvas apps. We did agree with Zynga to work together in the future on providing ads on their properties beyond Facebook, but we have no current timeline for when we might start working on that.”

This could be the first sign of a future Facebook off-site ad network, in which sites could host ads that employ Facebook’s own targeting system to present relevant ads to visitors that are currently logged in to Facebook. This could become a huge revenue stream for Facebook if it ever rolls the system out to sites beyond Zynga’s.
Some specific points from the agreement:

• Zynga is responsible for “all content and materials, maintenance and operation” of its own gaming websites, except for the Facebook ads it hosts
• Zynga will not “remove, minimize, frame, or otherwise inhibit the full and complete display of any Page” such that it could obscure ads or overlays that pop up when ads are clicked.
• Zynga will exclusively use Facebook Credits as its in-game purchase processing method on all its “Covered Zynga Services”, including Mafia  Wars, FarmVille, and any other games that utilize Facebook data.

15:08 by Robert dawne · 0

Games Bring in the Most Revenue for Sohu in the 4th Quarter

Despite government crackdowns on social media users, social games continue to grow in China.  Sohu’s (NASDAQ: SOHU) fourth quarter financial results are in, and the largest share of the company’s revenue came from games, which brought in $123 million and showed an increase of 34 percent year-over-year and 6 percent quarter-over-quarter.
Sohu.com, Inc. is the parent company of the Chinese language online media destination www.sohu.com; the interactive search engine www.sogou.com; the games information portal www.17173.com; the real estate website www.focus.cn; the online alumni website www.chinaren.com; the wireless value-added services provider www.goodfeel.com.cn; the online mapping service provider www.go2map.com; and the developer and operator of online games at www.changyou.com/en/.
The company’s business model is based on brand advertising, sponsored search services, online games, and wireless value-added services like downloadable ringtones. Overall revenues are at an all-time high of $246 million, representing a 42 percent increase over the fourth quarter last year.
In May 2011 Sohu’s subsidiary Changyou bought the majority stake in the online gaming company Shenzhen 7Road Technology Co. for $32.76 million. Changyou’s games include the martial arts game “Tian Long Ba Bu” and a new massively multiplayer online role-playing game (MMORPG) called “Duke of Mount Deer” for hard-core gamers. In December, Sohu sold its 17173 website to Changyou for $162.5 million and will provide tech support and advertising for around $30 million.
Said Dr. Charles Zhang, Chairman and CEO of Sohu.com Inc., “For online game business, in 2011 Changyou achieved healthy growth in its MMO game portfolio and diversified into other fast growing areas such as Web-based games. In 2012, with our leading game information portal 17173.com under its leadership, Changyou will jumpstart a platform-based initiative.”
Next quarter, revenue for 17173 is expected to be between  $7 million and $8 million – a $4 million to $5 million drop from last quarter. Co-president and CFO Carol Yu explained that the first quarter of the year is always a slow season for online gaming advertising, and that new game launches have been affected by the early arrival of the Chinese New Year holiday.
NASDAQ.com has a good analysis of Sohu’s net income, which dropped despite the increase in revenue. To read the transcript of the earnings call, click here.
Image by sevenke via Shutterstock.

12:44 by Robert dawne · 0

Facebook Social Games [infographic]

Facebook is a social networking service and website launched in February 2004, operated and privately owned by Facebook, Inc. As of February 2012, Facebook has more than 845 million active users. Users must register before using the site, after which they may create a personal profile, add other users as friends, and exchange messages, including automatic notifications when they update their profile.
The fact that half of the population of the Internet plays social games on Facebook and Google+ caught our attention. That’s the reason we’ve compiled some very insightful stats from great authorities on social media and online games and put everything together in a brand new infographic we present to you today titled: What Makes Social Games on Facebook and Google+ so Popular? If you haven’t quite grasped the concept of why in the world are people so addicted to Mafia Wars and keep requesting your help to load up on weapons and armour…let us show you why in our detailed infographic:

07:42 by Robert dawne · 0