Place more than two casual game executives in a room together and the one thing they will agree on is that casual game downloads are dead. They are not, of course. The market is just changing, evolving into a whole new market with new genres, distribution channels, and pricing (unlike the price of gas, download games are cheaper, yea!).
This begs the questions. If everyone who makes casual games thinks downloads are dead, what shall arise in their place? With that question on my mind and a quest for answers, I drove 15 minutes down the road to the Social Gaming Conference in San Francisco. Here’s what I learned:
1. The more things change, the more they stay the same. For the past couple years, the only thing companies that create download games agree on is that they hate the term “casual games.” After much debate, no one can agree on a new name and the moniker of casual games sticks. So what was the most heated discussion at the Social Gaming Conference? That everyone hates the term casual games in regards to social gaming.
2. According to members on all panels, casual MMO’s (massively multiplayer online games) targeting young children and teenagers are going to be huge. Once Club Penguin was acquired last year for $750 million, venture capital firms (VC’s) starting throwing in the money in this space and it was estimated that over 100 Casual MMO’s targeting kids and teens are being developed as we speak. I actually buy into this hype. There is a huge demand for innovation and the most innovation in casual games right now is in social gaming.
3. What I do not buy into is this is a multi-billion dollar market. The math simply does not add up. Every casual social game company plans to offer the games for free but charge users to purchase items in the games (micro-transactions). People on the Casual MMO Panel actually shared real numbers which was refreshing, estimating a good social game can get 5 – 10% of their users purchase items online and a bad one will get 1 – 2% of their users do so.
But here’s the problem. Let’s assume that hundreds of casual MMO’s and thousands of casual games on Facebook launch over the next 12 months with micro-transactions as their business model. I can see a casual gamer playing and be willing to invest in purchasing items within 2 – 3 casual MMOs but no more than that. Casual gamers have actual lives and a finite amount of time to play games.
Another issue is that kids and tweens to whom most of these games are going to be designed for, have the money to spend but credit cards to do so (though admittedly, Nexon has proven the success of selling pre-paid cards at retail for their hit game MapleStory).
The irony is the demand for casual social games exists, but the supply is about to get way out of whack. Just like the dot com and the real estate bubble, we may actually be facing a social gaming bubble, even before the market comes to fruition. It’s sad because from a casual gamer perspective, there is a lot more innovation happening in social games right now than download games, where the big innovation is should I hide this item here instead of there in the cluttered picture.
4. This is not to say that all casual social games will fail. Those that already have an interesting product and user base have a great chance of succeeding. I met and spoke with three such interesting companies last week. Gaia Online is an “online hang-out” in the words of CEO Craig Sherman, and boasts over 5.5 million users a month, the second largest art gallery on the Internet, a huge forum, and tons of free games. They are working on an Casual MMO and we are going to be invited to a sneak peak very soon.
I also spoke with Mattias Miksche, of Stardoll, a virtual doll fashion community with 8 million unique users a month. Users can dress up and purchase clothes for their avatars, design their own clothes clothes, and sell them to each other in an online bizarre. We also spoke with Kris Soumas of Lifetime TV about the new DressUpChallenge Web site they have quietly yet successfully launched recently. Web sites targeting females where you can dress up your avatars and share together online are among the most popular casual social games online and should all be successful.
These casual social games are on our radar screen and we’ll continue to introduce and share with you new social games to check out yourself every week in our new Social Saturdays feature.
OK, now time now to stop writing to get back to work on our own social site!