What’s the secret to being one of the profitable and biggest players in the casual and social games space? According to a fascinating interview with Facebook CEO Mark Zuckerberg from Inside Facebook, it’s to not get games or care about making money.
Here are the detailed tidbits from the interview:
Zuckerberg believes there are two ways for an app to be successful on Facebook: viral distribution and reengagement. Facebook believes that the scales were tilted on the former and have now changed the rules of the game so that it is tilted to the latter, which they believe will lead to better games over the long-term.
The challenge for Facebook in games is set a course that appeals to Facebook users that love to play games while not angering Facebook users that don’t like games.
Apparently, Zuckerberg falls in the latter category. He admits to have been surprised that games did so well on the Facebook platform (and sending virtual Vampire bites like Bite Me was expected?). He still does not play games.
Zuckerberg says that the reason they are pushing Facebook Credits is that a single currency makes virtual goods a better experience. He claims it has nothing to do with money because advertising have better margins. Of course, the margins for Facebook Credits could be 5% and at billions virtual item dollars, it’s still a hefty number. His “margins” analysis does not compute to me.
Finally, Zuckerberg references Zynga multiple times in the article and each time it is in a negative way. It’s subtle but clear if you read the article that he’s not fan of the Ville games.
Back to the secret of Facebook’s success in casual games, here’s one more secret that Zuckerberg does not mention in the article: Luck!
Seriously, you don’t grow a business that is projected to make $1 billion in 2010 piggy backing on games and not get games (or in the case of Mr. Zuckerberg, apparently, not even like to play games.
There is a lesson here for Facebook. If you were flat out lucky to create a multi-billion business in social games by accidently becoming the leader, it does not make you expert in this space at all. Facebook has purposely made major changes to their games model this year, but what they need to have is humility. In the same way they were lucky to create the social games phenomenon, they can be equally unlucky to throw it away.