Liveblogging Inside Social Apps: Facebook, Apple, Google and in 2012

We’re at the San Francisco Design center, blogging Inside Network’s third annual Inside Social Apps conference.

The event kicks off with “Facebook, Apple, Google: Which Platform(s) Hold the Most Opportunity in 2012?” Joining moderator Eric Eldon on stage are wooga founder and CEO Jens Begemann, Kabam founder and CEO Kevin Chou, Funzio and Storm 8 co-founder Anil Dharni and Disney Interactive Senior VP of Social Games John Spinale.

What follows is a paraphrased transcript of the panel.

Eric: Let’s talk about what’s going on with Facebook. Jens, let’s start with you — you’re still focused on Facebook.

Jens: We’re very happy with Facebook. If I look at our four largest games, we had our all time highs last week and some of these games are two years old. We have three times as many users as we had a year ago. If you really focus on the platform and you really focus on having a great user experience. For us, it’s really most organic. Advertising is roughly 5% of new users for us. 40% is viral and 55% is through cross promotion.

Kevin: I think Jens’ experience is a unique. I think looking at the platform for the past few months, advertising costs have gone up 18% and virality is kind of a black box to developers in general. We’re still very excited about Facebook and we continue to work with them, but they’re just starting to learn — they’re really two quarters in with learning how Facebook Credits factors into the developer’s experience. When we implemented Credits, we though conversion would go up 15 to 20%, but I think FB Credits has helped maybe 5%.

John: It is pretty similar for us. At the end of the day, having a unified currency that’s easy for people to understand — I think they made a good choice, but it was a drag on the system. For us it’s less about DAUs and MAUs, it’s more about monetization. While we have a different experience than Jens here where we have to incent our user base to grow, we’ve gotten very good at figuring out how to get people to pay and how to use existing channels.

Anil: There is no clear roadmap on how Facebook is thinking about the viral channels. It’s not clear what channels will exist tomorrow and how they will change today. That’s a growing challenge for us and I’m actually hoping there’s more solidificaiton that they talk about here at ISA. As far as FB Credits, I think it’s a wash out. We saw increased conversion rates, but a gradual decrease in average revenue per paying users. It’s hard to know why, but for games with whales, we see that people just like credit cards and PayPal better than these 99 cent purchases. The percentage of users that are paying are increasing, but total volume has decline.

Jens: We’ve been with Credits since day one, so we can’t really compare. We don’t see negative trends because we can’t compare the pre-Credits revenue to post. I think we should appreciate that the Facebook platform is completely free and only if you make revenue will you do a 30% revenue share and I’ve not heard anybody complain about Apple for their revenue share. It’s apples to apples with Facebook. You get distribution and other things — and only if you’re successful do you give to FB.

Kevin: We’re really excited about mobile. On the web, we have converted more users to paying. On mobile, we’re getting well above the conversion that we see on Facebook. More people have historic credit cards on file, so there’s less friction. But Apple provides less than Facebook.

Eric: Walk us through the transition to mobile. Anil, do you have any regrets?

Anil: The Funzio team has a unique background, we’ve done Facebook and mobile gaming before Funzio. I think our experience depends on what existed at that time. When we were doing Storm 8 our team came mostly from Zynga and we had to look at our DAUs and they were mostly a joke. We had a large portfolio of games to manage. When we launched Funzio, Facebook was the obvious choice. Looking back Facebook was an obvious platform for scale and we can take a game to mobile and google plus. Overall it’s been a good experience. The Funzio team has a unique background, we’ve done Facebook and mobile gaming before Funzio. I think our experience depends on what existed at that time. When we were doing Storm 8, our team came mostly from Zynga and we had to look at our DAUs and they were mostly a joke. We had a large portfolio of games to manage. When we launched Funzio, Facebook was the obvious choice. Looking back Facebook was an obvious platform for scale and we can take a game to mobile and google plus. Overall it’s been a good experience.

Jens: For 2012, we’re very focused on FB, but we’re very interested in mobile. We’ve kicked off as many projects for mobile as we have for social. We’ve brought our IP to iOS like Diamond Dash and we see that this works very well. We see many new users on mobile. We see more new users that have never seen the game before. It really helped when we launched that we had the core fan base download everything because that brought us to the charts and then we attracted many many new users.

Eric: John, you have a bunch of mobile games through Disney and some Playdom games you’re moving to mobile. How do you prioritize?

John: On the social game side of things, we’ve seen social game networks go mobile. We move where the puck is, we’re making sure our existing social games extend to mobile — like on iOS, but we’re also seeing revenue growth on Android meaningful enough that it’s worth doing. It’s more unwieldy and has more overhead, but it’s worth it. It’s not an either or game for us. We take some strategic bets and we love that the vast majority of revenue is still iOS and Facebook but nobody wants a one horse race.

Eric: You’ve been at OnLive so you’ve seen platforms shifting. What do you think is shifting?

John: Back in the PC days when there were a variety of operating systems and a huge variety of consoles fighting it out, this is pretty natural. We started off making games for MySpace and it wasn’t obvious that Facebook would be THE social network and I don’t think they realized they’d be a games platform. Games drive usage and purchases and engagement. Apple came reluctantly to the games space and Facebook came accidentally. A lot of the user engagement and adoption of the platform is driven by gaming and now they’re beginning to stabilize their business around gaming. Now we’re seeing people come in from the outside to make gaming ecosystems. I think mobile is going to take the lead over a several year time frame. I don’t know how long that will take.

Eric: How is HTML5 going for you guys? Any meaningful results from some of the apps you’ve launched? Are we years out?

John: It’s going to be a while. There are a lot of people making incredible prototypes to show it’s real and it’s going to be great. But I don’t think there’s enough feature completeness or momentum where people are going to turn a business on it.

Kevin: We have two mobile games in beta. One is in Unity, the other is in HTML5. Some of our games have less animation, so it’s a lot easier in HTML5. Obviously you can’t access the accelerometer and other things that make mobile great. I’d say it’s probably 2013 or 2014.

Jens: We launched our first mobile game in October. We’re satisfied overall, but many details were not optimal. It was hard to start a game online and finish offline. All of these small things combined to make HTML5 less attractive. It will take some time. It depends on the game — but in the long term, we’re very bullish. Until the user experience is identical — I would say three years from now.

Kevin: It’s not necessarily that there should be parity. We operate on over half a dozen platforms and it’s a single game universe where all our players play against each other. We’re excited about Google+ and several other platforms and we have to think about operational efficiency.

Anil: One of the big trends we’re seeing from a player’s perspective is that they’re demanding better quality games. HTML5 would be a regression for us. We’re interested in new technology, but we’d rather go 3D than HTML5.

Eric: Let’s talk about iOS a bit more — what are the main ways to solve the viral channels issue?

Jens: We see a decent number of users coming from the Facebook to iOS games if they’re connected. IT’s a healthy amount of users. We see much higher engagement from those using Facebook Connect. I think it’s a little bit underrated. I think making mobile games social will increase engagement a lot.

John: For our mobile games that we’ve added social components to like Where’s My Water, which has been a huge success, the level of engagement by adding Facebook has been pretty low, but adding game centric features like leaderboards has been better. I think there are better pure gaming platforms available on iOS now. I think OpenFeint, Gree, ngmoco, there’s a lot of cool stuff going on and I think Game Center could do more. On the flip side of things we’re bring our social games into the mobile platforms. We’re definitely viewing it through two lenses right now but it’s getting better over time.

Eric: What about iPad? We’ve heard that that’s a very big part of how people are playing your games?

Anil: We’re less on the casual side right now, we’re more on the midcore hardcore side. And we’re seeing massive uptake on the iPad. Apple has a massive edge over Android because of the iPad. We’re hoping Google figures out tablet soon because that’ll be a market for us. The ARPU is even higher than what you see on iOS users.

Eric: What are the monetization differences you’re seeing on iOS and Android?

John: It’s a smaller amount of users that get through the funnel. We’re finding that users are more engaged for equivalent games — like Gardens of Time. It’s a meaningful percentage that’s more engaged. That’s were we see the large growth in the market is mobile. To some degree, we take a platform agnostic view as Disney. We’ve been through 20 platform transitions from black and white to radio and so on — that’s how the company at large views platform transitions. For us it’s about story and character connections and crafting them to be appropriate for the right platforms. We need to think about it in the short term and in the long term. When you have a success like Swampy the Alligator, you need to think about how to branch that out.

Eric: Are you shifting more resources to Android this year?

Anil: We’re definitely focused on building out the team.

Eric: But it’s the third place to go after Facebook and Apple?

Jens: We have no team on Android. Going from Facebook to mobile is a big challenge and we want to get it right. Android is an issue because we’re a small company and we don’t have a QA team. The team is responsible for delivering high quality. On iOS that’s possible because there’s a limited number of devices that the team can test. Android needs a large QA team that goes through all the specifics for the devices — and that’s an issue. In time it will happen.

Eric: Does the Google+ platform matter at all to you guys?

Kevin: We’re very happy with Google+. We’re seeing retention similar to what we see on other networks. Monetization is a little worse. Google+ takes a different approach to acquiring users. Putting content on the exclusively gets better featured placement. It’s not an open platform, it’s more of a curated approach. But we’re probably one of the more successful developers on the platform and we’re opening up our catalog of games to the platform. On the unit economic side, we look at how much it costs to get a user and we look at how much planned monetization we get per user and those are similar. On Google, the issue is scale. And the payments cost – which is obviously very favorable. It’s been growing, so it’s hard to ignore. Google+ has been in the news for a lot of things, but the most important news is that it’s growing.

John: Did you get money from Google? [Laughs]

Kevin: Yeah.

John: I see the potential, that they’re very serious about what they’re doing and they have an opportunity to approach it differently. To be able to weave games and building a community on that platform is very different and it’s not head to head any longer. What’s interesting is how we can approach people from a different angle. We have a few games on there with smaller user numbers, but they monetize well.

Eric: Any other platforms we should talk about?

John: We just published Spry Fox’s Triple Town — which came form Kindle. There’s not much there yet, but it’s a great game to come from that platform.

Eric: How about the international networks? Aren’t they declining?

Kevin: I don’t track the platforms, I look at the growth in the games. The large majority of our new users are not on Facebook. It’s Google+ and 600 other social networks — we just launched on Yahoo and we’re launching on games portals. There’s a lot of opportunity around the web.

John: We’ve launched on loads of social networks over the course of Playdom’s life cycle and we’ve narrowed it back down to Facebook and Google+ and a couple in Russia like that are still pretty vibrant. But the number keeps shrinking. It gets down to true development efficiency.

Eric: Windows Phone? You guys ready?

Jens: I’m from Europe, so I’m bullish on what Nokia can do with Windows Phone. Here in the U.S. it’s not a big brand but in Europe and Asia it’s still huge. I think it will be a third platform that will be relevant. We’re focused today on Facebook and iOS and we’re trying to create the best games possible.

Now into the Question & Answer segment…

Q: With regards to monetization, we’ve heard that 95 percent of users don’t monetize, but advertisers are coming in and getting interested in the space. What’s the difference between pissing off users with advertising and monetizing those users who haven’t monetized yet?

John: I think users recognize that programming needs to be paid for in some way. Having contextual, relevant advertising typically isn’t a problem. We haven’t embraced advertising in its fullest form. We see it as a pretty big revenue stream overall and we’re leaning into it. We’re not at the bleeding edge.

Jens: We don’t have advertising in our games because we’re focused on selling and monetizing though virtual goods. The large majority of people who never pay, so there should be a meaningful revenue stream. Everything we’re hearing though says its not yet there. One of the big issues is standardization. I don’t know what this issue is, but if we could could get a standardized format I think it could become big.

Kevin: When we do the math for ourselves we see we can make $10,000 – $20,000 a day through advertising with a lot of work, but we can make the same by monetizing with our users better.

Anil: I don’t think the ad products are there yet. They can actually hurt the user experience. If you have products that are more innovative and don’t impede a user experience we’ll look at them.

Q: From a global user acquisition point of view, which platform has been the most valuable – HTML5, Android etc?

Jens: For us, the focus is on Facebook and iOS. Facebook is blocked in China, and the parts of Asia where Facebook is big monetization is very low, so our focus is mainly on Europe and North America.

Kevin: On mobile you’re going to get global coverage, but on the web it’s different. Facebook has low penetration in Japan and it’s blocked in China, but for a casual audience, you pretty much want to be on Facebook. If you’re looking to go after a niche market, you can get into smaller markets and networks.  In China you want to be on Tencent and Sina. Japan is very interesting with GREE and DeNA, in South Korea you’ve got Nexon and a number of others.

Q: How do users discover new games on Facebook?

Jens: On Facebook it’s really through requests and news feeds. Our users come because their friends are playing.

John: Paid advertising on Facebook is a well-oiled machine on Facebook. You can also pull in from outside channels — we’re seeing a massive influx of people from outside the Facebook platform through more traditional channels like PR and marketing that I think we do well as a company.

Q: Eric Eldon: What can Facebook do to become a successful mobile platform?

Jens: Facebook is already huge on mobile. They’re doing the right things to make the platform right to develop for on mobile. We want to make mobile games that are really social and I think Facebook is doing the right things with Facebook connect to make it more social and use the social graph.

Anil: We’ve found that gamers don’t care about their friends, they want to find other gamers. They need to have a game graph and I think that would be a lot more relevant on mobile. It would be the secret sauce.

Kevin: I think what Facebook needs to do is figure out how to get around the 30 percent tax that mobile platforms charge them. I think that’s why they’re betting heavily on HTML5 so they can bypass the app stores and go from a mobile browser to a game. I think it would be very difficult for any developer to pay two 30 percent taxes. They need to go HTML5 and push the entire ecosystem to HTML5 to make it successful.


Publish date: February 8, 2012 © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT