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Is Zynga’s Collapse the Future of Social Gaming?

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Where is social gaming like Zynga on its way? Image Courtesy Zynga

Social gaming used to be the buzz word in game development. Regardless of where you hobnobbed, whether it’s at E3 Game Developers’ Conference in San Francisco, or at Gamescom, the buzz word that burdened the psyche of many game strategist, game industry observers, and video game bloggers was social gaming. It’s the next big thing. Remember when “portals” was the next big thing on the internet and there were tons of portals that rose? Well, when it comes to social gaming, Zynga is the 800-pound gorilla and the main contender of the social gaming space. It, afterall, went IPO but the market hasn’t been kind to Zynga to say the least.

It has posted quite a bit of substantial losses. The average repeat playing volume for its properties had been declining. It tried to make some acquisitions but these have not performed as expected. And shareholders are just dumping the stock. Things, indeed, are not looking good for Zynga. In fact, its stock has hit the three-dollar range.

Predictably, the media reactions to Zynga’s recent bad fortunes have ranged from self-satisfied mutual pats on the back, claiming that they saw the train wreck coming, to utter denial and mystification. There are a lot of lessons to be learned in this Zynga debacle. Keep in mind that this is still an ongoing story. Zynga might still pull the magical rabbit out of the hat and get out of its hole. As a matter of fact, the synergy between the Zynga platform and online gambling is quite magnetic and that might prove to be a lucrative way out for the company. Still, as a mainstream gaming company, Zynga is facing a lot of hurdles.

Zynga, is a pioneer company. It is one of the biggest early names in social gaming. Its brands, like FarmVille, completely dominate social gaming. So we have to analyze Zynga as a game pioneer. And its fortune should be analyzed from that perspective.

Pioneers make mistakes. If you establish a new product or service category, you really can’t be blamed for making missteps because it is a virgin territory. You pioneered it and others coming behind you have the hindsight and the benefit of learning from your mistakes. Being the path leader of a brave new world of consumer gaming, Zynga put the category on the map. However, it made spectacular mistakes along the way.

One of these, which Zynga is learning painfully, is that social games operate within a tight boundary of rules and functionalities. Basically, for a social game to operate, it has to have this fixed range of rules that people can glom onto. The problem is, at a certain point, it all boils down to a branding game. Whoever can brand their particular social game to a certain level wins, and that’s where Zynga’s strategic advantage laid. It was able to brand CityVille, FarmVille, and a whole host of social games.

Zynga CityVille Stats

Zynga CityVille stats as of July 2012

The problem is, solid brand can only take you so far because the underlying product beneath the brand is operated within a fixed set of rules. Some critics of social gaming say that because the makers of social games restricted themselves to this type of rules that constitutes a social game, they pretty much are shooting themselves on the foot. They are engaged in a race to the bottom because the underlying engines of social games have become quite identical and generic. One prominent critic, Tadgh Kelly, says that social games that exist now involve the same kind of business devolution that afflicted Atari back in the early 80’s.

Let’s take a little track back in time. During the 80s, video games were huge. We’re talking about the early generations of video game consuls, and Atari was the absolute giant in that space. But in a short period of time, due to the cheap, generic, and unremarkable games that inundated the market, the market imploded. So, Atari’s fortunes collapsed along with that market. The lesson that critics say that could be taken away from the Atari experience was: the overall effects of these similar games operating within a fixed set of parameters made the consumers skip the whole game platform entirely. And the critics say that this might take place with social gaming.

On its phase, the social gaming critics have a point. There are so many ways that you can play a social game. They all revolve around a small set of features that involve social aspects of sharing, achievements, and other psychological triggers. If there is anything that can be learned from a social gaming current downward spiral, that is the static conceptions of social gaming have to give way to a more dynamic orientation for a social gaming to take off. Remember, social gaming is social in the sense that your actions within the game are publicized to your social network where your friends can see and join, thereby growing the game.

The problem takes place when the focus is solely on growing the game and there is less interaction between the people joining in. It’s one thing when your friends join because they simply like the farming game. It’s another when they join and interact with you so you can start a ketchup factory. See the difference? This is the difference that is most highlighted by critics, such as Kelly. When you look at dynamic game products like poker, the Zynga poker has the hallmark of a social game because your achievements, invitations, etc, get set up to your social network. What changes the game dynamic is that you can play with your friends on a poker table and the results are always different, while the rules are fixed.
The dynamic are different because the friends change; the personality-blend changes. So at this level of the analysis, the game component that people can attach their interest to is not just the actual mechanics of winning and losing based on the draws of the cards, but in the interaction of the combination of the players; the different personalities that come to the table.

As Zynga poker players, we can say that a lot of the fun in playing Zynga poker comes from the banter and the wisecracks between the players that can’t be replicated in a typical social game. So, Zynga has a lot to think about regarding its implementation of social gaming. Kelly’s point was that Zynga has to demolish its old mindset of operating its social gaming model as a gaming portal. Portals eventually don’t win out in the end. Remember the Yahoo portal idea? You only need to look out Yahoo’s declining stocks and stature to see that the portal model has a limited shelf life.

According to Kelly, instead of looking at itself as a place where people go to play games, social Zynga should look at itself more like HBO that’s producing dynamic content. This is a key direction to go because it opens up the social gaming space from a tightly controlled network to a laboratory of experimentation, where the third party application providers can continuously tweak the social elements of gaming so that it will enable the social factors to provide a level of dynamism, interactivity, and content creation that would make the game more valuable and unique. That is where the challenge lies.

Zynga is really running into some serious problems with the portal model. The good thing is, it’s many competitors can look at Zynga’s misstep and innovate their way around them so that they don’t commit the same mistakes. They need to study what Zynga got right and where it’s going wrong so they can evolve the social gaming space accordingly.