Another Gentle Nudge at Teachers and Schools
A few years back I wrote a post called “On Kids, Parenting and the Real Time Web” encouraging schools to take advantage of online tools to complement classroom teaching and facilitate homework assignments. It’s great to finally see them adopting tools like Google Earth to teach geography and visualize historic sites, and Mathletics - an excellent way for kids to complete homework assignments in a gamified way.
My latest educational obsession revolves around teaching kids the key tools for creativity and empowerment for the next 50 years: software development, design, and robotics. While a number of governmental and educational bodies have been publishing discussion documents on the subject (read: see you in 10 years or move to Estonia) - there a number of emerging online services and volunteer programs that can accelerate their introduction at home, in the classroom or even in your local community. Here’s a snapshot of the current movers:
Scratch - a wonderful software development environment for kids built by MIT. Very intuitive, it’s a great tool to teach kids aged 7+ the building blocks of software development while creating their own animations and games. A fun way to start is to combine it with “The Super Scratch Programming Adventure”, a comic-book like guide written by the LEAD project (Learning through Engineering, Art and Design) - thanks Hilary Mason for the suggestion!
Coder Dojo - a movement to create free coding clubs for young people around the world. Taught and organized by volunteers who follow a “keeping it cool” dogma, this is a must check-out if you’re interested in either joining, organizing or teaching a local dojo. In the UK, a very similar program called Code Club is worth looking into as well. Schools should proactively seek our Coder Dojos or Code Club volunteers to run weekly after-school sessions.
Khan Academy - Salman Khan’s brilliant videos have been making advanced education free and accessible to everyone for some time. Computer Science is one of many tracks available and a great way to get started with design, animation and programming basics.
Codecademy & Learnstreet - while not designed for kids, Codecademy and Learnstreet make it dead easy to learn how to code. An hour a week will get any parent or teacher the fluency to support their learning kids (and why not, build your own games, apps or websites).
Arduino and other Open Source Hardware - and finally, robotics. With the advent of Arduino, an open source hardware and software platform for the creation of interactive objects, a number of kids-centric projects have leveraged the technology to introduce the principles of robotics. A recent discovery is RoboBrrd, a cute bird robot that gives kids hands on experience with mechanical and electrical engineering, and programming. I’m also unlikely to resist the temptation at giving the Lego inspired littleBits a go - their starter and holiday kits seem perfect for kids (and adults).
On a personal wish list note, I’d love to see a rich adventure game like environment where levelling up is achieved by learning principles of coding, design, user interaction, cryptography, machine intelligence and big data. Looking forward to seeing what Kuato Studios comes up with in this space. Alternatively, time to nudge a talented hacker and game designer duo to launch a new Kickstarter or Indiegogo project…
Connected TVs done right - Apps instead of browser interface experience. Slick integration with companion devices that take on a role as the new learning remotes with program previewing, recommendations, content mashing and social interaction. DECE’s Ultraviolet standard prevails, making purchased content available on any device.
In Vehicle Cloud Services - your photos, your music and (maybe) your video from your personal cloud to the car. First versions offered are likely to be attempts that confuse walled gardens with competitive advantage. The second wave will see cloud domain experts offer services directly to the car (Dropbox, Google Music, Ubuntu One, Spotify, etc).
Music Industry Shift - A major music artist will drop a record label and sign directly with Google Music, initiating a trend where the direct-to-consumer platforms prevail on content distribution, while traditional labels transform their businesses around image rights, merchandizing and event organization (or flop).
Personal Cloud services go mainstream - Storing your music in the cloud and streaming it to mobile phones, accessing your files from any device, buying digital content and getting it delivered directly to your cloud, taking a photo from your mobile device and instantly see it on your home computer. Amazon, Microsoft Sky Drive, Dropbox, Ubuntu One, iCloud, SugarSync etc will be services that the majority of connected people won’t go without.
Teleporting - OK, wishful thinking…
Cloud services are hot. Google Docs making document creation and collaboration a cloud job, Dropbox raking in users and getting the cover of Forbes magazine, Apple getting the headlines even for a half baked iCloud, Spotify and Groovshark giving us access to any music for (almost) free and Turntable.fm getting mighty close to a truly social music experience. Most cloud services offer a combination of convenience, instant gratification and entertainment - but fewer have a behaviour changing impact on your daily life. Three cloud services have done exactly that for me recently:
Photo taking behavior. A subtle feature of the Ubuntu One Files app for Android phones made me exponentially increase the number of photos I take and toss my digital camera in an eBay listing. The app, which gives me access to all of my files, from all my computers, on my mobile phone - has an option to automatically upload any photo taken from my phone to the cloud and then automatically sync it with all of my computers. Goodbye tethering and other hassles around getting my photos from one device to another. Lytro better not come out without connecting to my personal cloud.
Music listening behavior. Spotify, Pandora and Last.fm have changed the way I discover music. But I also like to own a copy of my favorite music. And I also like to be able to access my entire music collection and playlists anytime, anywhere and on any device. But I’ve never been willing to take on the burden of copying my music from one device to the other and then recreating my playlists. I no longer have to thanks to services like Amazon CloudPlayer, Google Music and the less known (but first to nail this) Ubuntu One Music. My entire music collection is now synced to the cloud and available via online & offline streaming to my mobile devices. I can also buy music from one device, and it immediately shows up on my other devices, ready for listening.
Books reading behavior. OK, so I jumped late on the Kindle bandwagon. Not a huge fan of being restricted in the “where and how I can consume content I paid for” category, so I resisted for a while. Having my entire library in my pocket all the time, with immediate access to hundreds of thousands of books from the classics to the newest releases and instant delivery of any purchase, did me in. I still can’t walk past a bookstore or library without walking in - but anything I find of interest I wind up buying on my Kindle (sometimes while still standing in the bookstore). The exception - children books.
Disclaimer: I work for Canonical and on Ubuntu One, so it’s unsurprising that some of its services happen to solve my worst digital painpoints.
As a single dad with personal and professional interests in the Real Time Web – I inevitably pay lots of attention to the online world when educating, entertaining and communicating with my kids. There are two aspects that deserve consideration: a) choosing those applications that can complement their schooling, provide entertainment and facilitate communication and interaction with family and friends - and b) educating children on the opportunities and threats of the online world in general. While the former is being fulfilled by a sky-rocketing number of online startups, the latter identifies a potential shortfall of most existing school programs. There are literally hundreds of secure experiences for kids online, the more popular being the fun-centric social games & virtual worlds like Disney’s Club Penguin. I personally tend to prefer those who cleverly combine entertainment with education or address communication and interaction in a useful way. My favorites follow: Moshi Monsters by Mind Candy – A virtual world for children which does a fantastic job at combining fun, education and safety for kids age 3 to teens. Users adopt their own monster, decorate their home and acquire points (rox) by solving puzzles that cover a multitude of subjects (math, spelling, vocabulary, geography, history, visual recognition, hand-eye coordination, etc) across several learning stiles. Kids can also connect and exchange messages with their friends and everything is subject to parental supervision and approval. Has great potential to evolve into an online school or a collaboration platform for parents, students and teachers. Elected as best game ever by my own kids… KIDO’Z – Based in Israel – arguably the most outstanding technology innovation center worldwide – KIDO’Z is a downloadable browser that gives kids from 3 to 7 years old a fun and secure web environment to independently watch videos, play games and visit approved websites – and parents the ability to manage content access, set usage levels and have piece of mind while their child is online. The platform is also due to include secure instant messaging and social networking tools in an upcoming release. Vikido – Another young Israel-based startup, led by a talented founding-duo which includes a TechCrunch “femme-preneur to keep an eye on” (and unquestionable tech hottie). Vikido, currently in Beta, launched a web-to-mobile application that allows children from 3 to 9 to record and send voice and video messages to friends and family through an awesome toy-like web interface – which doesn’t require reading or writing skills. With a strong focus on safety (parents manage everything through an admin panel) – Vikido is a wonderful way to keep families in touch when work, location and other household structures create distance. At last, a perfect alternative to the controversial child-phones. Our generation is technology-driven and that’s not going to change. According to Nielsen, the average ownership starting age for mobile telephony goes down every year (9.7 years old in 2009). The average 13-17 year old sends 2000 texts per month. Today, kids already represent 19% of social networkers worldwide. Education at an early age is therefore an obvious consideration – but it does trigger a few questions: Why aren’t schools revamping their curriculums to leverage online tools? This can be as simple as using Google Earth to learn geography to something a bit more sophisticated like creating a secure virtual world/social network to assign and review homework, create after-school programs and encourage participation and collaboration among parents, students and teachers. Why aren’t schools preparing their pupils for the online world? Cyber-bullying, stalking and internet addictions are constantly in the headlines. Not to mention the consequences a lack of online etiquette or content privacy knowledge can have on a child’s college application, internship or job interview. Parents clearly need to have a role, but most parents do not have that knowledge themselves. Come on schools…
As a single dad with personal and professional interests in the Real Time Web – I inevitably pay lots of attention to the online world when educating, entertaining and communicating with my kids.
There are two aspects that deserve consideration: a) choosing those applications that can complement their schooling, provide entertainment and facilitate communication and interaction with family and friends - and b) educating children on the opportunities and threats of the online world in general. While the former is being fulfilled by a sky-rocketing number of online startups, the latter identifies a potential shortfall of most existing school programs.
There are literally hundreds of secure experiences for kids online, the more popular being the fun-centric social games & virtual worlds like Disney’s Club Penguin. I personally tend to prefer those who cleverly combine entertainment with education or address communication and interaction in a useful way. My favorites follow:
Moshi Monsters by Mind Candy – A virtual world for children which does a fantastic job at combining fun, education and safety for kids age 3 to teens. Users adopt their own monster, decorate their home and acquire points (rox) by solving puzzles that cover a multitude of subjects (math, spelling, vocabulary, geography, history, visual recognition, hand-eye coordination, etc) across several learning stiles. Kids can also connect and exchange messages with their friends and everything is subject to parental supervision and approval. Has great potential to evolve into an online school or a collaboration platform for parents, students and teachers. Elected as best game ever by my own kids…
KIDO’Z – Based in Israel – arguably the most outstanding technology innovation center worldwide – KIDO’Z is a downloadable browser that gives kids from 3 to 7 years old a fun and secure web environment to independently watch videos, play games and visit approved websites – and parents the ability to manage content access, set usage levels and have piece of mind while their child is online. The platform is also due to include secure instant messaging and social networking tools in an upcoming release.
Vikido – Another young Israel-based startup, led by a talented founding-duo which includes a TechCrunch “femme-preneur to keep an eye on” (and unquestionable tech hottie). Vikido, currently in Beta, launched a web-to-mobile application that allows children from 3 to 9 to record and send voice and video messages to friends and family through an awesome toy-like web interface – which doesn’t require reading or writing skills. With a strong focus on safety (parents manage everything through an admin panel) – Vikido is a wonderful way to keep families in touch when work, location and other household structures create distance. At last, a perfect alternative to the controversial child-phones.
Our generation is technology-driven and that’s not going to change. According to Nielsen, the average ownership starting age for mobile telephony goes down every year (9.7 years old in 2009). The average 13-17 year old sends 2000 texts per month. Today, kids already represent 19% of social networkers worldwide. Education at an early age is therefore an obvious consideration – but it does trigger a few questions:
Why aren’t schools revamping their curriculums to leverage online tools? This can be as simple as using Google Earth to learn geography to something a bit more sophisticated like creating a secure virtual world/social network to assign and review homework, create after-school programs and encourage participation and collaboration among parents, students and teachers.
Why aren’t schools preparing their pupils for the online world? Cyber-bullying, stalking and internet addictions are constantly in the headlines. Not to mention the consequences a lack of online etiquette or content privacy knowledge can have on a child’s college application, internship or job interview. Parents clearly need to have a role, but most parents do not have that knowledge themselves.
Come on schools…
The impressive proliferation of Social Location Applications has been hard to ignore with the recent tech media and blogosphere’s enamourment of the space. Facilitated by the ground-braking usability of the iPhone and Android platforms, a number of start-ups have been able to combine geo-location with social and gaming features to launch several new applications which range from clever to useful. I’ve enjoyed tracking the space for some time so the following is a snapshot on a handful of the more interesting applications and a brief future outlook on the space in general.
When thinking of an ideal social location service a few questions are automatic: Does it facilitate my meeting and staying in contact with friends? Is it fun and engaging? Does it help me discover what’s around me in terms of places, events and activities? Is it easy to use and available everywhere I go? Does it have long-term usefulness? Ultimately these questions address the Stickiness and Usability of an application – in this case as follows:
Stickiness = usefulness + entertainment + social interaction
Usability = available content + locations + devices + ease of use
Stickiness (3.5 out of 5) - The Foursquare application allows people to earn points by “checking-into” locations and sharing that information with their friends - cleverly including those on Facebook and Twitter. Title badges (mayor-ships) are earned for being the most frequent visitor to a single location, which encourages competition among users - though initially fun, this model’s appeal is arguably short-term. The information shared among users is a pin-on-a-map visual with a brief “I’ve just checked into” message – useful to nearby friends who may want to meet-up or compete for a mayor-ship, but not ideal for those who are interested in discovering nearby places, events or activities.
Usability (3 out of 5) – As I write, Foursquare has announced a new upgrade that will enable check-ins anywhere in the world as opposed to the current list of a few dozen cities worldwide – which is currently a huge limitation to its growth and appeal. The application is slick and easy to use, is available for both iPhone and Android, with a full functionality mobile browser version for other smart-phones.
Gowalla – Though very similar to Foursquare with its focus on gaming and friend-tracking, Gowalla has managed to nail Foursquare’s shortfalls from day one: Unlimited locations, a slicker application and most importantly – the ability to scrape friends from Facebook and Twitter.
Stickiness (3.5 out of 5) – Gowalla, like Foursquare, relies heavily on a gaming approach to create its appeal. Users stamp their “Passports” when visiting places and compete for a mayorship-like Top 10 ranking at each location. Users can also pick-up or drop-off items (virtual goods) at different locations, with the ability to track who has “owned” an item previously. Gaming aspects aside, Gowalla’s virtual goods model is interesting as one can easily foresee how virtual items could eventually be traded-in for real items. Gowalla is initially fun and engaging but as with Foursquare – its focus on gaming and friend-tracking is less ideal for truly discovering what’s around you.
Usability (3.5 out of 5) – Gowalla can be used anywhere, users can simply enter new locations when these are not automatically detected by the application – which is currently available for the iPhone, with a near-full functionality mobile web browser version for Android and other smart-phones.
Flook – Launched in November 2009, Flook is the newest entry in the social geo-location space. Founded by the team who built Symbian (disclaimer: whom I’ve had the pleasure of meeting), they have taken a completely different approach from the gaming and friend-tracking model of other social location apps: a usefully serendipitous discovery of nearby places, events, activities and “things” via picture/information cards.
Stickiness (4 out of 5) – Flook allows users to take a picture of anything, add some text and a “Card” is automatically created with the picture, description, location map and creator info – which can then be shared on Twitter. Users can browse Cards from their friends, from a nearby location or search specific categories. “Flookers” can also collect points, introducing a light competitive gaming aspect and potentially, a future virtual goods business model. In its initial release, Flook has placed a lesser emphasis on the friend management features commonly found on other apps.
Usability (4 out of 5) – Another appealing aspect of Flook is that most content is created by its users and as a consequence - locations are unlimited and discovery is a pleasantly unpredictable experience. By browsing Cards, one is just as likely to find a hidden flower garden, a free power socket, a major landmark, a cozy restaurant or a local farmers market. A current limitation of Flook is its iPhone-only availability – but the application looks great and is intuitive to use.
Loopt – One of the first to enter the social location space with a simplistic check-in and friend tracking approach - which has been replicated by a dozen or so other companies (Google Latitude included). Loopt claims millions of users across hundreds of devices, though suffering the recent media hype around Foursquare and Gowalla’s gaming model.
Stickiness (3 out of 5) – Loopt is currently focused on what can be considered the foundation service or starting point for any social location app: the ability to share your real time location with friends and track who else is nearby. Their first step in expanding beyond that is a recently added restaurant and event discovery feature.
Usability (2 out of 5) – The application is currently available on iPhone, Android, Blackberry and hundreds of other smart-phones…but only in major cities around the United States. Their map visual shows icons of nearby friends, restaurants and events and the app is extremely easy to use.
FUTURE OUTLOOK (Functionality, Monetization, Consolidation and Acquisition)
Functionality - Today’s Social Location apps can be broken down into three functional categories: Gaming-Centric (Foursquare, Gowalla), Discovery-Centric (Flook) and Basic Friend Management (Loopt, Brightkite, Google Latitude, etc). Most have understandably been focused on user-acquisition rather than monetization but surprisingly, only Gowalla has gone directly where users reside today to import people’s existing relationships - Facebook and Twitter. With the availability of Facebook Connect and Twitter APIs I expect most applications to implement a similar feature in the short term (most have already included the ability to share content across Facebook and Twitter). Privacy-oriented friends lists will become important once this happens as one may not want to share his/her location with everyone. Though I currently enjoy the competitive gaming features of the likes of Foursquare and Gowalla – we’ve learned from the social gaming space that social gamers typically remain active for three to four months – I would therefore expect the Gaming-Centric companies to expand their reason for being very quickly, particularly in the areas of usefulness and monetization.
Monetization - The social gaming space has reached profitability faster than any other social media business and they’ve done so by implementing a virtual-good centric revenue model. A model that can be easily adopted by the Social Location companies. Virtual goods/points, from a gaming perspective, are what determine “bragging rights” among friends. Users can earn virtual goods based on activities undertaken (check-ins, flooks, invites, viral activities like tweeting, etc), by selecting sponsored offers or by purchasing them directly. Virtual goods could be also converted into real-world products or vouchers. Brands could easily sponsor virtual goods in exchange for crowdsourced content (flooked cards, check-ins, first at a location, etc). Bookings could be integrated for places like restaurants, theatres, cinemas – which already exist for other types of applications. The same way users can choose to discover people, places and events based on location – they could choose to discover vouchers and special offers near-by: non-intrusive, truly opt-in and actually useful, with the added bonus of not having to deal with the intrusive targeted ads model so dear to most media buyers.
Consolidation and acquisition - Social location apps may be the one case where user-base has less of an impact on company valuation than what we’ve been used to across the social media space. Social relationships currently reside on Facebook and Twitter – which are also the most probable giants to move into the social location space as adding geo-tagging and friend location management features to their existing social networks is trivial – and potentially very disruptive. Either company is more likely to acquire a social location app which has nailed usefulness or monetization rather than a large user-base that they possibly own already. On the other hand, both Google (Google Maps, Google Earth, Google Latitude, Android) and Microsoft (Bing Maps, Messenger, Windows Mobile) already own interesting location, friend management, mapping, directory, augmented reality assets and mobile operating systems but are lacking true social relationships and mobile-centric location applications. Social location companies across the three functional categories with a significant user-count may be their acquisition candidate of choice. Consolidation between two or more social location companies is also a strong possibility – Interestingly, a Flook-like approach to places, activities and events highly complements a gaming and friends-centric approach a la Foursquare and Gowalla. At the same time, a high-user base friends location management service like a global version of Loopt could be combined with a Flook for a killer service and company.
As always, opinions are free and debates are what blogging is all about – very much looking forward to your views.
The debate around crowdsourcing – the outsourcing of a job or problem to a large and open group of people – is heating up again as an increasing number of brands are gaining headlines by launching design and ad creation contests.
On one side of the debate are those who argue that crowdsourcing is nothing more than outsourcing cheap labor and a temporary fad, while on the other are those who believe that involving large, undefined groups of people can increase creativity and productivity at lower costs.
Critics of crowdsourcing, usually people with an Ad Agency or a professional design background, are quick to point out that crowdsourcing is just a fashionable term for something that’s existed for ages; call it freelancing, outsourcing, competitions or spec-work. The latter, I’ve learned, is somewhat of an insult in the design industry which has even taken an official position on the subject through AIGA. Probably the strongest point I’ve encountered though, is regarding the sustainability of a model where many spend the time to produce work but only one gets paid for it.
Notwithstanding these points - crowdsourcing has had a growing number of success stories and media exploits recently: Unilever dropping its agency Lowe to pursue a crowdsourcing ad campaign for their Pepperami brand. Netflix announcing the $1M winner in its long-running call to improve its recommendation algorithms. The impressive growth of services like Crowdspring and Innocentive. Mofilm crowdsourcing video ads for large brands and linking these to the major film festivals worldwide. The self-proclaimed first crowdsourcing Ad Agency, Victors & Spoils. Across the board, participation in these crowdsourcing campaigns has been strong, with businesses and brands expressing satisfaction with the final creative products received.
What both sides of the debate are ignoring, at least in the advertising space, is the potential impact of the Real Time Web on the future of crowdsourcing. With so many available tools that facilitate online conversation and collaboration, there can be as much value (if not more) in the crowdsourcing process as there is in the end result. The experts call this Engagement. In other words, while the ROI for most of the crowdsourcing activities to date has come from the cheaper creative result (and the press coverage that came with it) – by treating the process as an interactive and potentially viral campaign, crowdsourcing ROI could come from both Engagement and the creative result.
What drove me to contribute the millionth opinion on the subject is my surprise at history repeating itself once again – the reluctance of most Agencies to embrace a new model in its early stages. After all, who is in a better place to generate the kind of value described above than those who are experts at client brand strategy, campaign planning and insight? The case for Agencies to embrace real-time web crowdsourcing seems pretty straight forward:
Crowdsourcing in the real time web is in its early stages and as such, is bound to evolve from its current state. For it to become a sustainable model, there needs to be a way to improve the current “many work one gets paid” issue. As the software world has been able to teach us with open-source communities, recognition, reputation and reward (both monetary and non) are an important factor. In applying the open-source principles to an Agency-driven model, I can imagine a platform that allows agencies and advertisers to rate contributors (reputation & recognition) and assign a share of the profits to those who had the most impact on overall ROI.
I for one am enjoying the debate and look forward to its evolution.
So what’s so fascinating about the Social Gaming space beyond the entertainment factor for those of us who enjoy the occasional game?
Simple: just about every company in the space is astoundingly profitable.
In dissecting the success of companies like Playfish, Zynga, Playdom, MindJolt, etc - a few things become clear very quickly: Their expertise is more about viral marketing than it is about game development. They’ve mastered massive user acquisition at lowest possible costs while introducing simple business models to generate revenue. Even more importantly, they own the relationship with users/players which is not only critical to their promotional strategies but also to game development and future business models. In other words, their success formula looks something like this:
SUCCESS = SIMPLE GAMING + CLONING + VIRALITY + FREEMIUM BUSINESS MODEL + DIRECT USER RELATIONSHIP
Simple Gaming – The simplicity approach taken on by game developers, both in terms of access and game mechanics, has significantly facilitated user adoption and repeat visits. Access, which for all companies is browser-based, is also about being on or off platform. On-platform games (those on Facebook, MySpace, etc) get to leverage massive and easy-to-target user bases. Off-platform games have more flexibility with game development at the expense of “viral-ability”. On the game mechanics front, enabling users to quickly understand game play, making that game play light touch, interactive and competitive have been key aspects in triggering user adoption and return. The light and casual approach to game mechanics has also dramatically reduced game development times (3-6 months for most developers), but has also facilitated a cloning wildfire.
Cloning – Very much a legacy of traditional gaming as the Ataris and Nintendos of the world can teach us. Though easy to frown at companies who constantly release obviously cloned games, cloning is arguably a smart business approach in early stage and immature markets. After all, people like to play instantly recognizable concepts just as they like to watch familiar formats on TV (what’s the last original Reality or Game Show format you’ve seen?). Additionally, if the uptake of Facebook games is of any indication, a cloned game is more likely to fulfill areas of the market that haven’t been reached by the original game developer than it is to erode at that developer’s existing market. For example, when Zynga introduced Café World earlier this month (16M users in its first two weeks), it didn’t visibly impact Playfish’s Restaurant City user and growth counts. As the market matures with users demanding games with more depth and sophistication – cloning will become more difficult and as a consequence, an un-sustainable model. The first test of this may come with the recently announced Facebook version of Sid Meier’s Civilization classic.
Virality – Let’s be clear upfront: Zynga and Playfish have both invested millions in advertising to gain their initial player critical mass. They have also mastered making the most out of that initial investment, using virality to significantly reduce additional user acquisition costs. As on-platform companies, they have leveraged the numerous embedded viral opportunities Facebook provides – integrating and automating status updates, wall posts, suggestions, friend pokes etc. They have also cleverly turned their games into advertising platforms of their own. Games cross-promote each other (which is half the reason why Zynga reached 16M in the first two weeks after launching Café World) and they encourage user-returns through time-based play, friend challenges and those annoying reminder messages.
Freemium Business Model – Play is free across the most popular games to eliminate barriers to entry. The interactive and competitive characteristics of social games (i.e., friends wanting to top each other) has facilitated the introduction of “virtual currency”. Virtual currency can either be purchased for cash or acquired free by registering for services offered by advertisers (and in many cases unfortunately, offer-scams) - and is used by players to buy virtual goods that help them reach new levels faster, access advanced play areas, gain special powers or even for vanity purposes (decorating your virtual environments and avatars). Sounds flaky? Zynga is rumored to be on a $100 million annual run-rate for 2009, while Playfish is allegedly on track for a $75 million result. According to Venture Beat, even the hundred or so garage-shop game developers present on Facebook are making between a quarter and half a million dollars per annum.
Direct User Relationship – Unlike traditional gaming companies who gave up user-relationship to retailers, social gaming companies interact directly with their users. This has given them a couple of invaluable advantages: 1) access to a huge amount of data and metrics, and 2) immediate feedback on game features. Social Gaming companies are therefore in the position to quickly improve and extend game play (most introduce games at 25% completion), increase virtual good conversions and crucially – provide a set of data that can yield much better value for advertisers and for the creation of new business models.
Looking ahead, new business models and new levels of game sophistication are bound to arise as the market matures. Media buyers may figure out that engagement is more than clicks and impressions and use social gaming to interact with their audiences over a broader period of time with “advert-games” (imagine a TGI Friday’s own Restaurant City) or integrated advertising (earn enough points for a virtual Audi to move up to the next level). As users begin to demand better games, gaming companies will need to match their existing skills in viral marketing, with new ones in software development and while we’re at it, patenting. This may also happen through acquisitions led by traditional gaming companies (as I write, EA is in rumored acquisition talks with Playfish for over $250M). Niche games are likely to arise the way niche social networks are already doing so thanks to Ning and Drupal. A fantastic first example is Mind Candy and their Moshi Monsters game targeting young children. As an off-platform company with a focus on education and parental-control, one of Mind Candy’s potential growth paths could be joining forces with school systems to provide teachers with managed fun environments for assigning and reviewing home-work.
As with any emerging industries, predictability is extremely difficult. Then again, so is instant profitability…
Update: Following TechCrunch blowing the whistle on offer-scams, an update to this post can be found here.