Guide language: the latest issue businessweek print KanWen says, although with Zynga, as a representative of the social game enterprise over the past few years won the high growth, but as the markets mature, attract the cost of users increase, forcing the enterprise to search for new profit channel.
The following is the full text articles:
Growth worries
In the gang war 2 "(Mafia Wars 2) after a few weeks in Facebook online, d club gave (Din Shlomi) and tired of this game. Claiming the club up pretty hardcore gamer from northern Israel, he spent several years in time to play the first edition "gang war", establish virtual criminal empire, and on the line with other gang war. But give the directive said, this section is much touted sequel to have many bugs (some tasks can't finish), and he was a certain extent have finished all the challenges. "With all the Zynga games, it's very easy to become addicted." Give the directive said. "but once you hit level 50, they have nothing to do. This is like touched the ceiling."
When the steal food Zynga game "FarmVille" attracted millions of Facebook users digital crop planting two years after time, social game has been rapid growth of a size of billions of dollars of the industry. The San Francisco venture company is in a few weeks will IPO (IPO), and are expected to raise 1 billion dollars. Although social game of the future of the market is still wide-according to investment agency Lazard Capital Markets prediction, this market in 2015 will create 14.2 billion dollars income-but the industry but first encounter with the "growing pains". Currently several hundred developers in for online gamers, shortened their every game in the time.
In order to stand out, Zynga and other enterprise into millions of dollars on developing the game and promotion, this is also the formation of the squeezing profit margins. But to be successful is more and more difficult. "The economic situation has changed." Social game consulting company Kontagent President and chief scientist Josh Williams (Josh Williams) said. Lazard Capital Markets analyst, tuor and cafes (Atul Bagga) also said: "the user access costs rise, which will bring about the margins form pressure." Although Zynga is still in the experience of high growth-the third quarter earnings up 80%, to $306.8 million--but the profits but fell by 54%, to $12.5 million.
The user loss
The gang war 2 "has a game title of all of the characteristics. The game development team has increased to 80 people, they put on it to a year of development time, and in October this year new headquarters in the company held a conference. The game of October this year, more than 2.5 million active players. But according to the market research company AppData data, since the beginning of November, this kind of virtual gangster adventure game players but shrinking to more than 90 people.
According to a refused to open the identity of the source said, "the gang war 2" didn't realize Zynga own expectations, all the senior doctor, like accused each other's faults. Zynga to silence on the issue in the IPO, refused to let the CEO, Mark Pincus (Mark Pincus) or other executives for comment.
"I think they are research of this sequel to failure." The United States Securities company Wedbush Securities analyst Michael palmer hutt (Michael Pachter) said. He said, active users, is to show a game in the key indicators of profitability, because every day playing games are more likely to spend money on the machine gun and shield and virtual goods. "They return to the higher the frequency, the greater the likelihood of money." The gang war 2, play home play every day the game is less than 10%, much lower than the average of the most Zynga game 20%. The dramatic may have fallen from players to some of the old content. "All finished all the work of the blackboard war old players ran for, 'this is the one of the same game, but is equipped with different task just." they had had enough, so I have lost." Palmer hutt said, "I think this is a good chance the wrong."
Huge promotion
To maintain the player will put more growth promotion costs, and may not be able to immediately receive a reward. Headquarters is located in California annatto City (Redwood City) game developer EA is the perfect example of how that they have passed a sweeping into Zynga became the biggest competitor. EA with the simulation life Social edition "(Sims Social) for the first time in Social fields a huge success, this game from the company's popular life simulation game, can be compatible with Facebook. Since the game this year published since August, has attracted 33 million users, 19% of the users every day and play this game. "The SIMS social edition" has become the second only to the CityVille "second favourites Facebook game. But, according to a person familiar with the spread of radical because EA marketing strategy, will this game promotion to Facebook millions of users, so has not yet profitable.
The Kontagent Williams said, software vendors usually have 40% to 70% of the user is through the advertising for, on average every name users access to the cost 0.25 to 1.50 us dollars. For "the SIMS social edition of this day more than 10 million active users in the game, the promotion cost cost EA at least $10 million. EA interaction department executive vice President of Barry's Kurt (Barry Cottle) said the company "for" the SIMS social version "of heat and financial performance are very satisfied."
Williams says, advertising to appeal to a broad user bombing is very important. "EA is trying to sell the game early will to as many people as possible, and then find out what players really like this game, and are willing to continue to play, and close friends in the game, and the pay for interaction."
However, this strategy will squeeze margins, and the game more long-term earnings difficulty. "I estimated that only about 30% of the social game developers can get from advertising investment is in return." Facebook advertising strategy consulting company AdParlor CEO Hussein law firm's (Hussein Fazal) said. As the network advertising in EA business accounted for more of than, the company investors grew more focus on "the SIMS social version of the profitability of the game.
Social game developers CrowdStar launched last year the animal heaven "(Zoo Paradise) began to feel the increase of the influence of marketing costs, the user can in this game to collect all kinds of virtual animals. Because of the game with competition too much, CrowdStar had to release in the game before threw more advertisement. "We have to buy a lot of users," the company CEO Peter Rachel LAN (Peter Relan) said, "we almost no profit."
Developers are virtual goods outside, looking for another growth paths. Zynga about 6% of the income from games built-in advertising, the company is trying to promote the business. This year in November, Zynga began to provide to Michael Jackson (Michael Jackson) as the theme of the virtual goods, such as gloves and the CityVille "of a" pop music heavenly king "the theme of the balloon. Earlier this year, the company also and pop star in Ann Krishna, terry lacy elias (Enrique Iglesias) and Lady Gaga unfolded similar to promote cooperation. This kind of project of Zynga has profit margins was positive, but the company is still in the search for a like "FarmVille" such a successful work
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