Social gaming suffers from growing pains: a 30% increase in cost returns

Beijing Time November 26 news, according to foreign media reports, although the market for social gaming market prospects remain optimistic, but the industry is experiencing the first growing troubles (Growing Pains).

Ding Sheromy (Din Shlomi) has been tired of the game, after a few weeks of Mafia Wars 2, the Zynga game "Mob Wars 2". Sheromy, from northern Israel, is a loyal gamer.

He spent years playing the first version of the gang wars, creating a virtual criminal empire and fighting other gangs online. Sheromy said the "Gangster War 2" was launched at a time of great attention, but the game has too many loopholes (some of which are impossible to complete), to some extent, he has completed the full range of challenges.

"Gang Wars 2 is fascinating, like other Zynga games, but once you reach level 50 you'll be doing nothing, as if you've touched the ceiling," says Sheromy. ”

The game "FarmVille" by Zynga has attracted millions of Facebook users to farm digital crops, and in the two years since then, social gaming has developed into a billions of-dollar industry. Zynga will also make its IPO in a few weeks ' time (initial public offering), which wants to raise 1 billion of billions of dollars.

Market research agency Lazard Capital CMC expects the social gaming market to reach $14.2 billion trillion in 2015, up from $6.1 billion trillion this year.

Hundreds of developers are now vying for online gamers, and online gamers are spending less time on each game. In order to be different, Zynga and other game makers spent millions of of dollars developing games and investing in millions of dollars in marketing, which has increasingly squeezed the company's profit margins. But good games are hard to come by.

"The economy is not the same," said Josh Williams, chief technology officer and President of social gaming consultancy Kontagent. "The cost of attracting users is increasing, which means it will put pressure on profit margins," said Attur Bar CMC, analyst at the US Investment analysis agency Lazard Capital, Atul Bagga. ”

The Gang War 2 development team has a total of 80 members and the game has been developing for nearly a year, and Zynga launched a media release of the game at its new headquarters in October this year.

Market Research Institute AppData data show that the game "gangster War 2" this year October peak day active users more than 2.5 million. But since early November, the virtual mob adventure game has reduced 900,000 players. According to Zynga insiders, the "mob War 2" sales did not meet the company's expectations.

Zynga declined to comment on the company's chief executive, Mark Pincus, and other executives, saying the company was in a Mark Ping period before the IPO. "I think they are analyzing the reasons for the poor sales of the game," said Michael Pachter, analyst at Wedbush Nomura, an American securities firm. ”

Pacht points out that the number of active users is an important indicator of a game's profitability, as active users are more likely to buy virtual items like weapons and protection. "The more times they play the game, the more likely they are to pay," Pacht said. ”

Less than 10% of the "Mob Wars 2" games play the game every day, below the average of 20% of Zynga's games. Pacht that the decline in the number of players may be due to the old content of boredom.

"The old players who have played the whole gang wars game," Pacht said, "This is the same game, but they have different tasks." They are tired of the game, so they quit. I think this is a good case to study where the error is. ”

Keep the number of players growing, which means that more marketing, marketing areas of input are usually not immediately effective. Electronic Arts, a game developer, is the best example, and art has become Zynga's biggest competitor. Sims Social, the game of The Sims, is the first major success in social gaming. Since its launch in August this year, the game has attracted 33 million users, with a daily return rate of 19%.

"Sims Social Edition" has become the second most popular game on Facebook after "CityVille". The game is still not profitable, the source said, although it has invested a lot of money in marketing the game to attract millions of Facebook players.

In general, game developers attract 40% to 70% of users through advertising, with about 25 cents to 1.5 dollars per user on average, Williams said. "Sims Social Version" of the number of active users more than 10 million, art power for the game's marketing spending at least 10 million U.S. dollars.

Mr Williams says advertising marketing is an important way to attract a broad audience. But this strategy squeezed the company's profitability, making it hard for the company to profit from the game for a long time.

"I think the game makers are investing a lot of money to advertise the game, but only 30% of social games can get positive returns through investment," Hussein Fazar Hussein Fazal, chief executive of advertising marketing consultancy Adparlor. ”