In “FarmVille,” you have to tend your crops if you want to have a successful harvest. And in “Mafia Wars,” you have to keep building your crime family if you want to rule New York.
But those are just Facebook games. In real life, the companies that make them are playing a game of their own: fighting for a piece of the expanding niche.
Social gaming companies first blossomed in Silicon Valley, but they’re now popping up across Los Angeles, where a handful of studios have set up shop. The latest is Talkie. The Brentwood startup, which will launch its first Facebook game this month, joins Beverly Hills developer Meteor Games; Long Beach-based Cie Games; and Burbank’s Disney Interactive, which became a local player through an acquisition last year.
Industry analysts say it’s a good time to be a social game developer. The market surpassed $1 billion in revenue last year and some expect it will reach $5 billion by 2015. Games make that money from advertising and the sale of virtual items that help players get through the virtual worlds. The cost might be pocket change for most players, but with millions of people playing these games, the revenue adds up.
With so much money up for grabs, it’s quickly become a hot playing field. Games from less well-known companies could have a hard time standing out in the crowd.
That’s a problem not lost on Talkie’s chief executive, Chris Swain. In most Facebook games, players perform simple tasks, such as planting crops in “FarmVille” or building a crime family in “Mafia Wars.” But for Talkie’s first title, “Ecotopia,” Swain cooked up the idea of adding more complex narratives.
“We wanted to differentiate from the games we saw in 2009 and 2010,” he said. “We said, ‘Let’s make something new and have a story that you can engage in.’”
In fact, “Ecotopia,” which Talkie will launch by the end of the month, has a similar city-building objective as many popular Facebook games. But the company has added a storyline that changes each month, giving the players new challenges to complete and villains to fight.
As the name suggests, “Ecotopia’s” challenges require players to keep the virtual world eco-friendly. Tasks include making buildings sustainable by installing solar panels or recycling.
Talkie, which has partnered with Arlington, Va., environmental non-profit Conservation International, also rewards players for completing environmentally friendly acts in real life. Someone who spends the weekend cleaning a local park, for example, can report it on the game and receive points that they can redeem for in-game items.
How does “Ecotopia” know they’re not lying? Players will only receive the maximum amount of points if their friends verify that they volunteered; they can also upload a photo of the event for more bonus points.
Swain said “Ecotopia’s” socially conscious message and real-life reward program will keep users more interested in the game, so they’ll keep playing longer. That’s good for Talkie if user interest translates into the sale of more virtual goods and advertising dollars.
Justin Smith, founder of Inside Network, a Palo Alto market research firm that focuses on Facebook and the social gaming industry, said he expects to see more games integrate real-life activities.
“Social networks are places where people are already advocating for causes that they’re proud of or excited about,” he said. “Adding causes provides another way to engage users in the game.”
Social gaming took off on Facebook in June 2009 when San Francisco’s Zynga launched “FarmVille.” Dozens of companies have sprouted since, and many of the sector’s biggest players are clustered near Silicon Valley.
But Los Angeles is reaping a growing presence in the social gaming space. Swain, a video game veteran and professor at the USC School of Cinematic Arts, founded Talkie last year. The 35-person company plans to create games that weave short videos into the game play.
In February last year, Zynga announced that it would open an office in Marina del Rey. A few months later, Disney Interactive acquired Mountain View-based Playdom for $563 million. One of the company’s most popular Facebook games is “Sorority Life,” where players try to make friends and increase their popularity in a virtual sorority house.
Cie Games, a spinoff from Long Beach interactive media company Cie Studios, also launched its first Facebook game, “Car Town,” last year. Players customize virtual cars and race them against friends.
Meteor in Beverly Hills is L.A.’s more established social gaming studio. The company was founded in 2007 and released its first Facebook game in 2009. The 86-person company has four titles and plans to launch several more in the next year.
Zac Brandenberg, the company’s chief executive, expects that social games will become more plot-driven than, say, “FarmVille.” Meteor’s newest, “Serf Wars,” features missions that players have to complete and even armies that need to be trained.
“We see that the tastes of players and their behavior is adapting,” he said. “They’re looking for a better experience.”
Players typically access social games through their Facebook or other social network accounts. Many games also work on a separate website, but those sites typically integrate Facebook features so people can still play with friends. When players connect to a game, some allow them to invite online friends to join in or facilitate competitions with potentially millions of other people.
Since the social games are ongoing, most don’t have winners. But there are consequences, such as dying plants or a deteriorating city if a player doesn’t keep coming back.
Smith of Inside Network said the hub of Facebook has allowed the games to become popular.
“Facebook allows players to play games with someone they know instead of a stranger,” he said. “That’s why people who don’t otherwise play online games are willing to play.”
Most games on Facebook, including “Ecotopia,” are free to play. They make money through ad sales and by charging players nominal fees, called microtransactions, for virtual items that allow them to make progress in the game. In “Ecotopia,” a player can pay anywhere from $5 to $50 for the game’s virtual currency, which can be used to purchase items such as a rain barrel or tree.
Pietro Macchiarella, a research analyst covering video games for Parks Associates in Dallas, said only about 2 percent to 5 percent of a game’s players actually pay for virtual goods. But with more than 250 million people playing social games, all those little transactions eventually add up.
“It’s all about numbers in this space,” Macchiarella said. “With a user base of several million people, paying players create significant revenue. The small percentage of users who pay will give a company a very high return.”
If “Ecotopia” follows most social game models, Swain expects about 2 percent of players to spend a lot of money on virtual goods.
Talkie also plans to sell video advertising for its “Ecotopia” TV feature, where players can watch user-created videos, messages from Conservation International and videos from other eco-friendly sponsors.
Meteor is an example of success with the microtransaction model. Brandenberg would not disclose revenue, but said the company is profitable. People who spend money in Meteor’s “Island Paradise” typically shell out between $35 and $70 a month. But several hundred have spent more than $1,000; some have even spent more than $10,000.
Macchiarella believes that players will spend more on virtual goods as they become more comfortable with the microtransaction model. He predicts that the growth of virtual sales and online advertising will push the social gaming industry to $5 billion by 2015.
Although gaming companies would like to see spending among players continue to grow, Brandenberg noted that games need nonpaying players, too.
“There are free players who are really passionate and spend a lot of time playing,” he said. “They are very important because they help create the community that you need for other players to want to spend money.”
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