In an earlier post I had spoken about Social gaming beyond Facebook and the fact that Gaming sites can no longer afford to rely solely on advertising revenue—they must master the intricacies of directly monetizing their users via virtual currency, virtual goods, and social games. In this post, i write about Platforms, one of the key elements to seamless delivery of Social Gaming to the users.
There are three main pillars that anchor a successful strategy: The platform, the content, and the distribution.
The first step in a successful social gaming strategy is creating an application platform from which social games and virtual goods can be distributed to a site’s users. A great platform must enable social games to be well integrated into a site’s structure, have access to essential social information about a site’s users, and monetize a site’s users with the least possible friction.It is essential for a site to have a private-label, site-wide virtual currency that is used as the coin of the realm. As Facebook is now discovering with Facebook Credits, a site-wide virtual currency has many benefits: It reduces friction by giving players a standardized form of payment across games, creates a barrier to exit for users that have stored value in the system, and gives sites an efficient and fair way to participate in revenue from third-party apps and games. By using this approach, sites can earn a revenue share of up to 30% for providing virtual currency and distribution to their developers. Virtual goods derive their value both from the utility they provide and the social value associated with owning or giving them. Although virtual goods got their start on social networks in the form of virtual gifts, selling virtual goods within social games has become the dominant business model on social networks. This is because social games can support virtual goods that combine gameplay benefit with social value.
A great example of this is Farmville’s most expensive item: the Unwither Ring. This $45 virtual good is priced far higher than the $1 and $2 virtual gifts sold on many social networks due both to its rarity and the powerful benefit it provides the owner — the ring forever prevents the owner’s crops from withering due to neglect. Even Facebook, which was a pioneer in virtual gifting, has decided to shut down Facebook Gifts in favor of positioning Facebook Credits (which was originally developed for Facebook Gifts) as a currency for social games.
A site’s platform need not be open to all developers, however, as is Facebook’s platform. In fact, for mid-tier social networks, an open platform can spread attention too thin and lead to an unwieldy experience for users. It is far better to have a portfolio of content that has been tailored to a site’s particular demographics and can be heavily promoted as a set of core site features. A great example of this is Fubar, a social network marketed as the “first online bar.” The site features a collection of flirtatious social games which are woven into every aspect of the on-site experience, including the login page, profile pages, communication channels and site structure. These apps succeed in attracting and retaining users because of how well they align with the site’s social context and how smoothly they integrate into the overall user experience.