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November 2, 2012

The future of social gaming: Q&A with Spil Games

Tineka Smith talks to Spil Games about challenges in the social gaming industry and how the company plans to succeed.

By Tineka Smith

Spil Games

Spil Games was hailed as the largest causal gaming site in 2009 by ComScore. The Zynga rival says it’s the largest online gaming platform with over 50 websites receiving 180 million visitors each month. Peter Hofstede, global game development director at Spil Games, discusses the future of social gaming with CBR.

How is the social gaming industry evolving?
In the beginning, early game developers rode the wave of almost free virality that Facebook’s platform offered. This allowed for an unprecedented fast growth of user-bases. After Facebook capped these features it normalised the situation and it’s now much more expensive to acquire new users. Therefore social gaming publishers can no longer rely on a continuous inflow of new users, but instead have to deal with increasing the loyalty of their current active user base, which is much harder. Consumers are flocking towards mobile to access social networks and social gaming platforms for their gaming experience. The gaming audience demographic has increased significantly beyond core gamers, which is a good thing for the industry. More people than ever find gaming socially acceptable and have developed an appetite for games. Development sophistication has increased as well, resulting in higher production values, smoother user experience, fun social game mechanics and a general move towards games as a service.

But if social gaming is growing, why are gaming companies like Zynga cutting costs to make a profit?
The eco-system has changed. It’s more expensive to acquire users, both on the web (for instance via social networks) and on mobile devices. As user-acquisition costs, such as keyword advertising, rise margins are inevitably squeezed. We are going through a period of consolidation which is natural as the market matures.

Do you think the UK Gaming will continue to grow and if so to what extent?
In general, gaming has become mainstream both as a form of entertainment and as a career. With a new IT curriculum in the UK and a boost for computer science and game development courses, the UK is fostering a new generation of tech savvy individuals who will be able to feed the mainstream appetite for mobile, social and casual games. I don’t see a reason why things should slow down in the near future.

What challenges are being faced by the social gaming industry as publishers are increasingly slashing forecasts?
Organisations will be looking more critically at business cases for new products. The challenge is not to become too conservative and only go for copycat products. There’s no need to re-invent the wheel with games that already have a huge following such as those found on Facebook.

Can George Osborne’s tax breaks for the gaming industry actually contribute to his vision of making the UK the technological centre of Europe?
Historically, the UK has always been a major player in the gaming industry – up there with the likes of Japan. It’s great to see governments starting to pay more attention to the technology industry and recognising it as a major contribution to innovation. With such a strong heritage in technology, and particularly gaming, it can only be good news that a helping hand is being leant to the industry in the UK. This way, valuable start-ups have a better chance of surviving. I think gaming has the potential to be a real shot in the arm in these tough economic times.

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Can you explain about online marketplaces democratising the gaming industry?
Both small teams and big companies can still have a similar level of success in the app stores, which is great for innovation. However, user expectations are going up, resulting in ever increasing production cycles and related budgets, combined with high advertising costs in the app store.

How does your company plan to succeed in the current social gaming market?
The growth for social games is currently mainly on mobile and tablets. Here we see a massive increase in platform segmentation and an ongoing increase in the number of products being released. To be successful in this market we think the user will offer their loyalty towards a limited amount of recognizable brands, featuring well defined and lovable characters and engaging game play. Our strategy is to give our 180 million players games and characters they can fall in love with, on the platforms they use. Ultimately, these franchises will be able to travel to other media and channels as well.


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