Titled The Relentless March Toward Free, Segerstrale’s talk looked at how the established game industry tends to view with suspicion social games’ free-to-play business model and the general trend for the industry to move from being product-driven to service-driven. Free, he said, is usually equated with piracy, and social games are blamed for ‘killing the console market’.
The truth, Segerstrale said, is that social games are not a threat, and that the free-to-play model is by the biggest growth opportunity the game industry has.
He explained that the game industry since its birth has become more and more accessible: lowering prices, simplifying interaction, becoming more social and more immediate. And as the barriers to entry come down, the audience grows.
Comparing this movement to that seen on the internet, which has grown from 16 million users to 1.8 billion in 15 years, due to lowered cost of access and better services, such as Google. And then there’s the adoption of online video, which has grown from almost nothing to 150 million users in US in three years. YouTube made it accessible, requiring no codecs and allowing sharing.
In this context, the rise of Facebook games is fantastic - 200 million of Facebook’s 400 million unique user numbers a month are playing games, Segerstrale said, adding, “Facebook is the YouTube effect for games.”
The central underpinning of this success is, he said, down to Facebook games’ social nature - social experiences are more compelling than traditional gaming experiences for the vast majority of people. Add to that Facebook’s ability for users to tell their friends what they’re playing, even those who aren’t also playing the game, and the reach of these games becomes unprecedented.
“For first time as an industry we’re able to bring games to where people hang out, and not identify players as ‘gamers’.”
As such, Segestrale projects revenues through social games in 2010 to hit US$1 billion, more than yesterday’s figure of XXX. He went on to identify other core attributes of social games - the speed at which they can be designed and iterated upon through reading and interpreting metrics on player behaviour.
“‘And we’ve only scratched the surface of what we can do in terms of designing games and creating payment flows.” This is only the beginning, he said, the pace of evolution is such that we have plenty of room to grow into.
What hasn’t happened is that game blockbusters haven’t died. Modern Warfare 2 was the largest videogame launch of all time, and game sites such as Pogo, Miniclip and Yahoo Games haven’t gone under. “Profitability hasn’t died, even though our games are free - We haven’t killed anything. In fact we’ve been hugely additive.”
In order to grow, Segerstrale said that developers need to make high quality experiences. All these connected players will tell their friends if they don’t like something, that it’s important to be multi-platform so the experience can be consumed in as many ways as possible, that developers need to further understand players and social play, knowing how people behave, and what they want next, and finally that companies need to focus on franchises. While franchises dominate mobile and consoles, free-to-play games have hardly any. Bejeweled Blitz is pretty much only one, but this won’t continue, because consumers prefer franchises.
Naturally, having made Playfish part of EA and development of EA’s properties on Facebook being a big part of what Playfish will go on to do, Segerstrale would say that. But as the iPhone app market demonstrated, with iBeer and Koi Pond being early big sellers and last year pretty much entirely giving way to the big names - The Sims 3, GTA: Chinatown Wars, Madden and Rock Band - it’s clear that even on the most ‘democratic’ of platforms, the franchises matter.
Concluding, Segerstrale said that he felt that the term ‘social games’ would cease to exist in three to five years. “Everything will have social features - it will be the same thing saying as ‘electric television’ - social will be a given.”