Charles Hudson is an expert on all things social gaming related, producing technology conferences focused on the intersection of gaming and social media, including the Virtual Goods Summit and the Social Gaming Summit. He's also currently working on a series of research reports on the virtual goods market, published at Inside Virtual Goods.
Prior to this, Charles was involved with various social gaming companies and start-ups, including Serious Business, a leading producer of social games for the social web (acquired by Zynga earlier this year) and Gaia Online, a leading online hangout for teens and young adults.
I interviewed Charles to find out more about social gaming, including the challenges and opportunities for businesses, and why marketers should be engaging with consumers on this channel.
Why should businesses invest in this area, and what are the advantages of social gaming over other digital marketing channels?
The most attractive reason to invest in social gaming is that consumers are spending more and more of their disposable time playing social games with their friends. Investing in areas where consumers are spending more of their time has historically been a good way to invest in new, emerging areas.
Social gaming is currently hyped to be the next big thing. How do you think social games can move beyond the hype to provide value for the business?
I think social games already provide value for users. Users are perfectly willing to spend money on games that they find valuable. The next thing that social games developers will do is to figure out how to work better with brands to find contextual ways to work brands into social games.
Who is a typical user of social games? What demographics are we talking about here?
The demographics depend quite a bit on the type of the game. Overall, social games cut across all age groups. Relative to other segments of games, there are proportionally more women involved in social games than one would expect.
What does the process of building a social game typically involve?
To build a social game, you need to bring to bear a number of capabilities. First and foremost, you need to have someone with game design skills who understands how to integrate social interactions into the games. You also need a team of talented engineers to build the game and, most importantly, resources to support the game as it scales and grows in terms of usage.
If a business is thinking of developing a social game, ideally which platform should they opt for? What should be the strategy for choosing a platform?
I think it really depends on the company's goals. If their objective is to reach the maximum number of users today, I think Facebook is still the best way to go.
Other than Facebook, the other big opportunity is to find a way to successfully build social games on the open web - nobody has cracked the code on that just yet. Other platforms such as MySpace, Hi5, and others offer good opportunities to build social games and learn without all of the competition you find on Facebook. In some cases, the monetization rates on small platforms can be higher.
In terms of platforms for these kinds of games, how does popularity compare on specialised social networks such as Hi5, specialised social gaming sites such as Gaia Online, and Facebook and other social networks?
To date, Facebook has been far and away the best place to build large social games. They have over 200m people engaging with social games on a monthly basis. There is an opportunity for more specialized sites to succeed by strictly targeting folks who want to play games.
What are the key issues for companies looking to launch a social game in multiple countries? Are there any cultural differences they need to be aware of?
There are two key questions to consider. First, there are some real advantages to localizing both the language / text used in the game as well as the payment types most popular in each given region.
The second key question to consider is whether the games and its theme will be as popular in every region. In some parts of the world, competitive games do better than co-operative games and vice versa.
How do you devise a strategy for social gaming?
The most important thing for any company to figure out is whether they want to build their own games or partner with people who have games and traffic and focus on partnerships instead. Unless companies are truly committed to social games for the long term, partnering is probably a faster way to get to market.
What about the long-term? If a company is investing in this area, how can they sustain interest / keep the game fresh for their users?
At their core, most social games are services. As is the case with any dynamic service, it's important for developers to continue investing in creating new content for users to keep them interested.
What business models can be used to monetise social gaming (e.g. in-game advertising, virtual goods)
The dominant model is still virtual goods - advertising is growing, but isn't huge yet. I don't expect it to change anytime soon.
Typically, how receptive are gamers to advertising on social games?
Attitudes are changing. I would say developers are much more open to including it. However, most people playing games are there to focus on playing games. The best advertising for gamers tends to be integrated into the game itself.
What metrics should be used to measure success, and how can these be tied to meaningful KPIs for the business?
Typically, most developers measure the number of people who play the game on a monthly basis (monthly active users, or MAU) and a daily basis (daily active users, or DAU). Additionally, it's important to track monetization rates per user as well.
What are the implications of new technologies such as location-based-services, and mobile for the social gaming arena?
We are in the very early stages of seeing social gaming work on mobile. Companies such as ngmoco, Papaya Mobile, and Aurora Feint are really pushing things forward here.
Privacy is an ongoing concern in social games. How big of a threat are privacy breaches, and is this something companies should be worried about?
Given how dependent most social games developers are on the Facebook platform, it is critical that developers pay attention to the Facebook terms of service and adhere to those guidelines.
A 15% discount is available for Econsultancy readers; please use the code ECONSULT010 on registration.