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Social Games like Farmville attract more active players than top TV shows in America have viewers. If engagement (recency, frequency, duration, virality and ratings) is factored in, it becomes even more obvious that social games are the new mass market medium.
The key to their success lies not only in the power of the Facebook platform, but also in games' motivational design focus and clever business model. While the prognosis for TV advertising may look increasingly grim, companies big and small are leveraging the techniques of social games to energize their brands.
This process is called Gamification, and it promises to bridge the gap between diverse interactions' utility and social games' fun and engagement.
Games played on Facebook have clearly taken off in recent years. From a standing start in 2007, companies like Zynga have built multi-billion dollar enterprises at the intersection of social networking and fun.
Now, this category - misleadingly called "social games" - has achieved an extraordinary milestone. If social game traffic were measured alongside television ratings, three of the five top non-special/sports shows would be games.
If we count TV gameshows (e.g. Dancing with the Stars) with their online brethren, all five of the top five non-special/sports programs are games, not scripted or "reality" entertainment. And the most popular diversion in America is, unsurprisingly, Farmville - Zynga's flagship game.
And because social games have much higher engagement rates in comparison to television, the effect that these 57m regular players have is profoundly more intense. TV may reach more people by numbers for now, but when you factor in the engagement levels (measured by user recency, frequency, duration, vitality and ratings) you find that social games win by a country mile.
So we can soon add TV to the list of industries vanquished by games, but what is the secret behind Zynga's success and the primacy of the Facebook platform for games? The answer can be found both in their design and their revenue model.
From a design standpoint, games are hard-wired to beat other forms of entertainment for consumer interest. After all, game designers spend every moment thinking about user motivation, focusing their efforts on producing "flow," or the state of losing track of space and time by being "in the zone." Most other kinds of media are designed with the motivation of the author in mind - rather than the players/viewers - and even with interactivity, tend to fall flat.
There are other techniques from successful social games that we use in Gamification - or the process of using game concepts in non-game contexts. These include badges, points, levels, leaderboards, onboarding and the like. Nonetheless, understanding motivational design is our most important skill - and a core element of the training I do at my Gamification workshops. Companies that have embraced gamification are leveraging the power of social games in industries as diverse as healthcare, finance, travel and education - to name just a few.
The second factor that has enabled social games to overtake television is their business model. Much has been made in the tech press about the power of freemium - the pricing model pioneered by games where the average user plays for free, while the most engaged users pay proportionately to their engagement. Freemium would be revolutionary enough if it just ended there. However, the less obvious elements that make freemium work so well in social games are among its most powerful.
Firstly, social game players mostly spend money to remove friction and to customize their experience. That is to say, players can usually play these games ad infinitum without paying at all, but if they want to play more effectively (which usually means faster) they are encouraged to throw down some cash. This produces a higher sense of satisfaction among players than the paywalls of cable TV or the New York Times. Consider the psychological difference: I can get the content for free if I'm prepared to do the work (invite people, work the grind), so choosing to pay feels like my choice...even if the friction is designed into the system.
Secondly, Zynga and other social game designers use elasticity of demand and price discrimination in a way that would make airlines blush. Their view about payments can be summarized simply as: never limit the amount of money that a user will pay you. This is revolutionary thought and practice - instead of thinking of freemium as free --> static paid tiers, users pay what they want, proportional to their engagement. So it probably comes as no surprise that top players of Farmville can readily spend upwards of $10,000 per month.
Compare that to television's approach and you quickly realize why games and Gamification will revolutionize not just content/consumption, but business models as well. The solution for TV is not to unbundle content so it's pay-as-you-go, but rather to create incentives (e.g. access to exclusive content, the stars, special fan forums, etc) that are progressively available to users based on their level of engagement...and spend.
Over the past 15 years, games have risen from a hobbyist industry to the largest single category of entertainment when measured by engagement. Although they long ago surpassed movies, books and music in revenue, games have trailed television. With the advent of social games and their supercharged business models, 2011 might be the last year of TV's dominance, unless Hollywood executives understand that games are much more than just cheap content to program.
The slippery slope for television is that advertisers will defect to games, much as they shifted dollars from print to Google (and TV before it). Once that occurs, advertising dollars will not return, creating a downward spiral of content and increased pressure for consolidation. Meanwhile, advertiser ROI from gamified campaigns - on and off Facebook - will blow away TV on every engagement metric possible (as they already have for brands such as Jimmy Choo), further eroding the networks' pricing power.
TV has long embraced games as a type of programming, but today's opportunity goes beyond mere game shows and reality competitions. It's time to embrace the lessons of Gamification across the full TV experience: more engagement and more interaction equal more revenue.