Two social gaming studios publicly announced they were closing these past few weeks in France, Mandala and Qozmo. We often hear from companies having a hard time that the Facebook market has been becoming tougher in recent years, and if several companies in the same space fail in a short time, this can turn into . True, Facebook is a quickly maturing market, with its gold rush phase firmly in the past, but does not mean there aren’t many opportunities to seize. I know firsthand how tempting it is to blame a failure on market conditions in any domain, but that’s never the whole story. So let’s take a closer look at what 2012 was made of.
Kobojo’s year of turbulence
Kobojo was in july 2012 the second largest French social games publisher, and is now 4th, due to a loss of about a third of its daily players. Its two co-founders have left the company, Vincent Vergonjanne having gone on to found gaming startup EVERYDAYiPLAY in Poland, while former CEO Franck Tetzlaff is looking for new challenges.
One should not confuse however turbulence with free-fall. I talked to Charlotte Lavergne, the new Marketing Director, and what she painted a much more balanced picture. First, one must realize that Kobojo’s current games like PyramidValley have been around for 2 years on average, and are pretty stable in their player numbers. So that’s for the foundation on which they can build, and for which the team (still at 60 people) deserves credit, as well as the original co-founders, no matter whether what triggered the change in management. What is certain is that 500k DAUs is still a solid base to build on.
Kobojo’s made some changes to its strategy, namely going much more mobile and starting to explore other platforms as well. They are currently soft-launching Questionary, an inherently viral trivia game on Facebook, Android and iOS. It has the potential to do quite well, maybe not at the Songpop level of awesomeness, but at least at a more than decent level. I believe they have the right elements, but then it’s a matter of cooking them perfectly together. Kobojo is also committed to innovate on another Facebook game project, that seems like quite a big deal internally, and something different from what they have done before, but Charlotte wasn’t ready just yet to disclose any specific information on the topic. All in all, it seems like Kobojo is facing its issues head-on, and is already turning things around, so it’s not unreasonable to assume they’ll manage to climb back up to 1M DAUs and beyond.
Alchemy, aka business as usual
Incidentally, when Vincent Vergonjeanne was telling me his thoughts on the social gaming market, and explaining why he favored mobile gaming in his new venture, his take was that social Free to Play games were especially difficult to get right, requiring an almost perfect alchemy. One key element in the context of rising user acquisition costs, was achieving a high organic growth, so that the lifetime value of players could exceed the costs of development and customer acquisition. It might sound obvious, but the trap of tunnel vision is ever present, and renowned developers and publishers, like THQ, have crumbled under debt.
In social gaming, I believe there is still ample room for growth and innovation. Video game developers, from indies to big names, have known this for a while, trying to balance building long-term revenue streams, i.e. hit franchises, and constantly innovating. Mobile/social gaming developers can do this just as well as traditional ones. It is however a very delicate exercise. Contrast Rovio‘s Angry Birds success, where every iteration on an essentially similar game-play is eagerly awaited by fans, with the much less positive reactions of players having tried one too many Zynga games. Think also of the almost overnight success of Pretty Simple Games, now France’s leading social games publisher, and the incredible footprint King.com acquired on Facebook over the last couple years. There isn’t necessarily always a great deal of innovation, but there is always the right alchemy.
So for 2013, it is somewhat video games business as usual. The industry, though still very young, has matured past infancy and started to find its stride. In France, some companies are rising, some are failing, and some are navigating in between. it’s getting closer to what traditional video games developers have been experiencing for the last couple decades. I am still more optimistic for the social and mobile games industry than for the AAA games publishers, as the next-gen consoles are now commanding production budgets so incredibly high that even sales of a million copies don’t cut it anymore. This year too will see great mobile and Facebook games emerge.