Hi5 launched its developer platform at the end of March, opening up access to its 80m+ registered users. It is a top 20 traffic site globally, although not as popular in the US.

Unlike other platforms, Hi5 does not publish a ranked application directory, so it has been hard to get real data on how quickly apps have penetrated the user base. Because Hi5 launched with viral channels open, penetration has been as fast as Facebook’s platform launch in the first 45 days, if not faster. Inside Facebook reports on some stats as to just how quick penetration has been - stats I have not seen elsewhere:

Hi5 Platform Totals

* 617 applications
* 1 million total daily installs
* 14 apps have been installed on more than 1 million profiles
* 6.5 million total daily canvas page views
* 9 apps with more than 10 million total canvas page views so far

Amongst Active Users

* 3.7 apps on average
* 52% have at least one app
* Max apps installed by any one user is 23

Hi5’s user base is primarily international, and anecdotal evidence from Facebook developers suggests that international users are more willing to install apps than US users. This may have influenced Hi5’s fast start out of the gate, despite repeated instability in their platform. (Facebook’s platform was equally unstable at launch, and still suffers outages from time to time).

While it may prove to be harder to monetize the Hi5 international user base through advertising in the short term, we may well see alternative monetization models emerge. Note slide 48 in Ben Joffe’s excellent comparison of social network business models between the US and Asia.

Would love to hear any data from readers on how their apps have performed on Hi5.

Reader of this blog will know that I have a high degree of interest in Social Games. There are a couple of social gaming conferences coming up in the next couple of months.

The first is Interplay which is being held on May 22nd at the Kabuki Hotel in San Francisco. It specifically is focused on games being played on social networks. Some of the topics that the conference plans to address include:

How will the companies in this space turn their momentum into sustainable business models?
How will the social network platforms react if and when they do?
The virtual economies represent large opportunities, but how does one exploit them, and what role can advertising play?

I’ll be speaking at the conference so hope to meet some readers there. Click here for a 25% discount to attend Interplay.

The second is the Social Gaming Summit which Lightspeed is sponsoring and that I am helping to organize with Charles Hudson and David Sachs. It isn’t until June 13th, so I’ll post more about that next week.

Today we announced a $4m investment in Serious Business. Their social game, Friends For Sale, has become a top ten app on Facebook since it launched in November. I am very excited about working with Siqi and Alex and the rest of the team.

While there are a lot of games on the social network platforms now, many have game mechanics that have been ported from another medium. I think Siqi and Alex have developed the first game dynamic that is native to social networks. As I’ve mentioned before, social games differ from merely multiplayer games in that social context has an impact on the game play and enjoyment. I believe that the Serious Business team has a deep understanding of how to create these social games, and we’ll see more such games coming from them in the future.

Venturebeat has a good description of the first game:

Here’s how it works. You join Friends For Sale and receive a starter war chest of several thousand dollars of the company’s virtual currency, as well as a valuation of how much you’re worth. Then you see a list of all your Facebook friends who have added the application, along with their selling price, and you can start buying them up. Price is determined like in any market, by bidders — so if you’re competing against others to buy a particular friend, you’ll have to keep raising your bid in order to maintain ownership.

When you sell a friend, you get to keep half the profit. The other half goes to the person getting bought. You can also make money by doing things like inviting more friends to the application. You earn $2,000 for every four hours that you’re logged in, and $1,000 for every friend you invite. And when somebody buys you, your value increases.

What’s the point of owning a friend, besides making virtual money on their eventual sale? Well, you can buy them gifts, or you can use them to “poke” other friends.

So really, this game is a mask for deeper social intentions. Let’s say you’re a high school student and you want to show a classmate that you have a romantic interest them — buy them and give them a gift on Friends For Sale. Or lets say you want to attract the interest of a prominent entrepreneur and angel investor like early Googler Georges Harik. Buy him, if you can afford it: He’s my most expensive Facebook friend, worth more than half a million dollars in the app’s virtual currency (pictured, above; thankfully, he’s already an investor in VentureBeat).

Other coverage is in Techcrunch, and Inside Facebook.

There are a couple of nice wrap-up articles on the Easter themed special events in MMOGs and Virtual worlds that took place over the weekend.

Massively surveys MMOG events in World of Warcraft, Lineage 2, Final Fantasty XI, Lord of the Rings Online and Second Life, noting:

Seasonal events are often the most popular in-game events in many of today’s MMOs. But each game’s designers have to find a way to slip these real world celebrations into the lore and mechanics of their persistent worlds.

Izzy Neis covers Easter events in kids online worlds, including Club Penguin, Buildabearville, Moshi Monsters and Nicktropolis. She says:

Perhaps I’m just picky, but I honestly think you cannot have a healthy, uber-strong sense of citizenship in your youth-based virtual worlds WITHOUT acknowledging real world excitement. I am consistently impressed by the thriving movement of the community in Club Penguin– they’re very good about giving their users the tools to play, instead of dictating to the users the play. Kids are actually forming their own civilization under the eyes of the moderators & site runners

My friends at Gaia tell me that they see a massive bump in usage during their theme events. As an example, last years invasion of vampires into Gaia on Halloween brought the site down several times during the event.

I think this idea of creating special events around real world events is incredibly powerful. It introduces the shared social context that the players and users of the MMOG/Virtual world which helps shape and condition responses to events. Facebook gifting spikes around the holidays for exactly the same reason; users import conventions and context from the real world.

I’m interested to hear anecdotes and specific data that readers can share about the success of tying in world events to real world events.

The games business has always been hit driven, and the move online hasn’t changed that. World of Warcraft alone commands 62% market share of all MMOGs. In the casual games business, the top 20 games constitute 75% of total industry revenue. As more games have launched onto Facebook, we still see a hit driven business. There is an order of magnitude change in the number of daily actives in just the top 25 games on Facebook:

Game, Daily Actives (’000s)
Scrabulous, 697
Friends for Sale, 672
Texas Holdem Poker, 581
Compare people, 393
Lil Green Patch, 338
Speed Racing, 260
(fluff)Friends, 240
MindJolt, 189
Vampires, 156
PetrolHead, 144
Who Has The Biggest Brain, 135
Scramble, 126
Jetman, 121
My Heroes Ability, 96
Mesmo TV, 93
Have You Ever???, 86
Zombies, 85
Blackjack, 83
WereWolves, 79
Slayers, 77
Parking Wars, 68
Scratch and Win, 67
Fight Club, 64
Hotties For Sale, 59
WarBook, 56

The graph below makes this point even more dramatically, showing a strong power law distribution for the 2190 games on Facebook:

Game 100 has 6,000 daily actives, game 500 has 150 daily actives, game 1000 has 23, game 1500 has 6 and games 2000 and up have no daily actives at all.

In an environment with as long a tail as this, companies need to take a portfolio approach to their games. Zynga has taken the approach to cross promoting their new games on launch, to good effect:

Although Zynga’s games also show a power law distribution as well, all but one of their games has made it to the top 100 in daily actives.

Social Games Network has built its portfolio through a combination of cross promotion and acquisition.

Their power curve is not as pronounced because they have bought some successful games to fill out their portfolio.

The difference between SGN and Zynga is really one hit game, Texas Holdem Poker.

Social games companies that learn how to repeatably create and launch hit games will become very valuable.

Lance Tokuda, CEO of Rockyou (a Lightspeed portfolio company) is interviewed over at paidContent.org about apps on social network platforms. Read the whole thing.

There has been a lot of coverage on the merits of AOL buying Bebo for $850m in the last 24 hours. [Disclaimer: from 2002-2005 I was an AOL employee, initially as SVP of Corporate Development, then as GM of Netscape.] While there has been debate about whether this is a good deal for AOL or not, there is no doubt in my mind that it is good for the social media industry.

As Inside Facebook and Techcrunch have noted, the use of social media has far outpaced the monetization of social media. This is true for the web in general (21% of media time, 7% of advertising dollars), but even more true for social media. As I have noted in the past, I believe that this is because social media needs a standard ad unit. Today the bulk of monetization within social media sites comes from IAB standard buttons and banners. That is a good start, but it does not take advantage of the inherent social elements of social media. We have yet to see a standard ad unit emerge that is native to social media.

In social media, users can willingly affiliate themselves with a brand, an implicit recommendation of that brand to their friends. This is clearly valuable to advertisers. It can take many forms, including Facebook’s Social Ads (announcing the purchase of an item), Bebo’s sponsored profiles (where a user can “friend” Burger King), MySpace’s momentum marketing, Gaia’s product integration (e.g. with Scion) or Clearspring’s sponsored widgets. Each company today sells its own special flavor of social media advertising. But standards are set by industries, not by individual companies. An advertiser today who wants to spend $10m on TV advertising can do so with one call and one creative unit. But they can not do that today across social media - they have to instead custom craft a deal with each social media property. That is a problem for the industry and one of the reasons that advertising spending lags media use - there is too much friction in the system

With AOL’s purchase of Bebo, AOL now has a vested interest to help create a standard ad unit for social media. Moreover, AOL has the advertiser relationships and the clout at the IAB to be able to accelerate this standardization process. AOL now joins Fox (Myspace) as a big media company with both a vested interest in standardization, and the relationships to make this happen. We can expect to see a shorter timeline towards creating a standard, making selling advertising look more like sales and less like business development. This rising tide will lift all boats in the industry.

As I read the coverage about the real money trade in MMOs panel at GDC, I was reminded of danah boyd’s thoughts on why MySpace took off and Friendster did not, which notes in part:

Friendster killed off anyone who didn’t conform to their standards, most notably Fakesters and those with more creative non-photorealistic profiles. When MySpace users didn’t conform, they were supported and recognized for their contributions to evolving the system.

A good analogy to both situations is what to do when faced with a nice green lawn on a college campus. Some students will always cut across the grass, leaving worn paths. There are three solutions to this problem:

(i) Erect a fence around the lawn and put up some “keep off the grass” signs. This keeps the grass green and pristine, exactly as the landscape architect imagined it, but forces unhappy students to go the long way around to their classes.

(ii) Do nothing, let students cut across the grass and tramp mud into classrooms.

(iii) Pave the paths. Students take the shortest paths, no mud in classrooms, and the rest of the lawn stays green.

Friendster put up “keep off the grass” signs. Myspace paved the paths.

Now if you ask students as to what should be done about the muddy paths, they’ll probably suggest option number one. But its those same students that created the paths in the first place! It is more important to watch what users do than what they say. Facebook is facing a similar dilemma with its apps right now.

Games companies have the same issue with virtual goods. The abundance of real money trading markets for virtual goods tell us what users want to do (despite their vociferous claims to the contrary). If game developers don’t pave these paths, they risk muddy classrooms or unhappy students.

Michael Parekh points to the Youtube video below and calls it further evidence of Facebook fatigue.

I disagree. I’m not a diehard Facebook fanboy, but I’ve done enough consumer internet product management to know that you can’t ask users what they think, you have to watch what they do.

There is certainly a growing chorus from the digerati about how Facebook apps are for toddlers, and this is echoed in the video embedded above. Interestingly though, Compete’s stats suggest that app usage is holding steady.

The feed, one of Facebook’s core innovations, had similar problems when it first launched. Early on, Facebook users condemned the feed. Today they can’t live without it.

Many of the lightweight Facebook apps live fleeting lives; they grow quickly and fade away just as quickly. That much is true. But their viral growth speaks to them meeting a core need for users of social networks, lightweight communications across increasingly expanded friendship networks:

These lightweight communications are native to social networks. Whether they be exchanging pokes on Facebook or pasting a glittering “thanks for the add” .jpg into a Myspace comment, “content free” communications abound. The meta message is clear though “I’m thinking of you”, and that is often enough of a ping to keep the connection open. Many of the Facebook and Bebo apps fulfill exactly this lightweight communication function, including Hug Me, Zombies and Scrabulous.

The digerati, with their Outlook address books and social network friends lists in the 1000s, bloated by people they met at conferences several years ago, are edge use cases. Their experience is atypical. Normal users of social networks use Facebook apps in the same way that middle America forwards emails to one another. A healthy percentage of the emails that I get from my mother in laws are these forwarded emails (whether remarkable pictures, funny videos, or uplifting stories) and they’ve all been forwarded many times before they get to her. Facebook apps are just another instance of this lightweight communication behavior that we’ve seen online for many years.

More recently we’ve seen more of the app developers turn their attention to increasing engagement and building richer experiences for app users beyond the lightweight communication. But even the lightweight apps are fulfilling a need for users.

The NY Times realizes that teen girls are driving social media:

Research by the Berkman Center for Internet & Society at Harvard Law School, the result of focus groups and interviews with young people 13 to 22, suggests that girls’ online practices tend to be about their desire to express themselves, particularly their originality.

“With young women it’s much more about expressing yourself to others in the way that wearing certain clothes to school does,” said John Palfrey, the executive director of the Berkman Center. “It ties into identity expression in the real world.”

That desire is never so evident as when girls criticize online copycats who essentially steal their Web page backgrounds and graphics by hotlinking (linking to someone else’s image so it appears on one’s own Web page). Aside from depleting bandwidth, it is the digital equivalent of arriving at a party wearing the same dress as another girl, Professor Palfrey said.

People building social media and social games need to think about their teen girl strategy; as I have noted in the past, it is no accident that Typhoid Mary was a woman.