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Five things startups should not skimp on March 31, 2008

Posted by jeremyliew in start-up, startup, startups.

The WSJ recently noted something that developers have known for a long time, that bigger monitors increase productivity:

Researchers at the University of Utah tested how quickly people performed tasks such as editing a document and copying numbers between spreadsheets while using different computer configurations: one with an 18-inch monitor, one with a 24-inch monitor and one with two 20-inch monitors. Their finding: People using the 24-inch screen completed the tasks 52% faster than people who used the 18-inch monitor; people who used the two 20-inch monitors were 44% faster than those with the 18-inch screens.

This got me thinking about other areas where buying “cheap” can be a false economy:

1. Large monitors. As noted above.

2. Comfortable ergonomic chairs. Your team spends most of their working time sitting in these chairs. If they are not comfortable, they won’t be in those chairs, and thus they won’t be working!

3. High Quality Speaker Phones. Conference calls are a part of doing business. If the people on the other end of the line can’t hear all the speakers in the room, you risk losing the nuances of the communication.

4. Experienced Law Firms The big silicon valley law firms are constantly involved with negotiating financings, venture debt, acquisitions and other legal matters on behalf of startups. They know which terms are “market” and not worth fighting over, and which are out of the ordinary. Firms that don’t have the same volume of deal flow often want to fight every point. While their zeal on your behalf is commendable, in the end they usually end up with “market” terms but take longer to get there. That results in higher legal bills for all parties, and greater conflict between partners where it wasn’t necessary.

5. Administrative Assistance. At some point making entries into Quickbooks, figuring out which insurance plan to sign up for and finding the cheapest airfare to LA for that conference become a poor use of founder’s time.

What are some other areas that readers think startups should not skimp on?

Managing Virtual Economies March 28, 2008

Posted by jeremyliew in economics, game design, game mechanics, mmorpg, virtual goods, virtual worlds.
1 comment so far

Scientific American has an overview of how some MMOGs manage their economies (found via Massively).

The article discusses the approaches of EVE Online, Entropia Universe and Second Life in trying to keep their virtual economies balanced. Getting the balance of crafting, economics and other such features right can drive behavior like specialization/division of labor, guilding etc, as Eyjólfur Guðmundsson, EVE Online’s economist, notes:

The new player who isn’t able to succeed roams around space trying to make ISK[s]. He tries to be a player-versus-player pilot and loses in battle. He needs help to succeed in the community. Players themselves have found ways to deal with this by creating corporations and alliances. It’s not just economics, but also socioeconomics in general.

For new game designers, keeping virtual economies in check is a non obvious but extremely important element of game design. While most designers spend a lot of time thinking about how to add money into a system and how to price virtual goods, some do not spend enough time thinking about how to balance these two elements. If you allow users to transfer virtual currency between each other, trade in virtual items will emerge. If the economies are unbalanced, you run the risk of side effects such as inflation in pricing of virtual goods or too many “high power” items in the wild. Both of these can make it hard for a new player to join the game after it has been ongoing for a while as they are either too poor or too weak to be able to do anything fun. While these things can be managed after they become problems, it is better to have spent some time thinking through the issues before launch.

Special events in MMOG and virtual worlds drive usage March 26, 2008

Posted by jeremyliew in facebook, game design, social games, social gaming, social media, social networks, virtual worlds.

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.

Three examples of truly social games March 25, 2008

Posted by jeremyliew in asynchronous gaming, game design, game mechanics, games, games 2.0, gaming, social games, social gaming.

Last week I asked what distinguishes a social game from a multiplayer game and suggested that for social games, social context has an impact on gameplay and enjoyment. Parking Wars is a great example of a truly social game on Facebook

When I asked readers for suggestions of social games, a few people suggested Friends For Sale. I agree that FFS is social; social context has a big impact on what players do. I’m not sure that it is a game though in that there is no “win” endstate, but that may be just quibbling with definitions.

The NY Times highlighted another great example of a social game last Friday when Brad Stone wrote a profile of GoCrossCampus:

This winter, the armies of Yale invaded Massachusetts and conquered Harvard. Cornell’s troops turned Dartmouth’s militia into a vassal force. Columbia allied itself with Yale and occupied Long Island, before getting routed by the Princeton-Cornell alliance.

The historic rivalries of the Ivy League have reached the Internet.

Eleven thousand Ivy League students and alumni have played out these scenarios as part of an online computer game called GoCrossCampus, or GXC. The game, a riff on classic territorial-conquest board games like Risk, may be the next Internet phenomenon to emerge from the computers of college students.

Techcrunch notes another company, Kirkland North, with a similar model.

Both games rely heavily on social context (namely school, department, and residence loyalties) to provide a framework for alliances, gameplay and motivation. It appears that both have also been able to draw a significant proportion of the students on various campuses into games, spreading virally.

I really like the approach that all three companies have taken to building social games, both on social networks and on a standalone basis.

Facebook is more than just a marketing channel March 24, 2008

Posted by jeremyliew in facebook, games, games 2.0, gaming, social games, social gaming.
1 comment so far

Venturebeat reports that some game companies are planning on launching teaser games into Facebook primarily to promote the sale of their “full” games at retail:

Unlike the one-off casual games you’ll generally find on the internet, Gnosis makes theme packages like Candie’s Factory, which is billed as an action / puzzle game. The plan is to split off individual mini-games and place them on Facebook to gain brand recognition for the retail product.

“We’re trying to build up an audience on Facebook where you can develop the brand association, so when you see that same brand at retail, you’re already familiar with it,” says Threewave’s CEO, Dan Irish. “I think for this year, the retail proposition is still the most important.”…

Threewave’s ideas do seem to be in line with Electronic Arts ‘ plans. EA has a stealth division called Blueprint that is reportedly creating “brand extensions” for its games to be distributed on social networks.

This reminds me of the old saying that if all you have is a hammer, then everything looks like a nail. I am excited about the innovation that is happening in social games where the gameplay occurs within Facebook itself (and other social networks). I think we’ll see far more innovation coming from startups who are focused on these new opportunities than from established game developers who may have trouble with the innovators dilemma in dealing with disruptive technologies, in this case, social games.

What distinguishes a social game from a multiplayer game? March 21, 2008

Posted by jeremyliew in games, games 2.0, social games, social gaming.

As I’ve spent more time looking at the games on Facebook, I’ve been trying to detangle the difference between a social game and a game on a social network. In response to my post on the top developers of Facebook games one commenter asked:

1. Andrew – February 13, 2008[Edit]

I’m all for the development of games on the Facebook Platform, and can even see the value and revenue model working…..but does it really need to be branded ‘Social Gaming’? The idea of playing multiplayer games isn’t exactly new, and even on a web model, Yahoo and MSN Games have existed for years….

Something about this didn’t sit right with me. Scrabulous feels like a social game to me, qualitatively different from multiplayer games on the web. But what is it that makes Scrabulous on Facebook a social game, but Chess at Pogo simply a multiplayer game? I think the difference is that social context has an impact on the game play and enjoyment.

Playing Scrabulous against my wife puts the game into context in a way that playing with a stranger that I met in the Yahoo games lobby simply doesn’t have. If I’m losing against a stranger, I might just abandon the game – not an option against my wife. If I’m taking too long to move, I’ll hear about it from my wife in a way that will cause me to play- not true for a stranger. The bragging rights on the win will be more meaningful and last much longer when I’m playing my wife. And finally, the act of playing itself has the subtext “I’m thinking of you” that is absent when playing against a stranger, where the game is the only concern.

That being said, many of the games on Facebook lack this social context. Warbook and Texas Hold’em, their success notwithstanding, are more like multiplayer games that happen to sit on top of a social networks – the social context is not a key element to the game itself.

One game that has strong social context is Parking Wars. Ian Bogost has a great discussion of the social context of Parking Wars over at Gamasutra:

In Parking Wars, each player gets a street with several spaces as well as a handful of cars, which come in different colors. Play involves virtually parking these cars on the streets of one’s Facebook friends. Each car earns money by remaining parked on the street over time, but the player can only cash out a car’s value by moving it to another space. Players level up at specific dollar figures, earning new cars as they do so.

Some spaces have special rules, like “red cars only,” or “no parking allowed.” It’s possible to park illegally in these spaces, but if their owners catch you they can choose to issue a ticket, which tows the player from the space and forfeits the money earned to the space’s owner.

parking wars screenshot

When possible, it’s best to park legally. However, in practice this isn’t easy, since many players vie for the limited resources of their friends’ collective parking lots, just like we do with our coworkers at the office. Moreover, very occasionally the signs on spaces change, so no one’s guaranteed to be safe.

Playing Parking Wars is an exercise in predicting friends’ schedules. A colleague in Europe is likely to be sleeping during the evening in the States, and thus his street might offer safe haven at that hour.

And just as some meter-maids don’t get around to patrolling real streets, so some players of Parking Wars don’t get around to patrolling their virtual one. Of course, such players might just be busy, or they might even be baiting their colleagues so that they can later issue a whirlwind of unexpected tickets.

The social context – knowing which of your friends are diligent about ticketing and which are not, and who might be too busy (or sleepy!) to be ticketing at a particular time, are key elements of the gameplay.

MindJolt, Jetman and Diveman are all games that use the “challenge” dynamic as their social context to drive repeat play.

I’m looking forward to seeing more games involving explicit social context get launched over time. What games do readers think have social context as part of their gameplay, thereby making them social games?

Nick to spend $100m on 600 games March 18, 2008

Posted by jeremyliew in advertising, casual games, games, games 2.0, gaming.

The NY Times has a story on Nickelodeon planing to spend $100m on 600 exclusive casual web games over the next two years. They certainly have a huge audience of people playing casual games across a network of sites:

With a series of customized sites for different age groups (preschoolers, tweens, teenage boys, moms), Nickelodeon calls itself the “biggest gaming network in the country.” Movie studios, video game publishers, and toy makers are among the top marketers on the sites. In the online games market, its stiffest competition comes from Yahoo Games, which had 15.5 million unique visitors in February according to the measurement firm comScore…

The N, Nickelodeon’s teenage network, has dozens of games for children aged 12 to 17. Slightly younger players are directed to Nick.com, which drew an average of 2.1 million visitors in February and is expected to add 185 games this year. The youngest players of all are welcome on the sites of Nick Jr. and Noggin, where games are meant to be played by children “on the laps of their moms,” Ms. Zarghami said.

The company also owns Neopets, a virtual pet Web site. The investment will add scores of new games to each site in the coming year…

MTV Networks acquired three sites to strengthen its gaming brand in 2005 and 2006. Of the three, Addicting Games is by far the most popular, averaging 9.4 million unique visitors in February, a 50 percent increase over the same month last year, according to comScore.

paidContent.org has more details:

Among the initiatives included in the investment :

— the launch, planned for September, of ad-free subscription service myNoggin, being offered with cable companies Charter, Cox and Insight and through direct subscription online.

— The transition of Neopets to NeoStudios, which will focus on creating new virtual worlds and further developing existing ones. The first new launch is slated for the end of 2008 with “a goal” of launching a new one every other year.

— The branding of Shockwave as “the” games destination for families. Somehow that includes new opportunities for “prominent integrated advertising.”

— AddictingGames is getting into the casual MMOG business with AddictingWorlds.

— The planned early 2008 launch of The-Ngames.com, dubbed “the first major casual gaming site to focus solely on teen girls.”

— A subscription product for Nickelodeon called the Nick Gaming Club, “a safe gaming environment.”

— 3D Slimeball. Now there’s the Nick we all know and love. Actually, it’s one of the multiplayer games for Nick.com. Nictropolis also gets multiplayer games.

The idea seems to be grab them as young as possible and keep them moving to various age-appropriate options.

From the sounds of the article, Nickelodeon primarily plans to primarily monetize through both subscription and advertising. Given their existing advertiser relationships and their huge reach, they should be able to help establish some standard advertising units in the casual games industry. That will be great for the industry. New forms of advertising are hard, and standard ad units lift all boats.

Games as a hit driven business March 17, 2008

Posted by jeremyliew in business models, facebook, games, games 2.0, social games, social gaming, social networks.

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:

Facebook Games by Active Users

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:

Zynga Games

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.

SGN Games

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.

Rock You CEO on social network platforms March 15, 2008

Posted by jeremyliew in apps, facebook, myspace, social networks.
1 comment so far

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.

AOL-Bebo deal is good for the industry March 14, 2008

Posted by jeremyliew in advertising, aol, bebo, business models, social networks.

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.