Speed will crown the new leader in real-money gambling games
At the GamesBeat 2012 conference today, one of the key themes has been speed. The number tossed around is that within 18 months, the social game market on Facebook was won by Zynga. Within 18 months, the key players in mobile has established a dominant position on iOS and Android. With the new, even more lucrative real-money social game market, speed will also crown the new champion. And with so much money at stake, it may take less than 18 months for a dominant market leader to emerge.
Are you speedy?
Speed to market is a key advantage of startups and smaller companies that have the organizational agility to change direction quickly and pursue a new opportunity. In the gaming industry, this has become more true with each new major democratic platform, from Facebook to iOS to Steam. While you may have needed a business deal with Sega to get your game on the Genesis, you could launch a Facebook app in as little as two weeks with a fast-moving development team, requiring no contact from Facebook. With the new iOS and Android marketplaces, the best games are surfaced via user adoption, ratings, and the editorial staff of the providing company. Each of these platforms benefit from having the best games win, so this lead to “may the best game win” ecosystem that benefitted quality developers and the players most of all.
But now, 5 years later, even the best new Facebook or mobile game company will have a hard time breaking through the market without help from distribution partners, a large paid advertising budget, or a friend in the ecosystem’s editorial department. No matter how good your game is, the market is saturated, the advertising costs have capped out, and you’re battling against incumbents with massive advantages of scale. Rather than pursuing the blood and shark-filled “red ocean”, as Dean Takahashi mentioned in his article and again today, you need to be looking for untouched “blue ocean”.
Why speed wins
If you’re looking to conquer a “blue ocean”, or new market, you need to be first to market. Being first to market has a number of big advantages that are quickly lost as the more companies enter:
Low Hanging Fruit
With every new market, there is a ton of “low hanging fruit” with regards to user acquisition. With Facebook, aggressive viral marketing made it possible for games to grow exponentially. With Facebook, iOS and Android, paid advertising in the first two years was incredibly cheap, less than 20% of what it costs to acquire a user today. With some prudent spending and a sticky game, you can acquire a significant user base quickly and cheaply in a new market.
No player loyalty (yet)
Players are inheritly loyal, and in an existing market you often have to make your game so good that it’s worth replacing their time and money investment in another game to switch to yours. In a new market, players have no games to be loyal to yet, so they are much more open to trying and playing your game. This also means that you have a chance to acquire some of the most valuable (and monetizable) users before anyone else.
Easy to stand out
In a new market, there are simply less games out there. This is an advantage for quality game companies, because they have less competition and can stand out easily. In a smaller market, the best games can get to the top of that market quickly and build a lasting franchise. Remember, Angry Birds was not the best physics game that’s ever been made on iOS, but it was the first quality game that really stuck with users.
Real-money social games are the next blue ocean market
As we highlighted in our previous post
, real-money social games are a huge opportunity for game developers. We firmly believe that the winner will be crowned in the next 18 months, and a new entrant will be able to grab significant market share of a valuable new market before any of the big players have time to react. The question now is: who will it be? Will it be an agile startup that adapts quickly to a new market? Will it be an indie game developer that creates the next big hit? Or will one of the big behemoths leverage its development and marketing muscle to capitalize on a new opportunity? The choice is yours