24 May, 2011
At the recent LOGIN conference, I was on a panel entitled “Wannabe Farmers replacing Pretend Mass-Murderers: Are Social Games a Fad?” To make the panel more interesting the panelists took extreme positions, and I was the solid “social (network) games are a fad” guy. Not that I believe that entirely, but it made for an entertaining panel discussion. (I’ll post a link when the talk is posted online.)
But, I mentioned something that I think is very true: business works in cycles. And, by looking at previous cycles we can use them to divine the future of the current cycle. Let’s take a closer look, shall we?
The great wheel of fortune
The wheel of fortune is a mythic image, where people attached to the wheel travel up, closer to the sky, on one side and down, usually into suffering, on the other. It’s a symbol of things changing, a representation of the cliché, “what goes up must come down.”
This cycle is evident in business. The clearest example in computer games is the console cycle: the announcement of new consoles spur a lot of excitement and activity by developers as they try to get the first mover advantage. Games launch, some do well and others do poorly. People eventually master the consoles, more complex games are released, a glut of mediocre games comes along and it gets harder to find the quality games, until rumors of a new generation of consoles surface and everyone gets ready to repeat the cycle again.
Cycles in online games
We also see cycles in online games as well. At the LOGIN conference, Richard Garriott gave a keynote where he talked about the development of games. He talked about how opportunities are coming and faster. He went into how, from his experience and history, single player games dominated for about 20 years, MMOs have dominated for about 10 years, and social network games are poised to dominate for about 5 years. His message was that it’s time to move fast if you want to get on the bandwagon! I don’t necessarily agree with the details, but the general point is not unreasonable.
I also saw a few people reference the Gartner Hype Cycle. It explains how technology starts from a trigger, rise quickly to a “Peak of Inflated Expectations”, then to a “Trough of Disillusionment”, and then finally up a “Slope of Enlightment” to a “Plateau of Productivity” for worthwhile technologies. Obviously not everything fits perfectly, but it’s interesting for looking at how things work.
New hotness: Social network games
Social network games (often simply called “social games”) are the newer darlings of the online world. The lofty valuations of the largest social network game companies boggles the mind, but investors are willing to pay big to get into the “next big thing”. If you take a look at LOGIN’s schedule, you’ll see most of the talks are about social network games. One speaker at the conference even explicitly put social network games near the “Peak of Inflated Expectations”; although I’d put it on the downward side instead of the upward side. :)
So, on the panel, when it came time to look at social network games and if they were going to be enduring, I remembered what Garriott had said at the previous day’s keynote and looked at the hype cycle and knew what was going to happen. Well, that and I already had some experience with the previous iteration of this cycle.
Old and busted: MMOs
Working at an exciting startup with a great team, I’ve seen first-hand from investors that MMOs aren’t the hot thing anymore. After the big promises of EQ1′s 40% profit margins and WoW’s ability to attract millions upon millions of players, we haven’t seen any game companies able to deliver. Even thought you can still be highly profitable with a “mid-sized” MMO game, it’s still a lot for publishers to invest in, and many investors who just want to invest in the next Google fail to see how it can cause massive disruption and therefore massive returns on investment.
Those talks at LOGIN on social network games? The last few years those talks would have been about MMOs. People cheered when Near Death Studios, Inc. bought Meridian 59, and we got a fair amount of press coverage considering the small game. When it closed down, we got some restrained yet polite (and a few not-so-polite) mentions. One journalist at LOGIN for a site that only covers MMORPGs didn’t seem particularly interested in hearing about Namaste’s new project. The press cares a lot less about MMOs, particularly as a lot of Asian games have gotten translated and created a little glut in the market.
So, looking at the hype cycle, it’s obvious that MMOs are in the trough of disillusionment. So, what can we do to climb out of it?
Beyond hype and cycles: broken business practices
There are other issues at work here. A recent article by N’Gai Croal entitled “When Good Enough Isn’t Good Enough” talks about our old friend innovation. N’Gai laments the fact that only the biggest titles continue to be developed. Again we see the conservatism at work in the industry, where the perceived rewards for creating a new type of game is seen as not sufficient.
How does this relate to social network games? The biggest company, Zynga, got its start by directly copying other games of the same type. They just applied higher production values and bigger marketing budgets to come out on top. Although Zynga now seems to be hiring a lot more old-school developers to create games, one has to wonder how many relative duds they’ll see before, like the large boxed game publishers, the retreat back to cloning other games to maintain their needed levels of income.
Spoiler: yes, they’re a fad
Okay, maybe “fad” is a bit strong, but the dominance of social network games will come to an end. We can see what’s going to happen to social network games by looking at the past. It’s already happening, as a lot of the investors writing big checks to anyone who could access the Facebook API are no longer quite so excited about the medium. The cycle is simply repeating itself faster this time around. Ultimately, some aspects of social network games will inform the game industry as a whole (probably minus the social network attachments), just as some aspects of MMOs have undoubtedly influenced games, but games as we know them will continue to exist. Someday soon, we’ll see them fall out of favor as MMOs have, but then they have a chance to redeem themselves and come back better than ever. Well, at least MMOs will. Jury’s still out on social network games. ;)
What do you think? Are MMOs moribund? What can rescue them? Are social network games coming to dominate? Or do you agree we’ll see the same cycle repeating?