When I wrote my BusinessWeek column on Zynga a while back, every venture capitalist in the Valley told me that Playdom was the company’s biggest competitor.
After all, it competes game-to-game, with similar mob-style and poker games, and was said to be doing the same revenues as Zynga with much higher profitability. (As my column pointed out, Zynga’s revenues are more like double Playdom’s—and since I’ve heard the discrepancy is even greater.)
As you’d expect Zynga’s CEO Mark Pincus pooh-poohed Playdom as any sort of threat. But tellingly, he said the company he was worried about was UK-based Playfish. So, while I was across the pond, I decided to see what the fuss was about and sat down with Playfish’s founder and CEO Kristian Segerstrale. I came away convinced this was one of the hottest companies to watch in the UK. Here are five reasons why.
1. Not “The UK Zynga.” Playfish is very much running its own race in this market, and this may be a case where distance from the Valley is actually healthy. It doesn’t try to compete on specific games with Playdom, SGN, and Zynga. For instance, it doesn’t have a mob game, the most popular genre right now, and it doesn’t have a poker game, Zynga’s top earner. “That’s such short term thinking,” Segerstrale said. “Something is wrong if your route to success is copying competitors’ games.”
2. Platform Development Doesn’t Have to Mean Half-Ass Development. Playfish is not about building a game in a week or so and throwing it up on Facebook. Playfish spends six months to a year designing a game, and they’ve only produced seven of them. While everyone else talks up how quickly and cheaply you can build a game on social networks, Playfish still employs the same artistic discipline of a console game with a Wii-like look and feel. The plus with platforms like Facebook and the iPhone isn’t speed to market for Playfish, it’s easier distribution and greater social engagement.
3. Traction. The painstaking design process appears to be a hit. Every one of Playfish’s games has been a top ten hit on Facebook. Across all platforms, those seven games have yielded 100 million installs and 30 million monthly uniques, says Segerstrale. Playfish pays “practically nothing” for customer acquisition and makes money through virtual goods, ads and premium versions of games.
Playfish is profitable and hasn’t spent a dime of its recent $17 million funding round. That’s gotta be some top line given Playfish has 200 employees across several offices. In fact, TechCrunch Europe’s Mike Butcher speculated that Playfish could be the $1 million-dollar-a-month Facebook app maker, back in September 2008. It certainly puts the company in an enviable position given the paucity of venture funds in the UK.
4. Proximity to the Valley Insiders via Investors. While Playfish enjoys distance from the one-ups-man-ship or developer poaching of SGN, Playdom and Zynga, it’s connected into the Valley where it counts. One of its main investors is Accel—also one of the main backers of Facebook. Yes, that matters. (See Sequoia Capital-backed Google’s purchase of Sequoia Capital-backed YouTube.)
5. Segerstrale Knows Games. This is the fuzziest one, but also probably the most important. As a CEO, Segerstrale comes to this industry from a different point of view than Pincus. Pincus has said he was never really much of a gamer—Segerstrale on the other hand has loved games since he was three years old playing Pong with his older brother. He always got a visceral rush from playing, especially with other people. So he’s spent much of his career working towards two goals: Decoding what makes a game “fun” and deconstructing the concept of a “gamer” so games are just something everyone plays.
His first attempt was at mobile, thinking that with phones in every pocket, everyone would essentially have a game console. Indeed, the company he cofounded, Glu Mobile, went on to a successful IPO. But gaming was still a niche activity on phones. There were too many barriers set up by the telcos and it wasn’t as easy for people to find and download games. Facebook turned out to be a much greater platform for this kind of democratization of gaming because users could market games to one another.
Segerstrale’s macro theory is that we’re in the first shift of a move from physical games and goods to digital ones, and from games as a product to games as a service. It’s a theory that seems right-on to me. For one thing, we already saw it with the transition from enterprise software to software as a service. For another, sales of console games are down 20% year-over-year according to NPD, while comScore says social gaming is up 20% year-over-year. It’s nice to see a CEO who can articulate not only a product vision, but a clear industry vision.
All the positives above aside, I’m still not convinced that Segerstrale will succeed in his mission to democratize games. I still mainly use Facebook as a way to connect with friends, not to build virtual restaurants and I don’t necessarily see that changing. In fact, Facebook has so de-emphasized apps in its new all-feed iteration, I spent nearly an hour trying to find a listing of games, before someone finally told me it was on the throw-away bottom bar of the profile page. And by emphasizing the social stickiness of a game, there’s a chicken-and-egg risk that the games are boring for people who don’t have enough friends already playing.
But these are execution risks and every promising startup has them. When it comes to business model, financing, vision and product, Playfish is certainly a formidable competitor to Zynga. With hundreds of millions in real dollars already swarming around social gaming, this will be fun space to watch.
What is Playdom? you mean Playfish right?
You didn’t read the post?
Looks like PlayFish is doing a Blue Ocean Strategy, I’d be interested in trying to put their strategy into an ERRC (eliminate-reduce-raise-create) grid …
It’s not really a blue ocean strategy, but that doesn’t make it any less smart. These are Red Ocean games in the world of gaming. Playfish has a version of Brain Age, Worms, etc etc. focusing on how to “Facebook-it” instead of the having to worry about the core of the mechanics. None of the games are wholly original and blue ocean, but they are to FB which makes it an excellent tactical and strategic win for Playfish.
It’s just that instead of adapting games from other Facebook games, they are looking to the world of Nintendo for their inspiration. Well done.
It’s Zynga… not Zygna…
what ever happened to short concise postings ? ,
go to twitter
Very impressive, the commitment to developing a quality product is really refreshing in the social media space. As the article says most of the early profits on platforms like Facebook were made through spamming combined with first mover advantage.
Now that Facebook has tightened up the restrictions and anti-spam measures on their platform it seems that there is space for companies that place high value on careful and well researched product development like this.
Very nice recap of the online social network gaming space for those of us just reading about it on the periphery. Thanks Sarah.
this is nice click-funnel to her BW column, but here’s a translation:
orig:
When I wrote my BusinessWeek column on Zygna a while back, every venture capitalist in the Valley told me that Playdom was the company’s biggest competitor.
translated:
After my BusinessWeek column ran, all of the other competitors to Zynga started calling, wanting equal exposure. Like most UK Internet companies Playfish was the most desperate for legitimate press, so here we are.”
HTH
Excellent
good sarcasm
Real translation:
“I like hobnobbing with VCs, it makes me feel cool and important, and some of them are quite handsome. Nevermind that they’re a small clique, after flirting with all the tall guys it seemed like enough different opinions to write a story. I couldn’t be bothered talking to anyone else, especially ugly normal people. Editor, what editor?”
Playfish’s geo challenge does a better job teaching geography than most teachers which is why there games tend to rock.
so expertise and thoughtful production are not a dying art after all?
i m afraid they still are and playfish is the exception
Sarah, you’re way too influenced by the company’s management. If you really wanted to know what the potential of the company is, you should talk to its users, not its management.
My wife and I love the Playfish games. I sometimes find “Playfish, Inc” on my bank statements and figure out exactly how she does so well
Easy – just check the ratings and reviews in their facebook games. I ‘m doing facebook development myself and have utmost respect for the quality of their work. i wish i had the resources to do what they do.
Wow when I first seen the logo I thought it was plenty of fish the popular free dating website, as I was reading the article I thought that cant be right why would a dating site be a threat to this online business
It’s a good oportunity to say: ZYNGA TU MADRE MIKE ARRINGTON!
lol “Hiyo”… http://www.yout...h?v=Ji-cT58rgNc
playfish is waay waaaay ahead of zynga in terms of anything relating to quality. zynga is all about making a quick buck by sending out span and abusing users. playfish is a proper game company. in fact, their games could very well stand on their own outside of social networks (they are not very social).
Hit the nail on the head.
Apple have held up Zynga’s iPhone mafia wars update for over a month. Zynga definitely have the best Mafia game on FB and the iPhone but it looks like this delay by Apple could cost them since many players are abndoning ship. Without this update that is months overdue and now delayed by Apples approval process, most of the players cannot advance or have no purpose to play since they have reached all the goals or don’t want to since the update brings fixes which they need to move forward.
Spot on. I’m mystified how Zynga has been able to avoid backlash from their blatant, “copy everyone’s else ideas” mentality. Glad to see Playfish being rewarded for focusing on fresh, unique, and high-quality games.
great article…. would love to see more of this type of reporting
finally something not about twitter
Amen to Gerardo. it’s nice to have a change from something un-twitter. Playfish makes great games that everyone enjoys. Especially games that can be played at work
http://appuseful.com
Can you please link to the website, you’re writing about, thx
Nice to see you looking beyond Zynga and the USA for the online games market. I’ve met Kristian twice and seem him pitch once. He is clear and concise and certainly knows where he is going plus his company is particularly well funded for a European starttup. Playfish is going places in its space that much is certain, I did not know they were already profitable so congrats. Also I think that this is one industry where European companies better understanding of cultural differences, the fact we need to focus on quality and profits might give us an advantage. Actually the leaders in the space are in Europe and Asia not the USA.. There are some really strong players in Europe already other than playfish, companies like: GameForge, Dofus, eRepublik (my company), Moshi Monsters etc… that are doing extremely well. Its a very exciting and fun space to be in.
After reading the article, I felt the need to address the following passage, “And by emphasizing the social stickiness of a game, there’s a chicken-and-egg risk that the games are boring for people who don’t have enough friends already playing.”
I was not a gamer when I opened my Facebook account. Sick of the advertising on MySpace, I simply followed the crowd to Facebook where my college age relatives set up shop. We use it to share family pictures. Even my 82 year old mother has a Facebook account.
Having said that, my college student son asked the family to join a game so he could get a new level on a racing game he was playing. Nitrous Racing, is to me by far the best of the racing games as it involves not only racing, but different plots and stories requiring decisions and choices. While Zynga may have the hottest Mafia game in Mafia Wars, it is still a rote “keep pressing this button until you get to the next level” mentality (even in it’s new offering, “Farmville”).
My point is, whether it is Nitrous Racing (Clipwire Games), Mafia Wars (Zynga) or Restaurant City (the Playfish offering), all these games have a built-in ability to grow your own social network. Any one of these games comes with a link to a forum in which millions of other players who love and enjoy the game are looking for new friends to share their passion with.
As I said earlier, I knew nothing about gaming before coming to Facebook. Through playing these three games I have amassed thousands of friends. Some were kept just long enough to add to my mafia total or get a new ingredient, while over 1,000 have stayed to allow themselves to gain points, loot and experience by helping me with mafia jobs, creating a group of people driving the same car to do a racing job or being available at all times to trade ingredients as they find the need.
I have enjoyed being exposed to so many different new cultures (have no clue what several of my friend’s names are because I can’t read Cantonese) and meeting some wonderful people who, oddly enough, find these same three games as entertaining and relaxing as I do. Even my 82 year old mother has fallen in love with Restaurant City and looks forward to receiving her free ingredient every day. We do the quiz together over the phone every night at 8:00 p.m. Eastern.
Social networking games teach us we really are all one people. Browsing through the avatars of many of my new and temporary friends reveals the ideal that family is held in high regard and friends are what make the ride fun while we are here. Even if you never meet them face to face.
If Microsoft’s charter to put a computer in every home was the key to creating this amazing ability to communicate with one another across the globe in this century, social games have become the venue in which we realize we are one people. Whatever our governments throw at us to make us believe we are too different to get along is wiped away the minute we come to one another’s aid without thinking twice in the gaming world. This is the world I am proud to be a part of.
i have to say that Playfish customer service is awful. can never get a straight answer from them if you need to know something. i love playing their games but the staff need more training….! sort it out Playfish before you lose more and more players!
hello to me years Banat .. but I did not sell chips and if possible I could have my chips please thanks
Playfish is no threat to Zynga. Think of Zynga as Google and Playfish as Yahoo. Playfish has more downtown than the early days of Twitter.
Zynga should be worried about any game maker offering to myspace and facebook!! The support for the games is terrible and the games themselve do not work for days at a time, I play Street Racing and it is loaded with issue and Zynga blames facebook..yet the same issues are on MySpace..so is it the networks or the games?
The biggest issue is getting locked out of the game because it fails to load after the index and gets stuck in the tutorial to index and back loop with the css files. So they either have poor programmers or lack troubleshooting skills. The pages trying to load were almost 3 days old telling me it may even be with their servers not being in sync or a lack of them…advertisers beware and any game currently with the name Zynga will never get a dime from me until they get their house in order!!
Zynga? Zynga? All their games are boring and cheap looking, horrible graphically, horrible music, looks like done in 1 day.
Mafia wars and their vampire games are just copies of those games like Bitefight that are here since… 2001?
YoVille was NOTHING like the artwork shows, I felt ripped of, I tried to play it but the retard ADD looking of my charatcer and the horrible messy desing wannabe Gaia bother me. Same with Farmville.
Zynga should be worried about console quality freeware games in browser platforms. Welcome to new millennium, it’s time to left 1996.
I have been using the zynga apps for a while now and must say how disgusted i am with the lack of customer service. Most multi million companies build their reputation on after sales care. Considering the amount of problems zynga have with ALL their software it stuns me the attitude they have towards their benefactors. Complaint tickets are held for weeks on end, and then ‘resolved’ if they can’t fix the issues.
And as for the previous posting of the tutorial/index looping, they have hundreds of complaints from customers, despite claiming they know of the problem and are fixing it. It has now been this way for 5 weeks now. Being fixed? ther is more chance of elvis having a comeback concert.
They do not post ANY information on the game pages, so when you read the forums, it is filled with conjecture and hearsay.
Surely if a company is aware of major issues, they post updates for their paying customers?
I do understand (and i’m not a business person) if you treat your customers like dirt, they will move on t a more reputable supplier, but zynga seem to treat their cash-cow (sorry, ‘customers’) with nothing short of contempt.
In this day and age, with the world economy, nobody seems to have informed zynga that manners are still free, and do not cost a cent.
With all the funding given to PF, investigation should be put into why their games are under maintenance / have loading issues so often.
In converstion with a Restaurant City and Pet Society player I learnt that the games have loading and maintenance issues every single day but PF manages to “hide” this information form non-players / media.
I played Mafia Wars when I was new to Myspace. I got bored with it after a month or so. I had millions rolling in and nothing to spend it on. The game doesn’t even have graphics… how much time did they spend making that garbage?
I actually created a Facebook account just to play a Playfish game with my wife. Now I’m hooked on Facebook and I love all of Playfish’s games. Thankfully they put some work into them.