News from the last couple days suggest that Zynga is planning to file for an IPO, following LinkedIn’s successful IPO move earlier in the month, and news from Popcap that they plan to IPO as early as November. So the big headlines all over the internet are that the IPO market is heating up, that social game IPOs are heating up, and that there is or is not another tech bubble (depending on who you ask). Kabam also raised $85 million last week, so a lot of money and hype is heading into the social game market right now.
In other/related news, Zynga is releasing their first game in many months tomorrow, and it DOESN’T end in ‘ville! Empires & Allies will launch tomorrow according to every technology site on the planet, and it’s a pretty big departure from the “mindlessly clicking on things and coming back tomorrow to click again” genre that Zynga has cornered so far. Apparently the game is something of a Risk/Settlers of Catan hybrid, though I’d be surprised to see the deeper strategy elements of either of those games appear in E&A.
Social games are clearly on the rise, and Zynga’s eventual IPO is probably going to surpass LinkedIn’s valuation by a mile and rile further claims of a bubble, but really the social games market isn’t close to finished growing. Here’s why:
The iphone has really only had one blockbuster game (Angry Birds), and it wasn’t even social – Social/mobile is the new hotness in the consumer web world, but it hasn’t hit it’s stride yet. There hasn’t been a big game yet that successfully connected a gaming experience with a social experience for a mobile device. Somebody will eventually figure out how to connect those dynamics and make a compelling user experience, but so far nobody has. And even besides that, Angry Birds showed that there is a large market for a game based on a single-player campaign with none of those social elements, and there are bound to be more hits the size of Angry Birds as developers become more sophisticated.
Nobody has made a good Facebook game yet – That’s right, as somebody who actually likes PLAYING games, I can confidently say that compared to the other things in the world that we consider games (board games, console games, classic games like chess), development for the Facebook platform has been rather pathetic. Compulsion loops are great for making money, and there’s no questioning that plenty of companies have made a living by satisfying people’s demand for mindless entertainment. But in terms of experiences that we could use in an argument about games as art, nothing from the major social game developers has really come close. Does every developer need to be trying for art when they make a social game? Of course not. But at least a few will, and whoever succeeds will probably have a sizable hit on their hands and gain a cult following for it.
Tablets (iPads) will probably be the next big development platform, and demand for tablets is not yet satisfied – Tablets, with their huge screen and more powerful hardware, present developers with the chance to make completely different sorts of games than we currently see on iphone and Facebook, but few have focused on the platform yet. As tablets continue to populate our planet at an increasing rate, more developers will gravitate towards it as a medium and eventually an Angry Birds-sized hit designed specifically for the iPad will launch a developer into the stratosphere. But as of now the biggest iPad game is Angry Birds, which wasn’t even designed with the tablet in mind.
So despite some of the negative bubble buzz, I don’t think these companies are overvalued or a sign of the impending apocalypse/bubble. People point to Zynga’s valuation as a sign of the bubble, but Zynga is making crazy money, and if you believe any of the three notes above, they’ll probably be able to make even more in the coming years. That’s a far cry from the bubble companies of yore, which went public before seeing any revenue or even developing a business plan.
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