In 2009 "Farmville" was pretty much the only topic of discussion at GDC. That March pretty much cemented what many people were already saying - that free-to-play was a huge deal, and that new economic models were set to completely eclipse the established models. In 2010 less than 10% of all money being invested in the game space was directed toward new console development. Zynga just had a rather successful IPO, but some serious cracks are already showing in the free-to-play armor.
Who is your audience?
A huge part of Zynga's success (and Facebook's success) is the fact that traditional non-gamers (we call these people "casual" players) played in droves, and paid money to the developers. Social games like Farmville used a great hook to pull whole communities of players in and keep them engaged. Then came Frontierville, Cityville, Adventureland... each building on that same recipe for success.
Except that they didn't exactly.
Oh, sure the numbers looked good. Zynga told us that sales were no longer important - what was important was # of new players, and the retention %. But Zynga has already become a victim of their own runaway success. If you have 10,000,000 players on your social game, where do you find new audience? Do you localize and expand into markets in China and India? No - Zynga just made more 'ville games which appealed to roughly the same segment of the population as Farmville - and so although each new game boasted higher player numbers and faster retentions, the total number of players started to creep downwards.
As this process expands, and new games continue to be released, fragmentation happens at an accelerated rate. It's the same trend we've seen in the MMO bubble - some early success, some early adopters share in that success, and then suddenly the game is reduced to maybe 1 major game, and some fringe players.
So why are we falling for this again? Isn't this just standard economic theory about market saturation? Well no - the problem here is the internet itself. The internet dramatically increases a developer's connection to customers, but it also speeds up market saturation, and I believe that we were unprepared for that.
Iteration, Feedback, and Savvy
A quicker development cycle and faster iteration times allows developers to tune their products like never before - but it also means that customers can exhaust those products of value at an accelerated rate. Part of the reason early console players would spend hundreds of hours on the same game was because of the fact that getting another game - any other game - was hard. But now, I have hundreds of unplayed games at my fingertips all day, every day. I'm not captive at all, which means I can afford to be capricious in my behaviors.
This doesn't happen with paid goods, or limited duration services. It's the combination of a focus on player retention and the market saturation which is creating an impossible challenge for developers trying to cash in on the Zynga-bonanza. That revenue stream is tapped out. Yes, lots of people will still be making millions on Facebook, but it won't be like Zynga - because that market no longer exists.