The decline of Zynga and Facebook?

Interesting things happening on the interactive social media front. IPO darlings Facebook and Zynga have seen their stock prices falling quite a bit lately. There's more analysis than information, but one thread stuck out at me: The idea that the attention garnered by Zynga and Facebook is not sustainable. For example, Leigh Alexander at Gamasutra carefully unpacks the dyanamics of attention when the portfolio consists of shiny empty games. It works for awhile, but eventually the users become bored at what is after all a very shallow experience. Over at CNN Money, Ben Rooney reports one analyst's conjecture that Facebook is sinking now because parents are using it. If there's any law of modern families, it is, Into the Tents of the Elders go no Teens. Advertisers are not at all desperate to get the rheumy, bloodshot eyeballs of the aged, which are still fixed on TV ("Figure skating is SO beautiful!") but they've lost the young people and can't find them. They thought the kids were on Facebok, but now, eh, where'd they go? In both cases the markets seem to be worried that there isn't nearly as much to this phenomenon as they thought.

OK, so what is the phenomenon all about really?

Some analysts say the OTHER analysts just don't get Facebook and Zynga. There's something to this. Everyone who loves games just shook their head as they heard the coins dropping into Zynga's coffers - how can such a thing be? I'm sure the great chefs of the 1950s did the same as McDonald's took off. How can people pay money for such crap? And Facebook - what's so great about Facebook? Why is it better than the mall + texting? "It just is. It's 2010, get hip baby" isn't a sufficient answer.

I like the McDonald's example. The food stinks, but the company provides a useful service nonetheless. Our world of mobile people needs reliable fast food that won't kill us (on the spot anyway). When you look honestly and coldly at the human person as situated in our culture today, you can see that a McDonald's-like service would be very useful indeed. It trades off quality for sodium, speed, and suffusion. There are genuine human fundamentals to the demand for Micky D's.

Are there genuine human fundamentals behind the demand for Zynga products? Yes and no. Yes: There are some people with psychologies such that they want or need mindless, endless, repetitive tasks  rewarded on a Skinner Box model. But there are far more who will enter something that looks Skinner-Boxish on the assumption that there will be a major payoff at the end. Zynga does not provide that payoff. The journey is the destination, and the journey, well, it stinks after awhile. WHen those people discover that this is all there is, and when they have tapped out on that experience, they will no longer be drawn into Zynga games or anything like them.

See the role of experience here? After a person eats at McDonald's many times, they begin to understand: No, there is no good food here. But a) I know what I'm getting. b) It's right here. c) It's fast. d) It won't kill me (right now) e) The fries are tasty. And those things never change. Given a lengthy experience of McDonald's, people still like it.

What about Zynga games? After a lengthy experience, people get the feeling of been there, done that. The demand for a Zynga experience no longer recurs. After the novelty wears off, there's nothing there. We know that this is true about specific games, but it also appears to be true about entire classes of games. The new user plays for 5 minutes and says "Ah - this is a collection/management game like Farmville. I know exactly where this is going. And that sort of experience is fun a few times but not more than 10 or 12." So the user turns away.

Note that interest in other classes of games does not diminish after a few experiences. Everyone know where and FPS is going after the first 30 seconds. Actually they know it before the download. Still fun, though.

I believe it goes back to the absence of payoff. It's an evolutionary psych thing. We are built to respond to a period of grinding and small rewards with the conjecture that perhaps, with a little more grinding, there may be something huge here. The hairless monkey foraging for berries finds 1, 2, 3, 2, 3 - hmm, maybe there's bushes here with 40 or 50 berries! Let's keep looking! If eventually the hairless monkey concludes that, no, there's only paltry rewards here, he moves on.

Players have done their grinding in Zynga type games and can now forecast the entire user experience from beginning to end. With that knowledge, they reject the genre because, as we all knew, there's nothing very satisfying in it.

I think something similar has happened in MMORPGs. When WoW came out, millions began the grind with the unconscious hunch that eventually there would be some great feeling at the end. Yet we know that that game and all others like it are not really going to give us anything but grind. We must enjoy the moments along the road. And, it turns out, the moments along the road in a WoW-style MMORPG are not all that jazzy. Or, more accurately, the experience of the first 10 levels is the experience of the whole game. We know that now, and did not in 2004. Recently I launched a character in Tera. I quit at the second quest hub. I knew exactly what the game was going to be. There would be an endless grind, with no huge payoff at the end (with no end payoff at all actually), never more berries, rather, fewer and fewer, harder and harder to find. And the world itself was not an interesting one to explore.

The early MMOGs had not yet figured out how to string people along with quite so much accuracy as WoW did. Yet they had interesting worlds. WoW itself had a very interesting world, at least in the first 20 levels or so. This made the grinding immediately interesting.

I guess the rule might be "immediate fundamental service." That's what McDonald's provides. Yes, you can trick people into a delayed-payoff scheme, but that model is not sustainable. The only product that can survive gives people a payoff worth the money, that satisfies a fundamental psychological need right now.

I'm playing Secret World at the moment, and while the mechanics are beginning to wear on me, the world itself draws me into new quests.

What does this mean for Facebook? Does it provide a fundamental, immediate service? For young people, it once did. Young people always need a place to get away from the elders. But now Facebook is a public square for everybody. As such, what is its fundamental, immediate service? It helps people quickly and easily share a version of themselves and their lives. It is broad sharing, however, very broad. I know you can filter, but, honestly, intimate conversation is just not facilitated by the service. This is not sitting down at the kitchen table; it's not hanging out with a few friends at the tavern. When you speak on FB, you are standing in a stadium filled with every person you ahve ever known, or who has ever known of you. Outside the stadium stand all the people who know the people who know you, and on and on.

Who needs this service? Celebrities (by definition, yuk). Also megalomaniacs, certainly. The Yellow Pages aspects of the service are great. (Hope wikipedia has an entry about Yellow Pages for the young'uns.) What about average people? It could be useful for the average person, depending on how the self-versions are crafted. If you are careful from birth about what you put on FB, it could be a good place to get a job. But no one is approaching it that way, and hence, FB is rapidly becoming more commonly a source of embarassment than anything else. For intense FBers, the more common experience is that weird people from the past suddenly reappear and follow them, or, people whose respect they crave discover odd things about their past.

Going out on a limb here: Facebook will crash. In its place will be two new services. One will be a business-only apps service that you can join. Yellow pages. Another will be a personal website service with communication features. They will both run exactly like FB but won't have FB's taint. People will approach social media differently now that they know where this rabbit hole leads.

Our social technologies change with experience.


Comments on The decline of Zynga and Facebook?:

Stabs says:

In my opinion it's about sex. People liked games like Farmville because they weren't full on playing them. They were actually flirting and gossiping on Facebook. However sitting watching a chat channel is pretty boring so they alt tabbed to some time waster while waiting for a new message.

http://stabbedup.blogspot.co.uk/2012/07/the-unlamented-decline-of-zynga.html

Posted Jul 31, 2012 5:23:19 AM | link

Isaac Knowles says:

WoW had enough meat to keep me going for a long time, but once my friends and family parted ways with Azeroth, my tenure was doomed. Still, there was a lot of inertia there and that kept me on for quite some time.

And maybe that's what Zynga has been riding: A wave of inertia. But unlike WoW content updates, new XXXXXVilles offer nothing in the way of new game mechanics, nor really any narrative. There's nothing to stir up and sustain new excitement, to incentivize people to rebuild frayed social networks. Unless this promise of new and better mobile/web-based gaming comes to fruition, I can't see Zynga sticking around. On the other hand, WoW's going to have a tenth anniversary, no problem.

Posted Aug 1, 2012 10:39:55 AM | link

Richard Bartle says:

The point about the pointlessness of FB games is one I made at the height of the hype last year (http://www.mud.co.uk/richard/Barcelona.pdf). I took a lot of flak for it, but it was pretty obvious even back then that whatever the players of Farmville would be playing 5 years down the line, it was unlikely to be Farmville or anything like it.

>the experience of the first 10 levels is the experience of the whole game. We know that now, and did not in 2004.

I knew that in 2004, and said so many times. No-one believed me, and again I took a lot of flak over it - so much so that I played WoW all the way through three times in order to be able to say that yes, I did know what it was going to be like and no, my opinion hadn't changed. Only recently have enough bloggers started saying the same thing that I was able (finally) to close my WoW account and not have to buy the Kung Fu Panda expansion.

Hopefully, we'll start getting some different MMOs as a result of this. At least The Secret World has done away with levels but kept all the things that you used to get when you levelled up, which is a nice break from tradition.

Richard

Posted Aug 2, 2012 4:13:48 AM | link

Isaac Knowles says:

Trying to close the italics... Did it work?

Posted Aug 2, 2012 11:04:15 AM | link

Edward Castronova says:

Yep!

Richard: Your excellence as a person who knows these objects are confirmed once again. I do indeed think back to the first days of Terra Nova when we new people would say something that seemed quite profound and you (and a few others) would say "That was all discussed in 1993." And it was.

Yesterday, a student showed me a book titled something like "Guide to Games and Simulations," a compilation of games for serious purposes like teaching, therapy, science, and the like. The date? 1980. 1980!!!!

Posted Aug 2, 2012 11:21:07 AM | link

Richard Bartle says:

I used to be a member of an organisation called SAGSET that was abotu serious games. They weren't computer games, though, they were regular board and pencil-and-paper games. I eventually gave up on it because although they were excited by the educational power of games, they didn't actually know much about game design.

Plus ca change...

Posted Aug 3, 2012 7:36:25 AM | link

Rits says:

Kixeye video says it all

Is the current movement of facebook and zynga really fully undesirable?

Zynga's">http://www.insidesocialgames.com/2012/07/25/zynga-doesnt-need-to-be-saved/">Zynga's business is growing in monetary terms. We can't ask Zynga to choose quality of game for dignity's sake over the low-cost-high-return shiny clones. It's against capitalism, and in fact if you're a business owner you know you can't afford a quality game that only attract on serious gamers to sustain the business. It is not a sustainable business, that's why the decline of top tier MMO in terms of quantity and quality, that's also why the rise of free to play MMOs with cute graphics and a vampire cash shop. I should state what I mean by top tier quality games. I mean Aion, Rift, Warhammer Online, Blade and Soul, Lineage 3, Final Fantasy 14, etc. They take atleast 5 years to develop and get version 1.0 out, with a much bigger team than Zynga has to be fed. Top with the problem that most (not all) decision makers in the business are not gamers themselves, they just can't afford to risk their investment into a big, quality MMO. They are aiming their product's life span to hit the hype in around 3 months after release. On the third month they should have covered all the cost and expenditure, anything beyond that is their profit, aka its okay to lose customers. That is how the business believes that they have no other option.

I think facebook app devs and zynga are aware of the decline in game quality. So its not an alarm that is needed to change the world. What really is needed is example to show the CEOs, so the CEOs can show the sponsors and share holders, of a successful game that is low-cost, high-quality, and profitable, perhaps also sustainable.

On the bright side, the gamer population is growing. Maybe the bigger society would understand us internet natives a bit more. Maybe less prejudice, more co-op. Our only enemy is the corruptive, corrosive culture of capitalism at large.

Posted Aug 3, 2012 5:15:15 PM | link

Mike Sellers says:

@Rits: The Kixeye video points out the fierce competition in this space. Other than that it says more about Kixeye as a company than anything else I think (disclaimer: I work for Kabam, one of the companies needled in the video -- but yes, we thought it was hilarious too, if not always intentionally).

Overall, I think we're seeing a game-generational shift here. I don't believe Facebook is going away, but its business is clearly changing and it does appear to have over-sold itself on its IPO. Same with Zynga.

But keep in mind that due in large part to Facebook, more than two orders of magnitude more people are playing games today than were doing so a few years ago. We used to be breathless when a few hundred thousand people played an MMO. Then WoW broke the mold when it climbed over a million, then ten million players. And yet those numbers are frankly paltry when compared to the number of people playing even first-generation FB/social games (and yes, I'm setting aside "paying" and talking about "playing" -- mindshare, not rev-share for the moment). There are easily over 100 million people playing games now, out of the nearly billion people on Facebook.

Ted said, "But now Facebook is a public square for everybody. As such, what is its fundamental, immediate service? It helps people quickly and easily share a version of themselves and their lives."

Yes, I think this is it: it allows you to see the life status and changes (baby/vacation/camping pictures, etc.) of someone you know, someone whom you don't want to lose track of but who maybe isn't a close friend, and to show your support even if only through the nearly effortless "Like" button. In other words, it lets you maintain weak ties (important in networks) with very little effort expended, and that governed by you, not them (i.e., not spending an evening watching a slideshow of their vacation as in generations past).

Ted continued: " It is broad sharing, however, very broad. I know you can filter, but, honestly, intimate conversation is just not facilitated by the service. This is not sitting down at the kitchen table; it's not hanging out with a few friends at the tavern. When you speak on FB, you are standing in a stadium filled with every person you ahve ever known, or who has ever known of you."

No, I don't believe that's correct; not any longer. More and more social communication on FB is filtered I believe, as people have become more savvy about its privacy filters. And anyway, this is an old argument that has gained little traction in actual use. If anything people communicate more this way now, not less.

"FB is rapidly becoming more commonly a source of embarassment than anything else."

Is there data to support this view? I don't believe there is. For many middle/late-adopters, FB is a great way to keep up with friends and family, even if the hipsters are becoming tired of it (which I'm not sure they are). I think you're way too early in saying Facebook will crash, particularly if social-fatigue is any sort of cause.

OTOH, Facebook's core business may be on more shaky ground. Advertising has once again become a very competitive environment. More and more companies are finding it difficult to get their message across in a cost-effective manner, and so are seeking other avenues. Game companies in particular have not been happy with Facebook's 30% tax on top of their advertising costs, and some have begun to drift away. This is compounded by the rise of game-availability on mobile and tablet devices, such that people can now get the free experience there that they used to have to go to Facebook to find.

Despite the rise of social channels like Twitter, Tumblr, Pinterest, etc., I don't believe we'll see Facebook going away any time soon. But I do think we're on the cusp of a generational change in how games (going back to Zynga et al) are made and delivered.

I've been saying this for over a year now and it continues to be true: I got into games in the mid-90s because it moves faster than any other part of the software world. The pace in this part of the industry has continued to accelerate in many ways (5-year MMO dev cycles aside), and the pace of change in online/social/casual/mobile games is nothing like I have ever seen. I wouldn't say we're approaching some sort of Singularity (the upward slope in the curve always looks like it approaches vertical from just below it; the shape of the curve itself is a matter of scale), but it does become more and more difficult to predict how things will change next.

Posted Aug 6, 2012 11:50:52 AM | link

Rits says:

>Mike

I've played one of Kabam's game - Dragons of Atlantis. I enjoyed the game. I actually got to the 4th elemental dragon. I think that game really stands out among all the other FB games I've come across because it was closer to a real mmo than a social/casual app game.

But that's why your post puzzles me a bit. If DoA stands for Kabam's character, how does the growth in demographic variety benefits Kabam? It doesn't sound like Kabam's targeted market.

I agree with you on the growth of FB gaming population, but I question the definition of "gaming" as the population grows. Yes, there are more people in the market, but as Zynga and a few others continue to mass produce the shinny yet empty games, we are seeing shorter life span of games, as in people quitting way sooner than they used to. And even if they do continue, how many are really enjoying, but not just zombie-grinding like its a daily habit? How many gain more social experience in both quantity and quality, or its just a simple click-to-gift-daily routine behaviour? Does playing the game really bring your friends closer? Perhaps to some people, the action of installing the newest Ville game already serves the function of keeping-up-with-the-trend. And what about releasing new outfits in cash shop; doesn't it only draw the line between pay-to-play and free-to-play? does that bring people closer? The reason why I'm raising these question is because I read a report from Vostu about casual games VS social games:

Vostu’s insights on retention patterns in social vs. casual games

To me, if there's any sense of degradation in FB, I think its more about the quality of gaming experience that the game drives people to. Adding to that, its the majority players, especially new generation of gamers, that are convincing Zynga and the rest that shiny empty game is the way to go. Online game veterans would see the problem, the new generations would take a longer time to realize.

Does it become more and more difficult to predict how things will change? I'd say Kabam might surprise me because of what I experienced in DoA, but the bigger wave I'd pessimistically say "yes, its predictable for the next 12 months"... I doubt even the recent EA VS Zynga incident would trigger any change.

Posted Aug 7, 2012 5:18:09 AM | link

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Posted Aug 22, 2012 6:01:21 AM | link