Tag Archives: social gaming

Why Blanket Digital Licenses for Publishing is Necessary: a Developer’s Perspective

Some interesting perspectives from Tuhin Roy of MXP4:

Social games and apps on Facebook are the most recent miracle of the Internet, coming from nowhere three years ago to generate a projected $4 billion in revenue this year. Companies such as Zynga, Playfish and Crowdstar have grown with the phenomenon and become experts in producing massively popular and addictive games.  Titles like Cityville, Mafiawars, Pet Society and Restaurant City have all become multi-million dollar business.

Music has been totally absent as a category.

Working with the team at Paris-based social music games developer MXP4 last year, we started to research why music-which seems such a perfect fit for the social space-had not taken part in the social games phenomenon. The answer that quickly became clear was that social game developers had looked into what is involved in acquiring music licenses and had run screaming. With lots of fertile territory left unworked, it didn’t make sense for these guys to dive into the thicket of rights issues involved, or to work through the complex license negotiations that would be involved in an entirely new model for the music industry.

With our backgrounds in music, we were less intimidated although we understood that huge complexities would be involved. On top of all the other issues faced by digital music services like iTunes or Spotify, we understood that social music games would be harder to license because they implicate synchronization rights. This meant that in large part we would not benefit from the work the music industry has done over the last ten years to clarify and simplify licensing for straight forward digital download and streaming services. We decided to dive in anyway.

We faced two major challenges. First, we would be negotiating deals that involved payments made in virtual currencies for virtual goods that included the right to access music. Beyond the obvious questions of how fairly to split revenue, the social game setting required us to work with labels and publishers to define entirely new methods of calculating and reporting royalties.

Second, and more problematic, is the fact that unlike digital mechanical reproduction rights or non-interactive streaming, there are no statutory or bulk licensing mechanisms for synchronization rights. For historical reasons, artists and writers almost universally have the right to approve on a case-by-case basis sync licenses that their labels and publishers want to issue.

As a result, once the hard work of agreeing on a deal with a label group or publisher is done, the fun of clearing songs on a track-by-track basis begins.

Just to identify what might be “clearable” and thus which tracks to request, has required us to build a proprietary multi-million line database of publishing rights using multiple sources.  Once we have identified a track that we think we may be able to clear through our deals, we work with the clearance teams at labels and publishers to put requests into the relevant artists and writers. Oftentimes, we need to reach out to the artists and writers representatives directly to get them up to speed on what we are doing.

And all of that is multiplied by the number of writers, publishers, artists and labels on a particular track-which these days can be a lot given the popularity of collaborations and sample licenses. One particular David Guetta track, for example, has 14 publishers.

So the challenges are clearly huge, although we are working hard to develop internal systems and procedures with our label and publisher partners to “scale up” the effort. The publishing industry is also starting to look at more comprehensive solutions. The NMPA’s recent call for a one-stop shop for synchronization and other rights is recognition that the music industry is losing out on potentially significant opportunities to make money in the world of gaming and beyond.

Unfortunately, given the historical requirement that artists and writers approve sync licenses individually it’s hard to see how such a one-stop shop can be set up quickly. Essentially, the publishing industry would have to replicate the process that we have been going through with MXP4. They would need to get buy-in from a large group of publishers and then would likely have to get individual writers to opt-in to the mechanism. It’s a huge task, but we would love to see it succeed.

In the meantime, we will continue to work through the process with our partners as we look to put the music business into social gaming.

(Tuhin Roy is Chief Strategy Officer of MXP4, the developer of Bopler Games, a Facebook application that enables users to play multiple music games across a large catalog of music. Tuhin practiced corporate and intellectual property law at Perkins Coie LLP in Menlo Park, California, founded and ran the Digital Rights Agency, co-founded Echo Networks and served on the board of directors of the Digital Media Association.  Tuhin also advises a number of digital media start-ups and is on the investment advisory board of Pink, an early stage investment fund.)

Source: http://www.billboard.biz/bbbiz/industry/publishing/tuhin-roy-of-mxp4-on-blanket-digital-music-1005256822.story

CrowdStar Secures $23 Million Series A Funding From Intel, Time Warner, The9

Social game developer CrowdStar nets a $23 million investment this week in a series A round led by Intel and Time Warner with participation from Chinese game publisher The9 and from NVInvestments.

Peter Relan, CEO of CrowdStar, tells us that the funding will go primarily toward expanding CrowdStar’s reach beyond Facebook onto other platforms and into other regions through hiring and development. The participation from The9, he says, confirms that there’s a large potential audience in China that the developer could tap if it had the resources to develop its games for non-Facebook platforms and localize them for China, Japan, Korea and other Asian countries.

Key to success in Asia is the mobile platform, on which CrowdStar has only recently begun to release its games, which is where the support from Intel comes in. Intel has also invested in OpenFeint, a mobile-focused sister project to CrowdStar formed out of the YouWeb incubator.

“Our focus on mobile is most important right now,” Relan says. “We believe social gaming is going beyond Facebook and mobile [eventually]. In a year, we’ll look at investing in [expanding onto] smart TVs.”

Relan says that CrowdStar aims to reach a potential audience of 2 billion alone on smartphones and “highly capable” feature phones. In Asia, Relans says there maybe 1 billion gamers that “want It Girl.” In order to get its games in front of those audiences as quickly as possible, CrowdStar hopes to double its staff this year to around 200 employees by investing about 80% of this series A funding into game development talent to adapt existing games and create new one. The rest will go toward globalization and localization of existing CrowdStar games.

This round of funding represents the first time CrowdStar has ever raised funding from investors for its projects. Previously, the developer was funded primarily from its own profits, but Relan says that the social games market is in a unique place that CrowdStar needs to take advantage of.

“Every major industry has three independent leaders,” Relan explains. “Over several years, three, maybe four wind up dominating the space. Playdom cashed out early. It’s really just Zynga and maybe one other left. And CrowdStar [has the chance] to remain one of the few independent social game developers with long term [potential].”

Beyond Asia and platform expansion, CrowdStar will get support from investors Time Warner in the form of branded intellectual property. CrowdStar hasn’t announced any new games as of yet, but Relan recently told us we could expect to see a new title this quarter.

CrowdStar has seen some gradual losses in monthly and daily active users across all its games in the last three months, according to our traffic tracking service, AppData. down about 10 million in MAU to today’s levels of 29.1 million and down 2 million in DAU to today’s 2.4 million figure. Its largest game, It Girl, accounts for 8 million of its total MAU and almost 800,000 of its DAU.

Source: http://www.insidesocialgames.com/2011/05/23/crowdstar-secures-23-million-series-a-funding-from-intel-time-warner-the9/

Three Ways Google Could Push Adoption of Android Market’s In-App Billing

Charles Hudson is a co-author on our Inside Virtual Goods series of industry reports, a co-founder of Android game developer Bionic Panda Games and a partner at SoftTech VC. Bionic Panda recently began using Google in-app billing, which finally came out to consumers at the end of March after several months of anticipation from the Android developer community. Hudson also used to work at Google on new business development.

We recently decided to launch Google In-App Billing in our first game, Aqua Pets. As a matter of background, we had been using PayPal to monetize our original game and were beginning to get user requests for support for credit cards. About one week ago, we released Google In-App Billing for Aqua Pets and decided to see how it would perform.

Our one major reservation with moving forward with Google in-app billing was the relationship between the 30 percent commission and what we anticipated the payment-enabled customer audience to be. While we don’t develop for the iOS platform, there are two compelling reasons why we think the 30 percent that Apple takes makes sense:

  • Apple has over 200 million credit cards on file already, so they’re bringing a large payment-enabled audience to application developers and they have every right to charge for access to that audience.
  • Apple kept alternative options off the platform from the very early days, which meant that just about everyone had to live with the same constraints around what they could and could not used to monetize. This is markedly different from other platforms, such as Facebook

After a week of using Google In-App Billing, we decided to dive into some of the data for our first week of paying users. Google does pass a field called “Account Age” that allows you to determine how long a given user who successfully transacts has had a payment-enabled Google Checkout account. We ran the data on our first batch of paying customers to determine the distribution of account age and charted the data below:

This is an admittedly small sample size of transactions and Google In-App Billing has only been publicly available for less than a month. However, what was of particular interest to us was the dark blue slice — nearly 25 percent of the users who transacted have had Google Checkout payment capabilities for less than a week and a meaningful number of them had account ages of 0 or 1, which means they essentially enrolled in Checkout to purchase in our application. Another 21 percent had only had payment capabilities in Checkout for less than a month, still relatively new to the world of spending money on applications through Google.

We really do want to see Google In-App Billing succeed and succeed quickly — it would be good for anyone building paid or free applications on the Android platform. If I were trying to drive broad adoption, there are three things Google could do and they are not mutually exclusive:

1. Compensate application developers who are enrolling net new Google Checkout customers: One way in which Google could make In-App Billing more attractive to developers would be to pay developers who enroll net-new Google Checkout customers. A small bounty of $5 to 10 per activated account would be interesting for most developers and would give the community a stronger incentive to push it more aggressively to users. A bounty of that size would be inline with what other payment options, namely PayPal, have paid historically to activate new users. It doesn’t seem unreasonable for Google to consider compensating developers who are helping to acquire customers.

2. Make Google In-App Billing mandatory for all application developers and enforce it: One other way to drive more broad adoption of In-App Billing is to strictly enforce usage of Google’s In-App Billing as a required and perhaps exclusive way to pay for in-app purchases across the network of applications in the Google Android Market. I do think that having end-users consistently see the Google Checkout experience across applications will make it feel more familiar and help hopefully grow the base of payment-enabled users. Having a standardized, simple, consistent way to checkout and buy things in apps that feels familiar to all users would be a net benefit for the platform.

3. Waive all of the fees for the rest of the year: One objection that developers have to rolling out Google In-App Billing is the 30 percent commission that Google is charging. There’s a simple solution to that — just remove it for the remainder of 2011. Yes, it will cost Google money. But zero-cost transaction processing is attractive to every developer out there and would likely spur some of the folks sitting on the fence to integrate in-app billing into their apps and encourage users to use it. They can reinstate fees in 2012 with a larger base of installed users and a happier set of developers who’ve seen the benefits of using in-app billing in their own applications.

At the end of the day, it’s Google’s platform and they’re free to do what they choose. But enabling platform-level in-app payments should be a priority and everyone will benefit when the solution is more widely used.

Source: http://www.insidemobileapps.com/

Four Reasons Index Ventures Invested In Grey Area

Earlier this week Grey Area announced a whopping 1.9 million euro series A round from Index Ventures, London Venture Partners and Initial Capital. This is one of the largest single rounds into the Finnish gaming companies in the recent years for sure. What makes this all the better for the whole country and Northern Europe for that matter, is that the financing came from overseas from globally respected investors. Ben Holmes from Index Ventures outlined four reasons why they invested in Grey Area. I think this is a good read for all entrepreneurs to keep in mind if they are looking for venture capital.

The four reasons Ben outlined in the Index Ventures blog post are also shown below:

* Exploding market – The iPhone and Android ecosystems have transformed and democratised mobile gaming. I have written in the past about how fragmentation and the operator channel made the whole mobile app business a nightmare. This is no longer the case, entrepreneurs can access vast audiences by being creative around marketing rather than using the traditional brute force approaches.

* The right monetization model – We have seen with existing investments in Stardoll, Moshi Monsters and Playfish as well as other companies such as Gameforge and Zygna that free-to-play with in-game purchase is probably the most lucrative business model in gaming currently. In-game purchases were rolled out by Apple last year and now a few of the “Top Grossing” titles in the iPhone appstore charts are free-to-play games. I would predict that over the next year that the majority of mobile gaming revenues will shift to free-to-play games.

* Positive early traction. One of the challenges with finding investments in this sector is that there are literally hundreds / thousands of developers writing for iPhone and Android. Those with substantial traction and monetisation tend to be valued stratospherically. Finding something which was early but was already showing its potential was what we were looking for. Shadow Cities fitted this criteria precisely. The early beta data from Finland showed very promising metrics around both engagement and monetisation. The app fairly quickly became the Top Grossing game in Finland soon after launch. Now just the rest of the world to conquer …

* Great team – Just four people when we first met, but already achieved a lot in a short timeframe and on a shoestring budget. If you want to see how effective entrepreneurs will be once they have money, see how much they can achieve without financing – that is always the best pointer.

From: http://www.arcticstartup.com/2011/02/25/four-reasons-index-ventures-invested-in-grey-area

Can a start-up raise too much money?

Some wise words from a VC guys and a games industry guy on money, money, money….read on…

“Together with Nic Brisbourne of The Equity Kicker / DFJ Esprit, I am writing a series of 50 questions you should ask when raising venture capital. We expect the series to run for a year, after which we will collate the answers into a book. We view this as a collaboration, so please comment to help make this series even more useful.

Can there really be such a thing as a startup raising too much money?

Of course there can. The history of investment is littered with example of companies that raised too much capital, were feted by the press, government and investors and then imploded before their products had made a dent on the market.

From the games industry, the most recent example is RealTime Worlds, which raised $104 million and closed a few weeks after it launched its magnum opus, APB. During the dot com boom, there were many examples, but perhaps the most egregious was Boo.com, which raised $135 million, spent it all within 18 months and went bust without having really launched a product at all.
Why is having too much money bad?

Having too much money is bad because it stops a startup from fulfilling its primary function: to iterate its way to product/market fit.

In a previous post, I explained what product/market fit means, and why it is so important to a startup. I hope it will quickly become apparent why too much money is detrimental to the process.

Finding product/market fit is about iterating. It is about changing the product, the business model or even, in its most radical form, the entire target market, in response to feedback from customers.

I’m not for a moment suggesting that a startup CEO needs to respond to every crazy idea of every customer. He or she needs to use face-to-face conversations with customers, detailed analytics, feedback from the sales and marketing teams and every tool in the workshop to understand where the perfect confluence of product, market and team occurs.

He or she then needs to reshape the company to deliver on that confluence. That can be a very scary process.

ngMoco CEO Neil Young pivoted away from paid-for games on the AppStore because he believed that he could not achieve meaningful scale as a games business given the rapid downward trend in pricepoints. He abandoned a business model that was currently profitable for his company based on his belief (and copious evidence) that transitioning to a business model that was free with microtransactions satisfied the market need much better – and would be much more profitable. Eighteen months later, he sold ngMoco for $400 million to DeNA of Japan.

The concept of pivoting may be overused in 2011 (see this New Yorker cartoon), but it is a useful one. It is a phrase that allows startup entrepreneurs to say not “we failed” but “we tried, and learned, and are trying again.”
Change is scary, and money makes it unnecessary

Companies with lots of money don’t need to pivot. They can tell themselves that the problem is with the sales team, or with customers not understanding the product, or with usability issues.

They tinker under the hood instead of understanding the market. They spend money on a sales force to pitch, instead of forcing the CEO into the marketplace to hear from his prospects why they are not buying. They execute, execute, execute.

Against a business model that does not work.

Raising money is a great thing. Having lots of it is a wonderful comfort. But for a startup trying to find its place in the market, it can be disastrous.”

Zynga Preps The Launch Of RewardVille: Earn Rewards For Playing Games

It’s interesting to see how these guys are looking at every possible angle to get you to spend…and also there plans for taking this stuff onto mobile.

Zynga is preparing to launch RewardVille. No, it’s not another ‘Ville’ game, but a custom rewards program apparently designed to let users earn rewards for playing Zynga games – which you can then use earn virtual currency, which you then use for purchasing in-game items.

Ok, let’s take a step back.

Earlier this month, domain industry vet and blogger Elliot J. Silver wondered whether it was Zynga who acquired the domain name RewardVille.com from its previous owner, for $4,500.

Fusible.com then pretty much confirmed Zynga made the purchase, by uncovering that the social gaming juggernaut had registered a European trademark for ‘Rewardville’ last month.

Fast forward to today, and Rewardville.com now resolves to a website that announces the rewards program in beta – the same website appears when you visit rewards.zynga.com, by the way. There’s a login screen, but you need to have a Zynga account (which, as far as I know, is usually created by connecting to your Facebook account) to get in.

There’s more.

If you look at the menu at the bottom, you’ll see a link to a now deleted FAQ item about RewardVille, which is set to launch in the next few weeks, as you can tell from the screenshot above.

I did some digging, though, and found a blogger that cleverly took screenshots of several pages Zynga put up about RewardVille, which all return errors at this point however.

The screenshot of the overview page is the most revealing:

It reads:

“RewardVille is a new rewards program which lets players earn rewards for Zynga games! Each time you play a participating Zynga game, you’ll earn Zynga Points (zPoints) and increase your Zynga Level (zLevel). At every zLevel, you’ll earn Zynga Coins (zCoins) to use on free, exclusive in-game items in RewardVille!”

I sincerely zHope that was as zConfusing for zYou as it was for zMe.

Participating games include FarmVille, FrontierVille, Mafia Wars, Treasure Isle and Zynga Poker (and not hit game CityVille), although Zynga says they’ll activate zPoints on other games in the future.

On another – now removed – page, Zynga specified that users automatically earn zPoints for playing Zynga games, and will need to register for a Zynga account in order to redeem zCoins. Users will be eligible to earn a maximum of 80 points per game per day, with a maximum of 300 points across the entire Zynga network each day.

We’ve reached out to Zynga for more information, but didn’t hear back immediately.

Zynga image
Website: zynga.com
Location: San Francisco, California, United States
Founded: July, 2007
Funding: $519M

Zynga was founded in July 2007 by Mark Pincus and is named for his late American Bulldog, Zinga. Loyal and spirited, Zinga’s name is a nod to a legendary African warrior queen. The early supporting founding team included Eric Schiermeyer, Michael… Learn More

DICE 2010 – Design Outside The Box

A great video for those into online entertainment courtesy of Jesse Schell…but also what is next in terms of social gaming