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Social Gaming is Doomed!

Doomed I tell you! Ok, so not me as much as Dennis Dyack, he of Silicon Knights (Too Human). Dyack says that the bubble is going to pop soon on this whole “social game” thing when he spoke to Industry Gamers saying:

“It is damaging traditional gaming for sure but… how it’s going to work out is anyone’s guess. The trend that I see is it’s probably going to be one of the biggest bubbles and explosions that our industry’s seen in a long time and I think when it crashes it’s going to crash very hard. I don’t think there’s an economy there.”

“I don’t know about Zynga (the company now valued at 10 billion dollars — yes billion with a b) – I think that’s a big micro, but I think that the amount of venture that’s being poured in, in general, that’s most of the video game industry investment. As far as I know right now, it’s going into pure social gaming. It looks like marketing to me. It doesn’t look like real gaming. And maybe it’ll change, I don’t know. It looks very, very dangerous. I think Zynga’s valuated more than some traditional publishers right now that have been in the industry for decades. I’m sorry, but I just don’t see it. It seems imaginary to me… it doesn’t look long term healthy to me.”

“I think there are a lot of publishers out there that don’t agree with it and they just haven’t spoken about it. I don’t see Nintendo going into that space, as an example. There are a lot of publishers that I don’t see going into that space. And, you know, EA is one of the few that’s [embraced social].”

READ ALSO:  Calendar Man – Week of 5/27

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So let’s see if we have our scorecard handy….CliffyB says middle of the road games are doomed, Dyack has called a halt to Facebook games, the Angry Birds dude says his games are the future of life on earth, Epic games fears those birds a great deal, Nintendo says those same birds are basically full of digital poo.

Chris Taylor of Gas Powered Games says he’s never buying another $50 game again because Freemium games like Age of Empires Online are the future telling Eurogamer, “I’m so done with that.”

Remind me – what games are we allowed to play again?

Thanks to Game Politics for the tip.

Bill Abner

Bill has been writing about games for the past 16 years for such outlets as Computer Games Magazine, GameSpy, The Escapist, GameShark, and Crispy Gamer. He will continue to do so until his wife tells him to get a real job.

12 thoughts to “Social Gaming is Doomed!”

  1. We’re all hardcore gamers, we can play whatever we like!

    If any of us happen to be venture capitalists in their day-jobs, those people might want to pay attention to the bubble stuff.

  2. The social gaming thing definitely feels like a bubble. I think there’s a real question mark over Facebook’s continued relevancy, and that seems to be what’s powering this social game explosion. I think the limitations of the service are already starting to come to the fore and temper the way people use it. The days of eager picture sharing and status updates have turned into a more heavily edited form of life propaganda as our friend lists have grown to encompass our professional and personal lives. At what point does our social circle widen too far, such that we feel we can only be reasonably less private than we can with a stranger on the street? The day that happens, and it’s fast approaching( already I use FB mainly as a voyeur), is the day we jump to the next more “exclusive” service, one free of the F-ville updates and absent our boss’s friend requests.

    The concepts companies like Zynga are developing are solid and will likely continue on in one form or another, however the notion that some monolithic service is going to retain an undivided share of audience attention in the way FB has is nearsighted at best. When the FB flame starts to flicker you’ll see the venture capital dry up and the bubble will, as Dyack points out, burst.

    On another note, I can’t believe I’m agreeing with Denis Dyack about anything.

  3. He seems to be making a pair of claims. Firstly: social games aren’t “real” games (whatever that might mean. Secondly: that there is so much investment in social gaming that most of it pretty much as to be bad money.

    The first claim seems like (to put it nicely) Bullshit. They may not be games that he wants to play. They may be games that have poor mechanics. They may be games just beginning to tap what the genera is capable of. But they’re real games that real people have real fun with. My own theory is that the facebook game has replaced the smoke break now that 75% of us choose not to pollute our lungs with tobacco.

    The second claim may well be true. I haven’t done any analysis of the market, so I don’t know. But I have a hard time believing that Zynga’s earnings are so high that it’s P/E can support a valuation in the low double digit billions.

    I do know that whenever you see a lot of money going after the same slice of a market, a lot of that money will be lost. This should mean something to an investor, or a potential employee. It should not mean anything to us gamers.

  4. People who think freemium are awesome and the future, are really really dumb and not understanding where it is going.

    In a freemium game you simply end up paying more for the same things!

    Oh sure you can “play” without paying, but your game experience will be so sucky you ll stop playing after a few weeks at most, and if you want to enjoy the game fully it will cost you more than paying a game for a regular price!

    People should realize it: Free is always very very fishy.

  5. I read his first claim very differently from you. There’s nothing in there about social games not being real games, what he’s saying is that he’s not convinced that there’s a real market. It’s not clear how many Facebook gamers are really invested in gaming in any way – it may actually be a high proportion, but it more likely isn’t. I think it’s reasonable to assume that large numbers of people won’t be playing Farmville in five years’ time. They might be playing the next generation of social games, they might be playing more traditional games, they might not be playing video games of any kind.

    Why should gamers care? Two reasons: firstly, that large scale investment in a sector will inevitably affect investment in closely-related sectors; secondly, that investor reactions tend to excessively influence business policy during a sector collapse, and that investors collectively are bad at distinguishing between sectors.

    The rise of the social game will impact on investment in and development (as a sector) of traditional video games. This might not necessarily be a bad thing as it could lead to a far stronger traditional games market in the future, but on the other hand it might negatively impact the quantity, quality or variety of traditional games which get funded.

    I think the fear here is that the social gaming bubble is following the path of the dotcom bubble. There are clear similarities – a heavily funded sector with few commercial products and potentially no sustainable market – but there are also significant differences, in that Zynga et al are developing products and could potentially evolve into a business with earnings justifying its (or a significant proportion of its) valuation.

    Most of the businesses which drove the dotcom sector up and down were not technology companies, they were advertising companies. A lot of real technology companies – those with real products, real paying customers and real profits – were sucked up into unreasonably high valuations and then suffered enormous crashes to levels which undervalued them ridiculously. A lot of people lost their jobs in the ensuing scramble to keep shareholders happy; if there’s a similar collapse in the social gaming sector I have no doubt that they same effect would be felt in other gaming sectors.

    I think that’s overly pessimistic, but it’s a legitimate cause for concern for committed gamers of all kinds.

  6. (sings) (badly): Pleeeeease release me, let me gooooooo
    For Iiiii don’t… ow!

    (exit stage left, pursued by rotten vegetables and much booing)

  7. How about all those games exist and you play whatever you want? Personally, I see big budget AAA $60 titles as being the most threatened, as the increase in consumer choice leaves less room for those games and they need much bigger sales numbers to turn a profit. But hey, $200 million summer blockbusters haven’t gone away with the advent of indie films, have they? Everything has it’s place.

  8. How many hardcore gamers gave up Gears, CoD, Civ, or anything in order to play Farmville? Not that bloody many I would think. Social gaming is powered by non-gamers and bored housewives (I can totally back that up too :P).

    I have personally found them dull and wretched, designed to give you a couple moves and keep you glued to their ads while a move recharges or you break down so you can click a couple more times.

    I think the bubble is going to burst because, hopefully, people will realize that actual good fare exists out there not this garbage. There is no free lunch.

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