The Latest News on the Social Games Market in Europe and Emerging Markets


New Report: Casual Game Websites and Social Network Gaming are not Mutually Exclusive

By Thorsten Bleich

Dutch market research firm Newzoo has released a report on online casual and social games which shows that 126 million Americans, or 87% of all gamers aged 10 to 65, play games on social networks or casual game websites such as Pogo, AGame, Miniclip, AddictingGames, Yahoo and
In the US social networks, obviously dominated by Facebook, attract 60% of these gamers, 41% of time and 38% of money spend. The share of paying gamers averages 22%, totaling to 28 million Americans. The situation in European, Asian and Emerging markets is comparable, in terms of share of total game time and wallet. The only exception is that Europeans are less likely to spend money. Also, the popularity of social networks as game platform is significantly higher in emerging and Asian markets than in the West.

The online casual games market, traditionally offering free ad-supported games, is gaining more and more traction when it comes to consumer revenues. All the casual websites combined attract a significantly larger gaming crowd than Facebook, even in the US. Partially driven by the rise in player acquisition costs, game companies have increasingly turned towards these destinations, integrating their free-to-play games with in-game business models. The full report can be found on Newzoo’s website.


Game of the Week: Okey – Peak’s Turkish Tile Game is Doing More Than OK at 4.1 Million Users

By Regina Leuwer

In Facebook’s top games lists, usually all titles are localized or in English (which has the advantage of being the language most likely understood by non-native speakers). A notable exception to this rule is Turkish developer and publisher Peak Games, a company that specializes in local niche markets and recently expanded into the Middle East. This week we look at Peak’s Okey, a Turkish-language game with more than 4 million monthly active users.

Developer: Peak Games
Genre: Arcade, tile game
Launch: October 2010
Language(s): Turkish
Monthly active users: 4,100,000 MAU (February 27, 2012)
Monetization: Free-to-play with paid premium subscriptions

What’s inside?

The social game rendition of Okey - a very traditional table-top game in Turkey (similar to Rummikub) that is and has been played in homes or cafes as a pass-time game.

How to play

The main rule of the game is to have mini sets with the tiles handed out, i.e. either have consecutive number sets in the same color, or have the same number if different colors; whoever finishes their sets first wins. A six-sided dice is used during the distribution of tiles. Okey is almost always played by four players, although it is possible for two or three people to play. The whole game is played anticlockwise.

Okey's popularity stems from the possibilities of in-game social interaction.

Peak game’s Facebook version of Okey thrives on its social features. The developer told us that people join not only to play this all-favorite, but to socialize with each other by creating their own mini communities within Facebook.

Okey is monetized through two different sorts of premium memberships: Gold membership (weekly, monthly, annually) and VIP membership. The main functions these subscriptions offer are all based on social interaction.

Gold membership makes players more noticeable via avatars and profile customization, and also makes interaction with other players easier, e.g. in “lobby chats” with a larger group or specific 1-on-1 chats. Other advantages include having the ability to create buddy-lists and player-lists besides the Facebook friend list, and having the ability to play or chat anonymously – which is especially important for people who want to socialize freely especially in emerging markets, where it’s not as easy to meet each other as it might be in the Western world.

The game monetizes through Gold and VIP memberships.

The VIP membership gives more control in how to play the game, it enables players to start their own game room, pick the players for this room based on interests, define the rules of a room, assign admins, and access full social channels in their room.


Interview: 15-Year Old Developer Manuel Otto Talks About His Hit Game Stick Run and Future Plans

By Regina Leuwer

Last week, we reported about Stick Run – a fast-growing endless running game that now has a whopping 4 million monthly active users on Facebook. Stick Run was single-handedly developed by 15-year-old Manuel Otto from Germany. We talked to him about the game’s background story, user base and his future plans.

Social Games Observer: How did you get the idea to build Stick Run?
Manuel Otto: Two years ago I started toying with different game concepts but never got to finish one of them. With Stick Run I decided to go through with it and the first playable prototype in single-player mode was done within a few weeks. After all, the main concept of an endless running game isn’t new; there have been hundreds of similar games before.

SGO: How long did the whole development take?
Manuel: To include the social features and multi-player option took another few weeks. Altogether the game was built in 2-3 months.

SGO: Do more of your users prefer the single-player mode or multi-player where different opponents compete in real-time?
Manuel: Definitely the single-player mode. There is an addictive quality to it, because you always want to progress and level up to compete against your friends.

SGO: Do you monetize the game mainly through advertising or virtual goods?
Manuel: At the moment the advertising revenue is a little better but by and large it’s nearly equal.

Stick Run now has 4 million monthly active users.

SGO: What are the most popular premium items?
Manuel: Our best-selling item is the Troll Face for the game character; a close second is a Trading Pass, which grants unrestricted access to the in-game marketplace where players can trade items with each other. The Ninja Kick to remove obstacles and Diamond Shoes for improved controls are also popular.

SGO: Where do your typical users live?
Manuel: At first I thought that Germans would remain in the majority, because it was distributed from here. But Stick Run somehow managed to become popular in the Philippines and now has 2.5 million Filipino players. Germany follows at around 800,000 players.

SGO: Your game has a massive user base, did you acquire these users virally or have you utilized additional marketing channels?
Manuel: When I brought the game to Facebook, I had just turned 14. Back then I didn’t have a clue about marketing; the game has attracted so many players on its own. So far, I’ve not used marketing channels because the user base grows by itself apparently.

SGO: Stick Run saw some enormous growth rates in February – from 2.2 million to now 4 million monthly active users. Can you give any reasons that have led to this massive increase?
Manuel: Actually, that’s a very silly story. I’ll summarize briefly: Until September 2011, Stick Run was still in beta, and after that I published a completely revised version which wasn’t too bad, but there was one stupid bug that affected only players who had just installed the game. The error wasn’t fatal, just annoying: If you went back to the game menu, the music overlapped twice. This obviously has deterred a lot of players, and thus leveled the monthly number of players at around 2 million. Until recently I had no idea about this error, because it just happened to new players. After this little bug was fixed, the growth rate has recovered to its old state.
In hindsight, I could kick myself when I think of how many players I’ve lost because of this bug.

Manuel's next game will be a 2D shooter.

SGO: Are there any plans for major new features to Stick Run – or another game on Facebook?
Manuel: Currently, there are not too many updates Stick Run because I put almost all my time into a new game. It’s called Stick Combat Multiplayer and it’s a 2D shooter where players fight together with others. There will be lots of modes such as Team Death match, Search & Destroy, Capture The Flag, or GunGame – game modes that players of the Call of Duty series are certainly familiar with.
The game will likely be published in spring 2012; there will be a trailer on YouTube soon.


Guest Post: The Colliding Worlds of Virtual and Real Currency Gambling

By Sebastian Sujka

[Editor's note: Real money gambling could turn into a main revenue driver for social games – if it is going to happen. In the first few weeks of 2012 this seems to have become increasingly likely; both Facebook and Zynga have been reported to be in talks with potential partners, and slot machine company IGT bought social casino game publisher DoubleDown Interactive for $500M in January. We are covering this topic from different perspectives (see the first article on gambling law).
This is a guest post by Andrew Hughes, fourth-time mobile entrepreneur and Co-Founder & CEO of AbZorba Games (founded in summer 2011) whose games Social Casino recreate the live casino game experience for Android. Currently AbZorba is expanding to multiple platforms and channels, including online and IPTV.
In this guest post, Andrew shares his views on opportunities and risks of real money social gambling.]

My father once said “Everything in life is a gamble son, just know the odds”.

Sound advice and timely for those of us who thrive off casino app games as decisions will soon have to be made to align or decline real money gambling alliances.

Social gamers’ growing appetite for casino apps

Whilst Virtual Casino app games may not be the next ‘throw a cabbage at a pig’ blockbuster – and how many try that tough route? – but they are trending, and will continue to trend, for the very fact they are perennial ‘evergreen’ fun that gamers come back to time and time again. Games such as Blackjack, Poker, Bingo to name a few.

The mobile format in particular offers the ‘perfect storm’ of smartphone penetration, network reliability and app popularity. Throw in live multi-players, like we did with AbZorba’s Live Blackjack21, and it’s seriously a compelling format.

Its proper, grown-up gaming with proper in-app spending power; AMRPU in double digits and lifespan that only cartoon characters can dream of. But take a look more closely and what can we see going on?

Online gambling is a $30B market, but what are the risks?

Casino apps sit right in the cross-hairs of the moral and legal debate between just-for-fun and real gambling – virtual chip play or real dollar risks. The outcome could be the biggest opportunity yet or the biggest threat. By offering links to gamble real money runs a considerable risk the high rollers, or ‘whales’, could turn away in droves.

Even without the chance to win real money some players spend up to $3000 for virtual chips.

So, why should a perfectly good app generating revenues from virtual goods take risks to court controversy and potential gamer backlash by offering real money gambling? And, in the online world, why should Facebook and Zynga for example, the most successful social games partnership yet, separate their strategies to contemplate launching disparate real gaming?

Simple: money. Serious money. Some say Facebook could be worth as much as $100 billion revenue when, and not if, online gambling in the US opens up again.
Even so, data shows a total global value of online gambling in 2011 approaching $30 billion of which casinos, including poker and blackjack, contributed 46%. Bingo wasn’t too bad at $1.6 billion though and marks a strong increase and presence. Let’s understand that’s a 12% increase on 2010 and in recessionary times.

Serious questions arise though. How will gamers themselves take to being invited to move from entertainment to gambling for real? Where is their risk tolerance line drawn and do we dare entice them over? Or, if we don’t, will they just go elsewhere to play? And anyway, is it even up to us to police them? Hard choices indeed.

At AbZorba, we believe most gamers have made a conscious decision not to gamble, or can’t, whilst still loving our casino game format. We know our gamers specifically enjoy the live multiplayer element we provide, where their skills are tested against others not their wallets, moreover it’s key to their loyalty. That’s not to say they don’t spend real money, some spent as much as $3000. But that whole social element of chatting up the person on the same table and buying them a ‘cocktail’ is pure fun, not risk.

However, we have noticed a fascinating change. There is a sharp rise of interest for real money gambling. Perhaps there is an untapped appetite for social gamers to morph in to real gamblers after all, empirical evidence suggests so.

Real and virtual casino gaming industry – a clash of titans

As the games industry debates the real battleground will not be between the likes of Facebook and Zynga but between the real and virtual gaming industry. Each titan is eying each other’s territory. To the real casinos social sites and apps provide a massively untapped opportunity but why should Facebook, arguably the best gatekeeper, leave ‘chips’ on the table? Why not just enter the game itself?

We too have been inundated with request from real gambling companies to reach our gamers. Why? Our gamers play live in an authentic casino environment and it’s that competitive element that encourages greater spend compared with say a single player format and they get that.

The question remains for us all though. Should we rush to bridge the divide between virtual and real money? Can the two worlds co-exist, indeed should they? Its undecided but one thing is for sure, the risks if we do or don’t are real, the stakes are high and my father’s advice has never rung truer.


PopCap Releases its First Casino-Themed Game on Facebook

By Regina Leuwer

EA-owned casual game developer PopCap Games today launched a slot-based social game Lucky Gem Casino. Exclusively available on Facebook, Lucky Gem Casino is PopCap’s first casino-themed title and will initially house seven custom-created luck-based games. The slot machine-style games available at launch are free to play with payouts occurring only in virtual currency and feature imagery and characters from other PopCap games including Bejeweled, Bookworm, Chuzzle, and Zuma.

“Casino-themed social games are one of the fastest growing genres on Facebook”, said Dennis Ryan, vice president of worldwide publishing at PopCap in a press statement. He continued: “The strength of PopCap’s game brands and the quality of the Lucky Gem product combined with our experience in luck-based games outside of Facebook means we are perfectly positioned to deliver the ultimate online free casino game experience – PopCap style.”

Lucky Gem Casino allows Facebook users to play alone or with friends. Players can compare their winnings, chat in real-time with friends, play mini-games and share game content. The games are free to play and players may purchase virtual currency in the form of Facebook Credits. All payouts are in virtual coins, which are not redeemable or transferable for cash.

Founded in 2000, PopCap was acquired by Electronic Arts in 2011. The company has a worldwide staff of more than 600 people in Seattle, San Francisco, Vancouver, B.C., Dublin, Seoul, Shanghai and Tokyo.


Peak Games Acquires Saudi Arabian Developer Kammelna, Expands Presence in Middle East

By Regina Leuwer

Turkish developer and publisher Peak Games today announced the acquisition of Saudi Arabian social games company Kammelna Games, marking a step forward to expansion in the emerging Middle East North Africa (MENA) markets. Kammelna’s staff of 30 will join Peak Games as founder Essam Alzamel will run Peak Games’ new studio in Damman, KSA (Kingdom of Saudi Arabia); financial details of the acquisition were not disclosed. Peak will take Kammelna’s most successful game Baloot to other platforms, including Facebook and mobile, as well as launch new titles across multiple platforms in the Gulf region.

Peak Games’ CSO Rina Onur also tells us that the company is currently looking into opening up a third office in the Gulf Region.

Kammelna's most popular game Baloot.

“If you consolidate the MENA region into one GDP, it would be the size of a top 5 country with over 400 million in population. It has one of the largest and most active online gaming communities in the world,” said Sidar Sahin, chief executive officer and founder of Peak Games.  ”We have added Kammelna to the Peak Games family because of their profound understanding of MENA players and their focus on creating culturally relevant, multiplayer social games – where Peak already has an expertise with millions of users.”

Peak Games started 14 months ago in Turkey and, after rapid growth in this market, expanded to the Middle East. Peak’s strategy is to cater to underserved markets with localized and culturally-specific games. Their most popular titles are mostly real-time card games such as Okey, Okey Plus, 101 Plus.
In emerging markets people usually don’t have the liberties like in the Western world where you can meet someone in a cafe or a bar, Onur says. “Players of our social games use them as a platform to build relationships with people from their region,” she tells us.

The demographics in these emerging markets is around 60 percent male audience for social games but Onur thinks that the actual ratio is closer to 50/50 – because men often hold the purchasing power but games are likely played by male and female members of a household. Apart from casual titles Peak is also expanding into core games, according to Onur. Peak Games also has two mobile titles to be released in Turkey soon for iOS and Android.

Peak’s audience has been growing rapidly, topping 20M monthly active users (MAU) and 7M daily active users (DAU), after a 25 percent increase in less than 4 months. Peak’s popular, Arabic-language Happy Farm sees 2.2 million DAU and 6.8 million MAU. Happy Farm is the second most popular social farm game in the world with more than a third of FarmVille’s numbers even as an Arabic-only property.

The MENA region is challenging for game developers because even though there are 29 Arabic language countries, the dialects across these countries vary greatly. According to the press release, more than two-thirds of Internet users play games online in Saudi Arabia which has one of the highest average revenue per user (ARPU) in social gaming around the world. The MENA region is projected to reach 400M players by 2015.

Social games developer and publisher Peak Games is based in Istanbul, Turkey. The company with focus on emerging markets now reaches more than 20 million active players. Peak Games is funded by venture capital firms Earlybird Venture Capital, Hummingbird Ventures, a strategic, regional investor and serial business angel Evren Ucok. Peak Games has offices and game studios in Istanbul, Ankara, Amman, Barcelona, Damman, Berlin and San Francisco.


Game of the Week: Hidden Chronicles Uncovers a new Genre for Zynga

By Regina Leuwer

This week’s game of the week marks Zynga’s venture into hidden object games. Released earlier this year, Hidden Chronicles became an instant success and is now the third most popular game on Facebook.
We talked to creative director Cara Ely (former creator of the popular Dream Day Wedding series of hidden object games for PC) to learn more about the game’s storytelling and design choices and how social features complement the hidden object genre.

Developer: Zynga
Genre: Hidden object game, puzzle
Launch: January 4, 2012
Language(s): English, French, Italian, German, Spanish, Portuguese, Turkish, Swedish, Thai, Dutch, Norwegian, Korean, Traditional Chinese, Japanese and Danish
Monthly active users: 31,200,000 MAU (February 20, 2012)
Monetization: Free-to-play with paid premium currency

What’s inside?

A sophisticated hidden object game that introduces a new art style for Zynga.

How to play

Players can explore Ramsey Manor to unlock new scenes and content.

Ramsey Manor can be explored to unlock new scenes and content.

The game is very story-driven; it starts with the suspicious death of the player’s uncle Geoffrey who lived in a spooky house called Ramsey Manor. Players are to solve the mystery of Geoffrey’s death by uncovering clues in the manor and other locations. These clues are different hidden object scenes with multiple items to click and cross of a list.  As players unlock more and more of these scenes, the story unfolds.

“Hidden object games lend themselves really well to mysteries and people who enjoy them see themselves as puzzle solvers just like in the Da Vinci Code,” Ely tells us. She compares the narrative to a television series.  ”We have developed a bunch of stories that are not released yet, new mysteries kick off as others are solved – the same way that a TV show like Lost can go on and on,” Ely says.

The scenes in Hidden Chronicles are beautifully crafted and diverge from Zynga’s other titles. ”It’s a very new art style for Zynga that we call soft photo-realism, with a realistic painted quality,” Ely explains. ” The mechanics of hidden object games are strongly connected to the visuals. It’s an appealing style to look at when you focus on one scene for a long period of time, and objects can be integrated with light and shadow.”

In the game's social challenge, friends compete to find as many objects as possible in 60 seconds.

Coming from a background in PC games, Ely embraces the possibilities of data analysis as a powerful tool to learn how players are experiencing a game, for example the difficulty levels. “We hide a lot of objects in each scene – it actually gets harder. We can find out what objects are not found very often, or are on the list when users ask for hints. So we tweak all the scenes to make sure the objects are challenging but not too challenging,” she says.

Ely has been working in the casual games genre for years, and tells us the success of hidden object games on Facebook came as no surprise for her. “They are great to look at and there’s something deeply satisfying about the gameplay of crossing things of a list that everybody can relate to.”

“Hidden object games previously have been more of a single-player experience, but they are really fun to share with people,” she says. Ely tells us that players enjoy all the game’s different aspects alike, such as challenging each other in special scenes to find as many objects as possible in 60 seconds, playing for relaxation in single-player mode or engaging in the game’s exploration elements similar to CastleVille.


Who is Who in Europe: Free Lunch Design

By Sebastian Sujka

European developers are gaining momentum on Facebook and other platforms. In this series we aim to highlight the most important social gaming companies from Europe.
This week, we cover Sweden’s second largest social game developer Free Lunch Design, previously known as Muskedunder Interactive. Free Lunch Design’s CEO Magnus Alm was kind to answer our little questionnaire.

  • Name: Free Lunch Design
  • What they do: We make kick ass games for kick ass people!
  • Located in: Founded and have our office in Gothenburg, Sweden
  • Founded by: Magnus Alm, Johan Peitz, Jimmy Öman and Patrik Liljecrantz
  • Christoffer Enedahl (Software engineer), Magnus Alm (CEO) and Emanuel Garnheim (Lead Artist)

  • Founded in: 2007
  • Funding: No funding except for blood, sweat and tears
  • Number of employees: 8
  • Number of games: 70, so far
  • Games published on: PC/Mac, Facebook, iOS, Android
  • Game genre(s): Arcade and RPG
  • Popular games on Facebook: Icy Tower (1.6M monthly active users), Hello Adventure! (250,000 monthly active users)
  • Working with publisher(s): Yes, SGN and Chillingo
  • Languages: Mainly English, but also German, Turkish and Polish
  • User demographics by gender: Male/Female 50/50
  • User demographics by location: All over the place
  • Most expensive virtual item: Hmm, a super souped armor in Hello Adventure… I think.
  • Best-selling virtual items: One of the towers in Icy Tower on Facebook
  • What do you see as currently most exciting trend in the industry?
    Indie developers suing big venture-backed copycats, it’s about time!

Guest Post: How to Benefit from Facebook’s IPO

By Sebastian Sujka

[Editor's note: Berlin-based serial entrepreneur Jan Beckers has founded five successful companies before starting his current venture, game distribution holding HitFox. Most recently, he has been co-founder and managing director of SponsorPay – a monetization platform for online, social and mobile games. Prior to that, Jan co-founded mobile marketing platform Madvertise and job platform Absolventa. During his studies at University of Münster he founded Studenta and Private Productions before graduating with a Master of Business Administration.
Jan has invested in Internet Start-ups such as Brands4Friends, Lieferheld or Gruenspar and is a pre-IPO investor in Facebook and LinkedIn since his secondary investments mid of 2010. In this guest post, Jan shares his insights on Facebook’s IPO from an investor's perspective.]

What happens when Facebook finally goes public

Here’s what I expect to happen in the short term (I have also blogged about this on German startup magazine Gründerszene).
Besides all the usual investors there are 800+ million (happy) users of Facebook that are following the IPO in the media. A fair amount of them will buy Facebook Shares to be part of the growth story – despite being unsophisticated in investment matters. This means they`ll literally buy at almost any price – they are not really aware that valuations matter.
Other investors will buy for tactical reasons: They buy to become part of the initial stock price gains. Therefor it is very likely that the stock price will go up 20-100% within the first minutes, hours or days. This could mean valuations between $100-200 billion.

After all initial buyers got their stock; the tactical buyers start to sell. Then the stock price will lose a part of its gains. But in the long-term the price/valuation of Facebook will likely go up again – justified by the good long-term business prospects for Facebook.

Facebook’s valuation could exceed $300 billion in the mid-to-long term

A valuation of $80-100 billion is fair at the moment. Here are the reasons:
Facebook will likely have about 1.5 billion users in a few years and they will use data and user relations to expand to further business fields – e.g. search.

Google is generating about $20 per user and year. If Facebook manages to do the same while maintaining its growth rate, this would mean that with 1.5 billion users, each of them generating $20 in yearly revenue, Facebook can see $30 billion revenue per year. Long-term margins with Facebook’s business model should be 40% or even higher – that’s $ 12 billion in potential annual profit.

If you now assume a typical growth price/earnings ratio of 25, you come to a valuation of 300 billion dollar. Now discounting these future expectations for the implicit risks and interests a valuation of $80-100 billion seems legitimate. The long-term value of Facebook could be even much more than $300 billion if you assume both user base and more significantly revenue/user are continuing to grow.

Strategies for profit

As an investor I see three strategies to profit from this IPO:

#1 Try to get Facebook stock before or during the emission. Wait for the quick gains. Sell before you expect the peak (e.g. at 30-50% gain).

#2 Buy (cheaper) stocks of comparable companies now, e.g. Google and other related internet stocks that people will compare against Facebook’s valuation. When Facebook’s valuation is increasing, their valuation will increase as well.

#3 It’s possible that in the mid-to long term (five or more years) Facebook has the potential to become a $1000 billion business. Long-term investors can buy now at prices close to $100 billion and still hope for a 10x profit.

Personally, I will try to profit from the initial gains and then sell my (Pre-IPO) Facebook shares after the IPO on the private market (to avoid the 6 month lock-up period of pre-IPO shares).
If you can get your hands on Facebook shares now, I’d recommend buying. Prices won’t be lower after the emission.

A nice side effect of the Facebook IPO on the valuation of social games companies: Valuations should go up, since there are always interdependencies between the valuation of related companies. You could already watch the effect when Zynga’s stock price increased by 10% after the announcement of the Facebook IPO.


Online and Casual Giant Bigpoint Releases Nice-Looking Demographics on Valentine’s Card

By Thorsten Bleich

Click ‘more’ to see infographic.  (more…)