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Next on Facebook: Let the games begin

Reuters, Feb 3, 2013

When nWay began a trial of its dark, sci-fi combat game "ChronoBlade" on Facebook last year, the San Francisco-based startup felt sure it had a hit on its hands.

"First of all, what comes is, 'Wow, I had no idea you could actually do a game of this quality on Facebook,'" said Dave Jones, Chief Creative Officer of nWay, who has worked on "Grand Theft Auto."

Then came some resistance: Jones admits some potential investors and partners questioned how an action-focused game with slick graphics can play to a Facebook audience more accustomed to "Farmville" and other less time-consuming casual games. Others wondered how the game -- which launches this spring -- would gain significant users and revenue on the social network.

But Facebook Inc  is betting that Way and a clutch of other developers this year can extend console-style action games beyond Microsoft Corp's Xbox or Sony Corp's  PlayStation onto the world's largest social network.

Facebook is spearheading the launch of 10 high-quality games created by third-party developers in 2013 that squarely target so-called hardcore gamers, an atypical audience overlooked thus far against the wealth of family-friendly offerings like Zynga Inc's  "Farmville" that now dominate the social network's gaming landscape.

The effort, which began late last year but will accelerate in 2013, is part of Facebook's ongoing objective of making sure its 1 billion-plus users log in and spend more time on the network, which in turn boosts ad revenue. Facebook also takes a cut of its applications' revenue.

Facebook's push into action and battle games follows a meeting in January between companies that make games like "first-person shooters" and Vice-President Joe Biden to look for ways to curb gun violence in the wake of the Connecticut school shootings.
Based on the console gaming industry experience, hardcore gamers -- typically men 18 to 30 years old -- spend more time and effort to master fast-paced games such as first-person shooters (Microsoft's "Halo") or real-time strategy games (Activision Blizzard's "StarCraft").

"You'll see a whole set of games hitting in the next two quarters in particular and throughout the year that really start to redefine what people think of Facebook games," Sean Ryan, head of game partnerships at Facebook said in an interview.

Facebook will embrace games from "casual all the way up through first-person shooters, massively multiplayer online games, real-time strategy games — all those types of more core player-versus-player games."

Just as hardcore gamers interact online and form clans in multiplayer games on console game networks like Xbox LIVE, Facebook can be that social layer needed to foster such gaming communities that help popularise titles, Jones said.

Over a quarter of Facebook's 1.06 billion monthly active users play games, one of the largest gaming communities in the industry, and the social network hopes that can grow. Facebook also aims to make more revenue from games. Revenue from the area was flat in the fourth quarter from a year ago, the company said on Wednesday without providing details.

The 8-year-old social network takes a 30 per cent revenue share from game developers who offer their product free but then charge for virtual goods -- like ammunition and power boosts.


Recently, Facebook's Chief Financial Officer David Ebersman told analysts on a post-earnings conference call that its "games ecosystem continues to show healthy signs of diversification" and suggested that games revenue would grow with increasing user engagement.

To grow its gaming business, Facebook has invested time and resources to work with developers since the summer to bring titles like u4iA's first-person shooter "Offensive Combat" and Plaruim's real-time strategy game "Stormfall: Age of War" alive, Ryan said.
"It doesn't mean we're walking away from other games, but there's no question our focus for 2013 much of it will be about becoming a better platform for core gamers and developers who make those games." To help users discover them, Facebook added new action and strategy games categories on its App Center that also shows you friends from your list playing those games. It brought back notification messages from game apps -- a feature that had been removed because users found them annoying -- with certain restrictions that stop developers from spamming a gamer.

Developers also rely on word-of-mouth publicity and ads on Facebook's advertising platform to draw in prospective gamers.

"Stormfall" has a player base of 4.5 million and hardcore games were proving to be far more lucrative, said Gabi Shalel, chief marketing officer Of Tel Aviv, Israel-based Plarium.
"Hardcore gamers pay more, play more and generate higher average revenue per user than traditional casual games."

Kixeye, which makes the warfare-strategy game "War Commander," said its gamers spend 20 times more than players of social games, helping it stay profitable over the past three years.


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