Fed Up With Facebook? Hi5 Tells Social Game Developers There's an Alternative.
The spotlight at the 2011 Game Developers Conference this week in San Francisco will be social networking, as Facebook has become an undeniable powerhouse in the industry–and a considerable force to reckon with.
As just one example of the scope of Facebook’s influence, the 18,000 attendees, who have hundreds of sessions and panels to pick from over five days, will be subjected to listening to 12 employees of Zynga, the Facebook superstar, on 15 different panels. (Brian Reynolds, Zynga’s chief game designer, appears three times, while a search reveals no Facebook employees on the roster.).
Two other elements will serve as a backdrop to the event.
Apple will hold its much-anticipated event on Wednesday, where it’s likely to unveil a new version of its hugely successful iPad, according to BoomTown’s Kara Swisher. The tech giant undoubtedly is becoming one of the dominant portable gaming giants, as the iPad and iPhone easily replace the need for dedicated gaming devices.
No need for Apple to attend GDC, however, when the unveiling will occur across the street at the Yerba Buena Center for the Arts. So subtle.
Meanwhile, the GDC is commemorating its own 25th gaming conference by featuring a keynote by Nintendo.
But can you believe the company, which doesn’t have a new gaming console even on the horizon, is the one talking about the past 25 years and not what the future has in store?
Other companies with a significant presence include Sony, which will be showing off the new Experia Play phone and its motion-activated Move technology, Electronic Arts and independent mobile-game makers like Rovio, of Angry Birds fame.
However, with social being one of the main ingredients on the menu, we caught up with Alex St. John, a long-time executive in the industry, who has spent the past year and a half coming up with an alternative– he calls it the “anti-social networking platform.”
St. John is the president and chief technology officer of Hi5, which was founded in 2003 as a competitor to Facebook’s social network. With all hope lost on that front, it’s now going up against the company a second time–this time for its games business.
The move is 100 percent anti-Facebook, and there’s nothing subtle about it.
Over the past year and a half, St. John has been building an alternative for social-game developers who fear they may be relying too much on Facebook.
Today, Facebook claims 30 percent of most revenues made within a game by mandating the use of its own virtual currency, called Facebook Credits. Developers often hand over even more money to the social network in order to advertise and draw an audience to their games.
St. John’s ambitions are unnaturally large, and supercharged by the fact that he was able to skyrocket his last company, WildTangent, into the largest casual games network (above Yahoo), where it continues to stand today. (Read our story on WildTangent for background.)
Even more boldly, he’s promising to double or triple the amount of revenues a developer can make when using Hi5 compared versus Facebook.
Here’s the logic:
“If I have the same content, and have better monetization, even if my audience is tiny, I will eventually win because I can buy traffic cheaper than you.”
If you buy that, listen to his two-part plan.
First, there’s SocioPath.
SocioPath (the anti-social network) will enable game developers to provide a home for their games outside of the walls of Facebook.
By using it, they can create a unique URL for the game, and users won’t have to register. To do this, Hi5 clones Facebook’s APIs, and enables users to create profiles on the fly, so they can play with other people immediately. The caveat is that if the gamers want to chat or communicate with others, they’ll have to log in and register.
Otherwise, the auto-registration process creates little to no friction for playing.
Second, there’s SocioPay.
SocioPay offers game-makers a way to monetize. It uses a hybrid of advertising and commerce, a practice St. John mastered at WildTangent (for the record, St. John no longer has any role at WildTangent and doesn’t own any stock).
This model allows developers to continue to sell virtual goods to the three percent of users who are traditionally willing to pay in games, but still monetize the other 97 percent using advertising.
When a user clicks on a virtual good, Hi5 will automatically serve a 15-second video clip. If a user would rather pay, they can skip the ad and enter their payment information.
St. John claims you end up losing about 25 percent of sales because of the ads, but you gain way more in revenue through advertising. Over time, they’ll tweak the ad server, so it knows not to offer an ad if a person has already paid for coins or is likely to. His calculations point to a 200 percent–maybe 300 percent–jump in revenue.
Of course, this isn’t free.
Hi5 will charge developers who want to use SocioPay 30 percent of both commerce and advertising revenues. If the ad server is used anywhere else, like on an individual Web site, the developer can keep 100 percent of the revenues. St. John claims the terms are less onerous than those of Facebook, which takes 30 percent of virtual goods and charges additionally for advertising on the site.
When SocioPath launched in August, it had three social games. It is now live with 116, and launching two to five a week.
This week, for instance, SocioPay launches with five partners–Portalarium: Port Casino Poker; DJArts Games: Bush Whacker; Mososh: Chronicles of Herenvale; Game Insight: Resort World;, and Hit Point Studios: Gunbros.
St. John expects the program to go live in a month after the beta is completed.
Here’s a video of St. John, discussing the the trends of GDC, his decision to join Hi5, and his ambitions for the new game venture (to be a very successful No. 2 behind Facebook).