Playfish: Using Facebook As Its Gaming Console

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If you glance at the top lineup of gaming applications on the Facebook or MySpace platform, you’ll notice an interesting fact. Not one is the product of a major gaming publisher. Instead a group of independent gaming startups have been the leaders in publishing games within social networks.

Co-founders of the gaming publisher Playfish, Kristian Segerstråle and Sebastien de Halleux, chalk up the growth to a profound platform shift social networks have introduced into the gaming marketplace. Traditionally, large publishers have lorded over the $50 billion gaming industry by controlling two things: access and distribution. Be it a console game or the latest PC title, only big companies could shoulder the large costs of distribution deals and advertising involved in bringing a game to market.

Social networks, however, have are an open platform that give away both access and distribution for free (the CBS backlash is an exception that proves the rule).

You may already recognize Playfish from their flashy Facebook games: Who Has The Biggest Brain?, Word Challenge, and Bowling Buddies. The games have a very similar look and feel to the popular Wii, especially their latest game, Bowling Buddies. Playfish developed the 3 games over the past 6 months and has grown to about 6 million monthly users playing an average of 30 minutes a session. The team attributes this to the social infrastructure that both makes the games more enjoyable and easier to spread. For some perspective, EA’s Pogo.com claims about 14 million visitors per month and has been around since 1999.

For the large part, big gaming publishers have only stuck a toe into social networking. Gaming giant EA’s most notable release to date has been the official version of Scrabble, which currently has around 7,000 DAU (it’s also limited to USA and CAN). However, there’s certainly more to come as these networks watch startups work out the kinks. EA has already done some major releases on the iPhone and has larger plans for their latest acquisition, Rupture. Comparatively, Playfish commands 3 of the top ten gaming apps on Facebook, totaling around 1 million daily active users. The others are belong to notables include SGN, Zynga, and Serious Business.

But traditional gaming companies have been beating the startups on one key metric, monetization. PC and console games saw sales up 43% last year to $18.8 billion. Onine gaming is currently a $1 billion a year business. Pogo.com has around 1.5 million members for it’s monthly subscription service, Club Pogo, for which they pay $4.99 a month or $29.99 a year. Free players of the main site are upsold to premium features and game downloads.

But Playfish is taking a similar approach, looking to monetize gamers on all points of the demand curve. Gamers who are happy to play the basic game will be subject to advertising, while players looking for more can pay for upgrades and premium games. Just this past week they released $10 paid upgrades for “Who has the Biggest Brain?” and expect these payments outpace their ad sales. Albeit, their only form of advertisement is video ads displayed after a game set is completed.

While Playfish has yet to cross outside of the Facebook platform on to other platforms, they’ve made great strides to cross continents by translating their top game “Who has the Biggest Brain?” into six languages. The London-based startup also has studios in Norway and Beijing. They’re funded by $3 million in angel financing with a $1 million bridge from Accel.

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