Facebook: the new model in online gaming
"Our goal is not to build a platform; it's to be across all of them." – Mark Zuckerberg, November 2011.
How do you build the games that are dominating mobile, played by every commuter waiting for a bus and by every teenager while they’re also watching TV?
Julien Codorniou claims half of the top 30 grossing apps on iOS and Android started on Facebook.
And citing hits from King’s Candy Crush Saga to Supercell’s Clash of Clans, Facebook’s head of platform in Europe says 55pc of the top 100 grossing apps have also been using Facebook mobile app ads to grow.
“There is a new pattern in the world of gaming, which is that if you want to be big on mobile, you have to start on Facebook,” he says.
Facebook has long been used by video game companies as a springboard for growth, but the social network’s recent success in mobile has made it more influential than ever before.
Earlier this year, Facebook proved that it had finally worked out how to make money from mobile, reporting that sales had jumped 77pc to $2.6bn in the fourth quarter of 2014, including more than $1 billion from advertising on mobile phones.
The performance marked a dramatic reversal of fortunes for Facebook, which floated in May 2012 and spent its first year as a public company struggling to work out the best way to monetise mobile users effectively.
But it also gave a significant boost to Facebook’s platform partners – companies that use the social network’s global reach to build engagement and extend their own customer bases.
“People want to play games all the time,” says Codorniou.
“They want to play on PC when they are at work or at home; they want to play on the phone when they are commuting or waiting in a line at Starbucks; they want to play on an iPad when they are watching TV. That cross-platform scenario that Facebook makes possible is what defines the next generation of gaming companies.”
Most of these high-grossing mobile games make money through micro-transactions and in-app purchases. By putting their games on Facebook, developers can take advantage of a variety of organised channels on the social network, like inviting a friend or posting to their wall.
In return, Facebook takes a 30pc cut of their revenues.
Codorniou said that 260 million people play games every month of Facebook, and 600,000 people pay for games every day, making it an "amazing platform" for anybody with good content – including casual games like Candy Crush Saga, management games like Farmville, casino games like Texas HoldEm Poker and hardcore games like Clash of Clans.
"Space Ape is a start-up in Soho with 15 people. We started working with the CEO six months before he created the company, because we knew he would do something good, and we helped him during the development of his game Samurai Seige. Three weeks after the launch, he was doing £50k per day in payments revenue," said Codorniou.
"This shows that when you have good IP, good games, good content, putting it on the Facebook platform gives you worldwide availability."
Codorniou said the growth of the mobile gaming ecosystem is much higher than any other gaming ecosystem, so developers are inevitably targeting mobile. However, Facebook introduces a social element, allowing gamers to compete and discuss their gaming experiences with friends across multiple platforms.
He pointed to Facebook's recent integration with Sony's Playstation 4, which allows gamers to share 2-3 minute videos of their latest achievements with friends. "That’s such a nice experience for gamers, to discover games like that, to see what your friends are doing, so that drives a lot of engagement for them," he said.
While gaming companies have led the effort to become cross-platform, other vertical sectors are now starting to follow suit, from e-commerce and media to travel and dating. Facebook represents 23pc of the time spent on mobile, according to Codorniou, so Facebook can help other companies grow on mobile.
"You take any platform in the world of computer and software, the gaming companies are always the first to embrace any new platform. Look at the iPhone, look at Windows, look at the Mac – always gaming first, because they are always looking for distribution and new opportunities," he said.
"It’s interesting to see how the Facebook platform is now disrupting a lot of industries on top of gaming."
Codorniou said that one of the big differences between Facebook and its competitors is that Facebook is a 'platform company', so it does well when its partners do well.
"We don’t do Facebook music, we partner with Spotify, we partner with Deezer, we partner with Beats; we don’t do Facebook video, we partner Dailymotion or YouTube; we don’t do e-commerce ourselves, but we love to send traffic to our partners like Yplan. It’s a very different philosophy than the other guys."
Companies in Europe have been quicker than most to take advantage of Facebook's distribution channels. This is because it gives them a global reach that would otherwise be unachievable. Codorniou said that half of Facebook's top 10 grossing partners in Europe are in Tel Aviv, "because when you are in Tel Aviv you know the local market is not enough".
However, he said that the most successful apps have a local element to them, so the key is to be able to appeal to cater to a global market with local users.
"There are some games where if you are an American user you will celebrate the 1 July, and in the same game, if you are French, you will celebrate French Independence Day on 14 July, so it’s very important to do that localisation," he said.
Facebook keeps a close eye on the European start-up market, and meets regularly with venture capitalists. However, when it comes to choosing platform partners, Codorniou said it’s 70pc about chance, 30pc about Facebook making bets.
"Right now, we know that the next big thing will come from Tel Aviv, Moscow, Helsinki, London, eventually Berlin. But one day Nordeus out of Belgrade in Serbia shows up, and it’s the hottest thing in gaming in the world. So there are always surprises," he said.