Essay on social games, and the future possibilities of the video game industry, first published in Prospect magazine, December 2009
Kristian Segerstråle is telling me what makes his videogames company unusual. “Most of the $50bn [£30.4bn] or more spent on videogames each year goes on that emotional, solitary, caveman-like journey of you versus the monsters,” he says. “But our games are different. They’re not about what is going on between you and the screen; they’re about what goes on between you and your friends when you play. They’re much more of a medium and a catalyst, for expression, competition, co-operation.” They are also a stupendously good way of making money.
Segerstråle, a boyish 32, is founder and CEO of Playfish, one of the world’s leading “social gaming” companies: makers of a new kind of videogame that is rapidly becoming as essential to online life as sharing images or reading a blog. It’s mid-November and he is “super excited”—not surprisingly, given that Playfish has just been bought by one of the world’s largest and most revered videogames publishers, Electronic Arts (EA), in a deal worth up to $400m (£250m). Playfish didn’t exist two years ago. Today, its games have over 60m unique monthly players and it’s not even the largest in its sector (market leader Zynga boasts over 100m after just two-and-a-half years in existence). So what, exactly, has been going so right?
The easiest answer has two words: social networks. Facebook, the world’s most influential social networking platform, now has over 300m active users. The only website to command more online traffic is Google. Other leading social websites like MySpace and Bebo reach several hundred million users globally. Factor into this the swelling number of smart-phones with internet capabilities, such as Apple’s iPhone, and you have a big business opportunity. Because, next to sending messages, the single most popular activity within these new social platforms and on these new devices is playing games.
The history of games is as old as civilisation. Competitive games are recorded as far back as 2,600BC, while archaeologists have found game “boards” that were apparently scratched onto the backs of statues by bored Assyrian guards in the 8th century BC. Technology has not changed human nature but it has given unprecedented rein to some of our innate impulses and, in particular, to those parts of us that the world of work and business have not used to best advantage: our love of exploration, learning, interaction and, perhaps above all, our sense of fun.
Playfish has created ten games to date, and most of them are a long way from the traditional idea of videogames as a violent, crude form of escapism. Its first title, Who Has the Biggest Brain?, is an IQ quiz. Starting to play it takes less than 30 seconds: having logged into Facebook or MySpace (or switched on your iPhone), you look up the application and, after a few clicks and no expenditure, start playing. An excitable cartoon figure invites you to pit your wits against four classes of game: analytical ability, calculation, memory and visual processing. And then you’re off—counting the number of blocks in increasingly complicated Lego-like shapes, for instance, or answering a series of sums against the clock.
The game does all the basics well: it features a bouncy, appealing interface and is challenging without being infuriating. The key to its success, though, is its integration into the social network itself. The moment you finish a game, it tells you how you rank compared to anyone on your “friends” list who has played the game and invites you to send a “taunt to a friend” to show off your prowess. Playing takes five minutes, and your friends don’t have to be online for you to be playing with them. They’ll find a message waiting for them on Facebook when they next log in, alerting them to the fact that they’re slightly lower down the big brain pecking order.
There are many thousands of playful social applications made by a whole spectrum of companies today, ranging from Scrabble emulators to programs encouraging you to “bite” your friends and turn them into a vampire/zombie/werewolf. But behind the swelling selection of Playfish titles—which range from a geography quiz to a “virtual pet” simulator—lies a close relationship with players that sets the company apart from its rivals. One corner of the London office is devoted to feedback and, Segerstråle says, “you’d be amazed at the stuff people send in.” Stuck to the wall are fan letters, drawings and even photographs of Playfish characters, including one snap of a three-foot-high cat knitted out of blue yarn.
The Playfish business model is a good example of the digital/internet “free” revolution working as it should. As with other social game producers, the basic Playfish games are given away free and the company then makes money through lots of small add-on purchases called micro-transactions. And yet the more mainstream end of the videogame market appears to be almost completely unaffected by the free revolution. People may no longer buy books, newspapers or music as they once did, but vast numbers remain willing to pay top dollar for the latest games. This was made clear on 10th November 2009 with the release of the game Call of Duty: Modern Warfare 2, which instantly wrested the coveted title of most valuable entertainment release in history from 2008’s biggest videogame, Grand Theft Auto IV. Within five days of release, Modern Warfare 2 had grossed over half a billion dollars; in its first 24 hours on sale, one in 49 people in Britain bought a copy.
Perhaps the most remarkable thing about the game’s triumph, though, was how conventional the economics behind it were. Modern Warfare 2 is a blockbuster: a piece of premium media content that has been lavishly, lovingly crafted by a team of many hundreds of expert programmers, artists, writers, testers, directors and animators over many thousands of hours. With a recommended retail price of £54.99, and an estimated overall budget of around $200m (including huge global marketing), it was largely bought as a boxed product. It represented, in other words, a success antithetical to almost everything that new media stands for—more like an MGM behemoth from the golden days of Hollywood than a virally-marketed, word-of-mouth indie flick.
Modern Warfare 2 came as a welcome commercial triumph at the end of a relatively slow year for games as a whole. And yet, for the games industry itself, it was the fact that EA was willing to pay up to $400m for Playfish rather than Modern Warfare 2’s sales that made the biggest waves. Why? The reason is not simply that an old model is giving way to the new. It’s that companies like Playfish are starting to dissolve the longstanding divide between those who identify themselves as “gamers” and those who would never go within a thousand yards of something like Modern Warfare 2. Gaming may be about the most mainstream subculture it’s possible to imagine, but it does not yet have a presence at the heart of our culture. As this changes, its different sectors are more likely to reinforce each other than they are to compete—and a cascade of associated transformations will not be far behind.
The main divide in gaming audiences currently runs along age lines; but there are also questions of taste, aptitude and perception. Modern Warfare 2 is a dazzling piece of programming, but it also presents a formidable challenge for anyone not acquainted with the intricacies of the FPS (“first person shooting”) genre. There are plenty of consumers who have little interest in its kind of “twitch” gameplay, which demands lightning fast reactions, not to mention those who dislike its gun-toting content. Its audience is composed largely of males aged between 18 and 35. These are the kind of players who are guaranteed to pay up every time a major release comes along, and they are the ones the games industry has to thank for its current wealth. Compared to the wider world of those who use social networks, however—an audience that is more female than male, and that ranges in age from five to 100—they’re merely a niche market. And it’s the massed ranks of this far larger audience that is the key to both the success of companies like Playfish and to the larger commercial excitement accompanying their expansion. For their growth owes as much to financial as to social innovation, and at its heart lies a business model that is finally combining videogames’ intense consumer appeal with the sophistication of 21st-century online business.
“We’re operating at the heart of a big shift in the games industry, as games move from being a product to being a service,” Segerstråle says. “With a social game, you only invest a fraction of the total development cost pre-launch, because you want to get it out as soon as possible. You can create the title in chunks. The budget for our titles ranges from $200,000 to $1m, but just 30 or 40 per cent of that is up front.” Mainstream games require budgets many times bigger than this, all of which has to be paid up front, which can put off risk-averse investors. All that is now changing, with venture capital money flowing towards the social gaming sector.
Investor excitement is sustained by the attraction of the “free” online games business model, and by the aspect that I mentioned earlier—micro-transactions. Unlike mainstream titles, social games producers do not charge up front, but rather generate the bulk of their revenues through many millions of tiny purchases. Everything from extra training options to faster advancement to fancy clothes for pets can be bought for a couple of dollars or less, while a progression through levels of achievement and the accumulation of in-game currency keeps you motivated. It’s a model that was pioneered in Asia, where consumers don’t tend to own computers and will not pay big money in advance for games.
Behind this micro-transaction model is the secret of these games companies’ success: data—and data of a kind that no other online business can match. The biggest online games companies now record more than 1bn data points every day, measuring everything from whether blue or red objects generate more sales to whether a certain phrasing improves the rate at which users click on a particular purchase. They can also see, for instance, exactly when the majority of players give up, and then release several subtle variations on that precise point to different segments of their audience, recording what works best and following it up with targeted email questionnaires. And games companies have only begun to scratch the surface of what’s possible. As Nicholas Lovell, an industry analyst, consultant and founder of the blog Gamesbrief, put it to me, “I can’t think of a single media company that couldn’t learn from the world of social and online games”—whether this is about the power of community, of precisely calibrated rewards, or of simply creating a virtual location so appealing that people will make it a part of their online lives.
Before Playfish, Kristian Segerstråle ran Glu Mobile, a company that made games for mobile phones. He says the inspiration behind his businesses is not just other videogames, but also his “fondest memories of growing up: playing with friends in the park, board games, cards.” These have fed his desire to bring back what he calls “that human element” to videogames, rather than “to drive people into deep dark cellars to interact with their 42-inch plasma screens.” Where once the kind of gaming pleasure he describes was confined almost exclusively to childhood, it is becoming more available to people almost all of the time. “This is a wonderful thing,” Segerstråle argues, “because it gives people this sense of being able to interact with each other over the generational boundaries and over other boundaries that are hard to cross: geography and time.”
Crucially, this audience no longer thinks of their behaviour as merely “gaming.” While chasing virtual soldiers around a three-dimensional landscape will always be a minority activity, the urge to pass time in casual play with a friend is something that anyone can identify with. It’s not even about winning, as the most successful games on social platforms demonstrate—from Playfish’s Pet Society (where you look after a virtual animal) to Zynga’s Farmville (where you run a virtual farm). It’s at least as much to do with the satisfactions of nurture and sharing. Like The Sims, the most successful single-player series of games ever, these games offer their users a miniature world they can manage and control in minute detail.
What makes electronic games quite so enjoyable and compelling? What most of the best minds pondering this question over the last 50 years can agree upon is that the satisfactions they offer have deep evolutionary roots and can exert an impressively strong grip on the human psyche. Few things satisfy us more than the sense of incremental mastery that comes from negotiating an environment especially designed to challenge, stimulate and reward.
Take what’s known in the industry as a “reward schedule”: a carefully tailored timetable that governs the rate at which different kinds of rewards are given to players. At the start, when a lot of basic learning is going on and a player doesn’t have much invested in the game, the rewards will come close together: more powers and options, graphical effects, new equipment, new areas to explore and so on. Gradually, these rewards will come further apart, with a tantalising random element included to keep players guessing (and hopeful). Psychologically, it’s a similar process to the kind of satisfaction gained from becoming better at a sport—golf, for instance. And as businesspeople have known for years, there are few better ways of gaining insight into another person and getting to know them than by playing a round of golf with them.
What videogames offer is both the automation of everything that is burdensome in the real world (keeping score, setting up, avoiding distractions, ensuring fairness) combined with the endless fine-tuning of an environment to keep it balanced and full of new content. I began playing World of Warcraft soon after it was first released; and yet, five years and the best part of 1,000 hours of play later, there is an ever-expanding list of items, achievements and quests I have yet to master. And still I go on playing—questing for just one more item, one more steed to show off, one more duelling victory to add to my tally.
Give someone a number, and they’ll want to make it go up. It’s a mechanism which is thought to have an especially powerful effect on the release of dopamine in the brain. Behaviourally, some argue, the most compelling videogames come dangerously close to being addiction machines—although games designers tend to retort that there’s still at least as much art as science to the process, and that the relatively high failure rate of even big-budget titles speaks for itself about the difficulty of compelling people into pleasure. It’s certainly true, however, that, in a well-made game, the more fun someone is having, the harder they are prepared to work. The mechanics of a modern game function as a kind of engine for generating effort in users—with the right learning curve and incentives, the right feedback and opportunities, and the chance to measure yourself against others. The evolutionary origins of play lie in humans learning vital lessons about the world through enacting a “safe” version of life-saving skills like flight, pursuit or deduction. And it appears that complexity and effort, far from being a bar to pleasure, can in fact be the most satisfying and stimulating incentives of all.
People have been “gaming” life in the pursuit of fun and profit for centuries. From collecting toys in cereal packets to gathering air miles via credit card purchases, it’s possible to give an activity “hooks.” What videogames bring is an unprecedented degree of automation and feedback: an aspiration towards a mental state first described in the 1970s by the Hungarian psychologist Mihaly Csikszentmihalyi as “flow.” This, he argued, was the mental state experienced by a top athlete executing a perfect sequence of manoeuvres or a musician losing themselves in performance; a kind of “optimal experience” gained from reacting to constant, shifting stimuli. It’s a state of harmony to which most forms of play aspire, and a perfect metaphor for the balance of rules, actions and consequences that all videogame designers aim for.
Videogames are perfectly pitched to deliver this kind of sensation because they are interactive. And this has applications well beyond mere entertainment, as I discovered when I spoke to the man credited as the founding father of virtual economics: the American academic Edward Castronova. As far as Castronova is concerned, fun must come first whenever you want to get anyone learning, trying and expressing themselves in the context of technology. “What I say to a lot of professionals in the area is that you must surrender to the principles of a game. You have got to surrender to what the hairless monkey [that is, the human animal] wants to do; and once you do that, you can do anything. I know people are suspicious of words like ‘fun.’ But I think you’re not getting the whole person if you’re compelling them.”
From Castronova’s perspective, the fundamentally measurable and manipulable nature of electronic media means that the time for setting theories and ideals above practical observations is now largely gone. It is no longer possible to pretend that you can change what people are like or, indeed, what they like. It’s all about using what you know.
What videogames suggest is that almost anything can be made more compelling with the application of gaming principles. This causes consternation among those who fear that games bring with them addiction, violence and social irresponsibility. Fun and play have been, for the last several centuries, words kept in a box tightly sealed off from work and adult responsibility. Whether we like it or not, this is now changing. And, for all the talk of addiction and dependence, the massive growth of social gaming suggests that most of the doommongers are wrong. We shouldn’t be worrying about gamers being sucked out of real life into a realm of unreal satisfactions. We should be looking, instead, to the gradual infiltration of play into our daily lives—the ways we socialise, express ourselves and, increasingly, think about everything from work to education to warfare. Understanding this shadowy world of virtual goods and transnational allegiances is a far greater challenge than chasing bogeymen.
The crossover between real and virtual actions is already well advanced in some fields. As political scientist Peter Singer describes in his book, Wired for War, the US military now spends $6bn a year on virtual and simulated training programmes. Not all are videogames in a strict sense, but their interactive scenarios are firmly rooted in the world of gaming, where learning occurs in real time in response to scenarios that look astonishingly realistic. One game, America’s Army, has been so successful at creating immersive military experiences that it doubles as a training and recruiting tool. The civilian version has now been downloaded more than 10m times. Do such games glamorise war for those far away from actual combat, or desensitise those fighting to the messy realities taking place on the ground? Given the increasing use of remote warfare, the answer is almost certainly a qualified yes. These are problems from a different world to that of social gaming; and yet some of the troubling questions they raise, about how remote interactions can both bring us closer together or drive us apart, are common to our future.
Then there is the more mundane but equally significant matter of business, and the eternal challenge faced by managers and companies in general: how to keep people happy and motivated. Games get people to pay to perform tasks that are often hugely demanding and time-consuming, or that—in social games—involve them seeking out new customers and persuading them to play (and pay) as well. In January 2009, the IBM Institute for Business Value released a report on “lessons from online gaming,” which highlighted some of the factors behind gaming’s success: excellent communication tools, the use of collaborative spaces where ideas can be openly shared, the communication of clear rules and objectives, the use of realtime data to analyse outcomes and, above all, the linking of performance to recognition and incentives. It’s only a matter of time before the finely-honed lessons of game design begin to be implemented across many workplaces.
In the field of education, too, games are beginning to reveal their potential: not only as tools for learning (although games like Nintendo’s Brain Training series have started appearing in classrooms around the world), but also as a broader context in which learning takes place. In Scotland, Derek Robertson—a former teacher, and now national adviser for emerging technologies and learning—talked me through a typical school term that used the music game Guitar Hero to motivate pupils. The actual time spent playing the game was quite brief: what mattered was the easy weaving of the game through every aspect of classroom activity and the fact that this allowed students of all abilities to forget they were in a classroom and to start—for the first time, in some cases—giving themselves entirely to the project. “The teacher who was organising this first got the children to write a biography of an imaginary rock star,” Robertson explained. “Then they looked at each other’s writing and got the best five into a virtual band for the class. The band then made an album. Then it was decided that the album had gone double platinum, and the band had to go on a European tour. And this meant that they had to plan an itinerary, research capital cities and routes across Europe, hotel costs, flights, times, currencies. Then they had to create a video for an awards ceremony…” Did it work? “Absolutely. They even now have a national Guitar Hero challenge taking place in Scottish schools.” The boundaries between play and work, here, are already not so much permeable as nonexistent.
“Children now see everything in 15-second bursts,” one headteacher told me. “Gone are the days when they sat for 30 minutes copying off a board: they expect the world to be singing and dancing. One teacher uses Twitter live in her class, live links with Australia for geography, posting stuff on websites: this is a world that even five years ago wasn’t there. But for the pupils, it’s not like, gosh, this is something new. They grow up with this technology. It’s part of who they are.”
It’s easy enough to lament this world of “15-second bursts.” But these pupils will not be setting aside their phones and consoles as they leave school or university, and nor will they be setting aside the emerging landscape of play: a realm that is crossing increasingly seamlessly between work and pleasure, and between personal and public selves. Games may have a history as old as civilisation itself, while computers and the internet have existed for the blink of an eye. And yet the latter has been colonised and shaped so thoroughly by the former that it’s becoming increasingly hard to tell where the serious business of play ends and the playful business of living begins.