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Social gaming is a hot topic here at SXSW. The industry has been growing at an incredible rate and traditional gaming companies have been caught unaware by a flurry of new market entrants.

Playfish was one of the 2009 success stories. Within two years of starting the company, they are attracting 60 million monthly players and are selling 90million items a day (virtual goods and unlockable gameplay). It’s also been a huge personal success for the founders, who sold the business for £240 million last year.

I noticed that Sebastien de Halleux, one of the co-founders of Playfish, was speaking on a panel this morning so I went along. It has been one of my SXSW highlights so far. Here are a few notes (NB comments are paraphrased).

How are social games different to what’s gone before?

SdH: The design of the games is the main difference. Rather than an immersive story-telling experience designed for gamers it’s a social experience designed for non-gamers.

ET: Story’s have endings so are not as scalable or well suited to social gaming platforms.

OA: It’s like going back to how we used to play board games with friends. From faceless gaming back to connecting with real people. There’s also a massive shift for the gaming industry; the economics of gaming is driving business model changes.

JD: Social has brought gaming to the masses. Facebook has also had a profound effect on what people are prepared to share online. People are open about their identity and that’s helped drive the big shift.

ET: The difference is that games can now transmit themselves through invites and gifting. So the opportunity is for a game to pass through recommendation not through marketing. As a result you don’t have to be a big brand or established business to have success. Just focus on creating good games.

Lessons you have learnt and surprises

ET: It’s useless to predict what will work in the future (social gaming) from the past (traditional gaming). For example, who would have thought a game about farming would be a runaway hit. You have to try a wide variety of things. Find a success and then drive hard into it.

SdH: Speed of the industry has evolved. Don’t even think about a change from time cycle in years to months to weeks. We think in evolutionary cycles – EA has published 17 versions of FIFA in 17 years, and our Pet society game has already been through hundreds of evolutions. It is constantly evolving with continuous feedback into each step.

JD: We’ve learnt that social games are living, breathing services. They are not stand-alone games or products. If you launch one, you are committed to it. The volume  of feedback, and the emotion behind it, is incredible.

ET: We’ve learnt that gameplay is there as a delivery mechanism for the content, or as a facilitator for social interaction. It’s not the reason for being

SdH: Launch early. We launch at a 10% completion milestone. We launch unfinished products and that’s fine as early feedback helps you get the game right.

Monetisation of social games

SdH: In-game micro-transactions are key. The game is free and we create emotional incentives that make people want more of the game. Audiences are ready to pay for good games, but in small chunks. Just don’t get fooled into believing that you need large ticket transactions. Try not to think in terms of a business plan based on: Price x Quantity. Instead, think about Distribution x Engagement x Lifetime User Value.

ET: we’ve found that there are two things that can have a disproportionate impact on profitability:

• Creativity / self-expression – allowing people to be creators makes them care more and increases their life time value.
• Competition – player vs. player conflict drives a willingness to pay for competitive advantage.

What’s the place for gaming brands in social?

There was some disagreement on this one.

OA: brands will take over this space. For an example, look at the success of Dante’s Inferno, an average game that got traction thanks to the brand.

SdH: The value of brands in a retail world was huge. It helped them fight for shelf-space and increased trust at the point-of-purchase. But there is no shelf space in social games [not sure I agree with this as we all look at the “top 25”]

Social gaming is driven by invitations from your friends. Direct emails into your inbox from people you know, alleviate the need for brands as a purveyor of trust.

But brands will be have a role especially in their ability to make you care more about a game by mixing offline with online. E.g. FIFA. There is a huge opportunity to innovate here as we move towards games with 1Bn players.

When it comes to other brands taking part (e.g. Coke) advergames do not work well as people see through them. However it is possible to create engagement models where brands add to the experience.

How will mobile gaming integrate with social gaming?

SdH: mobile is difficult to integrate. There are so many issues to balance if someone starts a game on the web then wants to continue playing on a different platform like iphone.

We are running a service. Running a service on the iphone is hard as they are built for application download. There are workarounds, but microtransactions in games are difficult (iphone does not allow individual item purchase, nor do they allow gifting). The factors that drive success on the web are difficult to replicate on mobile.

ET: The trick of getting social mobile to work will be hitting the union (think Venn diagrams) not the intersection of iphone and Facebook. There needs to be a synergy of multi-platform, not just a replacement.

Mobile is more like a way of making money out of what we already have.

Then it got controversial.

OA: we want Xbox and Facebook fully connected. Games will become fully transferable between the web, mobile and your TV screen.

ET and SdH: this has been forecast for years, but will not happen.

Things to watch

• The frictionless monetisation of Facebook credits is exceptionally powerful
• Location aware games like Gowalla and Foursquare.

Abbreviations:
SdH Sebastien de Halleux – Playfish co-founder
ET – Eric Todd, Playdom
OA – Omar Abdelwahed, Ubisoft
JD – Jon David, PopCap Games
GD – Gareth Davis, Facebook (moderator)

Read all our posts from SXSW

At FreshNetworks, we aim to bring you the best posts in social media, online communities and customer engagement online. In case you missed them, find below our top five posts in February.

1.The Economist on Social Networking

At the end of January, the Economist published a special report on on social networking.Their special report on A World of Connections, provided an excellent overview of the current state of social media for those still trying to get to grips with it. You can download a free pdf of the report here. Or check out our summary of key highlights in this post.

2. Vodafone, Twitter and the challenges of managing your brand in social medial

An interesting afternoon at Vodafone in the UK saw a tweet on their official @VodafoneUK account that was clearly not the kind of message the brand intended to share with its customers. You can read about what was actually said elsewhere. But, in addition to some rather questionable grammar, the message was offensive and not appropriate for a brand’s Twitter stream at all. It was clearly the work of either a hack, a case of very bad judgement, a disgruntled employee or an inappropriate sharing of passwords.

Putting aside any short-term issues and negative publicity, there are a couple of things we can learn from what happened to Vodafone. First in how you should manage your use of social media as a brand, and second in how you should respond when things go very wrong.

3. Facebook’s redesign shows how important search is for social networks

In February, Facebook rolled-out a redesigned homepage and navigation to its users. There four main areas where the site had changed: improved use of space n the main panel, made messaging easier, put notifications together in one place, and moved the search box. It is the last of these improvements that is, perhaps, the most significant. Facebook did more than just move the search box, they increased its importance on the site and showed the importance of search for Facebook, and indeed all social networks and online communities.

Facebook is huge, but to many of us feels very small. We mainly access content through feeds, messages and notifications. Training us as users to make search an integral part of our Facebook experience will make it a much bigger and more useful tool for us all.

4. The Matthew Effect – linking and how things become viral in social media

The Matthew Effect dates from the 1960s. It is the theory, first expressed by sociologist Robert K. Merton, that those who possess power and economic or social capital can leverage those resources to gain more power or capital. Put simply: the rich get richer and the poor get poorer. In this post we discuss a great presentation and video from Torsten Henning Hensel that explores the power of linking online and how the Matthew Effect can help us to understand how things become viral and spread online and in social media.

5. Russia: the fourth largest social networking market in Europe

In a post from almost a year ago we look at data showing that Russia was the fourth largest market in Europe for social networking behind the UK, Germany and France.

A useful survey from global PR firm Burson-Marsteller this week looks at the ways in which the Global Fortune 100 companies are using social media. The tools they are using and how they are developing a social media strategy. The survey looked at 100 firms in the US, Europe, Asia-Pacific and Latin America and examined how these firms are using social media.

The summary presentation is below, and is Required Reading here at FreshNetworks this week, and the full report can be downloaded here.

The survey highlights the ways in which these firms are using social media and is also insightful in terms of the tools and platforms (Twitter, Facebook, YouTube or a corporate blog) they are using. It is interesting to compare the use of the different tools – Twitter is the most popular and blogging the least. And to compare how behaviour differs by regions – particularly the differences between Asia-Pacific and the US and Europe.

Summary findings

• 79% of firms are using at least one of these social media platforms – this figure is higher in Europe (88%) and lowest in Asia-Pacific (50%) – and 20% of them are using all four
• The most popular platform is Twitter, with 65% of firms using this. Facebook and YouTube are next (54% and 50% respectively) with corporate blogs the least used (just 33% of firms surveyed)
• For companies that use Twitter the average number of accounts they are running is 4.2, with some companies (notably AT&T and Nokia) having a large number of accounts – 15 people in the case of these two firms
• For those companies who are engaging, their activity levels are mixed. 82% of those using Twitter have tweeted within the last week, whilst only 36% of those with blogs have added a new post in the last week

Twitter

• 65% of Fortune Global 100 firms have a Twitter account. In Europe and the US this figure is over 70%; in Asia-Pacific only 40% of firms have an account
• Firms are tweeting and average of 25-30 times per week
• Only 38% of companies are using Twitter actively to respond to other’s comments and questions
• In general companies are being followed by many more people than follow them. Typically they have about 1,500 followers and are following about 700 people

Facebook

• Facebook Fan pages are less popular that Twitter, with 54% of Fortune Global 100 firms having a page. They are significantly more popular in the US where 69% of fims have a Facebook Fan page
• Only 59% of companeis with a Fan page are actively using it with an average of only 3.8 posts per week
• The number of fans is higher than Twitter followers, with an average of 41,000 for firms with a Facebook Fan page

YouTube

• Half of all Fortune Global 100 firms have a YouTube Channel. Again firms in the US are more likely to have a Channel and those in Latin America least likely (59% and 33% respectively)
• 68% of firms with a YouTube channel are using it actively, with an average of 10 new videos each month
• Typically, firms are getting 40,000 views of their videos each month and over half of all Channels have comments

Corporate Blogs

• Whilst only a third of Fortune Global 100 firms have a corporate blog, these figures are much higher in Asia-Pacific (50%) and low in Europe (25%)
• The average number of posts per month is 7 (but again much higher in Asia-Pacific: 14), and almost three-quarters of blogs have comments

So the first FreshNetworks breakfast briefing has just finished and we had some great insights into how not for profit organisations (NFP’s) can use social media for strengthening their membership offering.

Breast Cancer Care Case Study

First up to speak was Bertie Bosredon, Assistant Director of Services (Information & Multimedia) at Breast Cancer Care. Bertie has been busy changing Breast Cancer Care’s social media strategy to utilise other social media platforms and contribute to overall integrated structure. More importantly changing the way they use social media to start listening and conversing with people online.

There were some key messages that resonated from his presentation, these were:

1. Have an integrated approach

Breast Cancer Care realise that a lot of conversations that were happening online were not necessarily happening in their space but through working with key influencers on other platforms supplying them with packaged information you can increase your presence online and collaborate with a lot more people.

2. Involve your members in planning

Bertie has been getting members involved in the planning of the current and future use of social media asking them what they would look for when engaging with Breast Cancer Care and how they could work this into a strategy that would best fit their organisational aims. Although a simple concept many companies forget that members and users usually know more about your brand then you do and can deliver some great insights.

3. Aligning all channels of communication

Breast Cancer Care have made sure that the social media strategy that they have been using is aligned with their offline print material so that it doesn’t matter where members go for the information. This means that they can use the channel that they prefer and the message will be consistent.

A popular point from Bertie: it doesn’t matter about the traffic to your site; care about how many people interact with your content even on other sites.

Social media marketing for not for profits

The next speaker was our very own Charlie Osmond from FreshNetworks. Charlie was speaking about how social media can be used for marketing and with specific reference to NFP organisations. Engaging people online is not about going for that quick win viral campaign but to successfully engage people online you need sustainable engagement.

Some key points to take away from Charlie’s presentations are:

1. The importance of the community manager

Engaging people online especially for sustainability requires a good community manager. They need to be able to reach out to people and facilitate discussions on a multitude of different platforms.

2. Know your tools but don’t let them drive your strategy

In order to be able to know what channels are available to you, you have to have a grasp of what’s in the vast social media environment. To create a successful strategy you should be looking at the aims of the business and the needs of the people that you want to engage.

3. To drive word of mouth for a certain cause take the ‘believe, belong and bear witness approach’

A great way to get people involved in a cause is to find people that believe in it, help them become involved in it and then help them bear witness to what they believe in this will help spread the message of the organisation through yours, and their own networks.

Steve Bridger on social media in charities

Finally but by no means least was Steve Bridger. Steve is a social media consultant and has some great (and extensive) history in community management for various charities. One of the more prevalent points of Steve’s presentation was the importance of putting people at the heart of your social media strategy

Some great points from Steve:

1. Help your advocates to amplify their voice

A lot of member organisations were using their current strategy to try and control conversations and go against ‘the flow’ of what people were online to do. They had a clear goal that they wanted to achieve and member organisations should be “enabling and empowering” these people to help deliver your message.

2. It’s about relationships not transactions

Member organisations and more specifically charities are currently set-up for transactions and are very ‘me’ focussed, there is greater value for charities if they position themselves for conversations and engagement.

3. You have to be in it to win it

A lot of companies are hoping for a win in social media what ever that may be but they don’t have a social media policy or ban social media access completely. A restrictive approach rather than a guided one causes bottlenecks at many organisations and restricts valuable internal knowledge.

It was great to see the focus on relationships and emphasis on the value rather then how much money can be made. There were lots of interesting perspectives and too many to write all in this blog post. A big thank you to all the people that attended there were some great discussions and insight from lots of different organisations and another big thank you to the speakers involved.

This week we have been looking at social media for small businesses. Ways in which they can use the social media tools that exist to build their brand, engage their customers and learn about their brand, market and competitors. It is as important for small businesses as it is for large brands to build a social media strategy. And there are many different ways that you can start to use social media to get these benefits.

And social media strategy should be based on what your brand is looking to achieve. Only when you have established this should you start to experiment with different social media tools and will you be able to measure the success of what you are doing. This need not be an expensive and elaborate implementation, some great tools exist for small businesses to use to help achieve their aims with social media and this week we looked at four of them:

1. Social media monitoring and buzz tracking: Any social media strategy should start with a thorough process of social media monitoring. Listening to what is being said about your brand, competitors, market and customers. There are a range of free buzz tracking tools available and setting up some simple monitoring tools is something that any small business should do.
2. Twitter and targeting customers: Twitter is a very flexible tool. Some people think that it is most useful when you are following and being followed by very large numbers of people. But this is not always true and it can be particularly powerful with small groups. You can build a small community of people online who are interested in the same issues and use this to engage customers or potential customers. Better to target and engage a smaller group of people than to try to appeal to everybody.
3. Blogging and brand building: Blogging is a great tool that any and every brand should consider. For many small businesses, blogs are a tool that can help them punch above their weight. The content, themes and information that they share can lead them to be thought of as much larger or much more established than they really are. Blogging provides an easy way for organisations to share their thoughts and their content. And people will respect you for this.
4. Foursquare and customer engagement: Foursquare is just one of a number of mobile-enabled and geo-location social media tools that are being developed. They allow people to connect and share information based on where they are. Foursquare in particular offers great and exciting opportunities to brands. You can find out who is visiting your shop, store, cafe or building and then work out ways to engage them and turn them into loyal customers

These are just four ways in which small businesses can use social media tools as part of a social media strategy. They are all free tools to start using and the posts linked to above contain more details about each of them. Using and experimenting with social media tools need not cost money. The important stages are in the thinking and planning about what you are looking to achieve and so which tools are most appropriate, and then in how you manage and grow your activity in any tool you choice.

Small businesses can benefit hugely from a social media strategy. Plan what you are looking to achieve and how you will measure success, and then experiment!

You can read all our posts on social media for small businesses here