There are an almost endless number of online games. Some of them end in -ville. For that, we have game maker Zynga to thank. Zynga recently had an initial public offering (IPO), where they became a publicly traded company. (Zynga, by the way, had set its initial stock price at $10 per share. Today it is trading down, though the stock had a brief period over $10/share around the time that Facebook announced it would be doing its own IPO later this year. This impacts Zynga because Zynga itself primarily makes games, like Farmville, to be played on Facebook.) Farmville and the other games out there used to be grouped under the category of massively multiplayer online games. I think people stopped using this because the MMOG (or MMORPG for online role playing games) shorthand didn’t spell out anything cool. And we all have the attention span of six seconds. I just changed the channel.
What’s surprising is that an online game maker would have an IPO. It used to be that game makers were local mom and pop shops with a few employees (some of whom were here in Hunt Valley, Maryland, like good old Microprose). But game makers have become increasingly complex, in some ways like movie production houses. Games themselves have also pushed the technology envelope. New games were often an excuse for computer owners to buy a new computer (including yours truly) so that one would have sufficient RAM and a fast enough video card to play the new game du jour. Given that, the overall online gaming market continues to grow, and the need to access larger amounts of capital to create new games (both in dollars and human capital), it seems likely that more game makers will become publicly traded businesses (or be acquired by existing, large companies like Sony or Disney).
Farmville itself, and its ken, employ several tactics to increase their profit. First off, activities on Farmville take a certain amount of time to occur. For example, certain crops on your farm take a variable amount of time to grow, ranging from a few hours (in real time) or a few days. If you are in a hurry, you can convert real money into game currency, and speed up certain tasks. In Farmville, it doesn’t appear that there is a way to convert Farmville currency back into real dollars (though this is the case in other systems, such as Second Life). In addition, there is substantial advertising within the gaming system itself which generates a certain amount of value back to Zynga. Farmville also has a social component, in that users can become neighboring farmers, and can share resources or tend to each other’s farms. Farmville attempts to exploit the network effect of allowing users to belong to a virtual community of other game users. By that I mean that the more users of the game, the more they interact, and the interactions create more users, causing a positive feedback loop that increases the value of the game to its users and Zynga.
There are a lot of online games these days. Civilization has been working on a release within Facebook. Ultima (an Electronic Arts game) has operated its own online system on various shards (servers) throughout the world. Ultima has also recently been advertising a release of its system on Facebook. EA, by the way, is also a publicly traded company. Ultima itself has been available for a long time (I have fond memories of trying to complete Ultima III on an old PC). Blizzard’s World of Warcraft, along with dozens of others, are out there. For WoW users, ebay.com lists in-game items available for purchase with real money. In fact, there have arisen a number of game “sweat shops” where employees work on building up inventory for various online games to offer those virtual items for sale for real currency. As an industry, it appears that these games are here to stay.
The interesting question is whether online computer gaming can be applied within the regular business world. Gamify.com seems to think so.