THE WEB 2.0 - BRINGING GAMES TO THE COMMUNITY

18 January 2008

Silicon Valley entrepreneur in the advance guard of a growing trend


Catching the first wave of the trend toward Internet community gaming interaction is high profile Silicon Valley entrepreneur Mark Pincus (41), the New York Times reports this week. Pincus has built a number of successful Internet start-ups ahead of emerging trends that include an early social networking site branded Tribe.net, and has now unveiled his latest brainchild, the Zynga Game Network.

Zynga is a company devoted to developing online games that work on the pages of popular sites like Facebook and MySpace, and Pincus has high hopes for the future albeit from a small 27 employee San Francisco base. For the past few months this group has been reinventing card games like poker and blackjack and classic soft games like Risk, Boggle and Battleship. The idea is that users of social networks can add the games to their profile pages and play with their friends online.

The games, particularly Zynga’s version of Texas Hold ’em poker, have already attracted hundreds of thousands of regular users, the newspaper reports. The company and others like it share a belief that Internet ventures can be created on the back of the rapidly growing social network phenomenom. In May last year, several of these networks invited entrepreneurs to take advantage of their large numbers of users and to keep the revenue they generate from advertising.

In just one case, that of Facebook, over 7 000 applications have been introduced since the company opened its doors to outside programmers, and more than 80 percent of its users have added at least one application. Seasoned companies and small start-ups alike are rapidly developing add-ons for Facebook and other sites, including MySpace, which has promised to follow the Facebook lead and open its service to developers in the near future.

Casual games, which are easy to master and cheap and enjoyable to play are also gaining in popularity and form part of Zynga's forward plan, which has been backed by $10 million in investment capital through the venture capital company Union Square Ventures. Fred Wilson, a partner at USV says: “People already love to play casual games. But when you take a casual game and stick it inside a social network, it becomes way more exciting. This is like pouring gasoline on a fire.”

Other investors in Zynga include high-profile Silicon Valley figures like Peter Thiel, a Facebook investor and board member; Reid Hoffman, the founder of LinkedIn; and Robert W. Pittman, the former chief operating officer of America Online.

Facebook's founder, the 23-year-old Internet entrepreneur Mark Zuckerberg is on to something big with his concept of a "social graph" Pincus told the NY Times: "The idea is that applications like games are even more appealing, and spread more quickly through networks, if friends, family and colleagues can share the experiences," he said. “I’m not a game fanatic,” avowed Pincus. "I generally don’t have time for games, but it could be a really nice way to connect, for example, with my niece.”

Pincus admits that none of Zynga’s game genres are particularly rare. For example, there are scores of versions of Texas Hold ’em on the Internet, and when Zynga introduced its version in July there were already several others on Facebook. But the company develops its games specifically with the interactive features of Facebook in mind. For example, users can invite their friends to play, or see who is already playing and join them in the middle of the game.

Zynga will have an embryo social website of its own shortly; beginning this week, when users join one of its games, they will have access to a universal lobby where they can chat and interact with other users who are playing other Zynga games on other social networks.

The company hopes to one day solicit traditional advertisers, but for now it makes money by selling ads to the creators of other applications who want to pull in more users. Zynga charges an advertiser 50 cents every time a Zynga player installs the advertiser’s application. It offers players incentives to do so; for example, blackjack players can get extra chips by clicking on a link.

50 000 players already click on such links each day, and Zynga is already breaking even despite having not yet accessed its venture capital. The company has a dozen games and is rolling out four to eight new ones a month, boasts Pincus. All of them trail behind the popularity of Scrabulous, a Scrabble clone that is one of the most popular games on Facebook, with nearly half a million active users.

Two brothers in India created the game but have since become embroiled in a legal tussle with Hasbro, the toy company that owns the Scrabble brand. Alerted by the possibility of such confrontations, Pincus says he is careful to respect the prior branding of others on his versions of popular game genres.

The NY Times says that Evan Wilson, a senior research analyst at Pacific Crest Securities, confirmed the online game industry was rife with copycats, but this does not generally pose a legal problem if the knockoffs have different names and altered mechanics. And he thinks that if companies like Zynga prove successful, game giants like Electronic Arts, which owns the digital license for Hasbro games, will move quickly to enter the arena.

That is what Pincus is really counting on - his company’s valuable real estate, at the top of the lists of “most popular applications” on sites like Facebook, could become an extremely valuable asset.

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