While the global economy has been blighted by prolonged periods of recession and sluggish growth since 2008, not all industries have suffered adversely. Take the social gaming industry, which has showcased considerable growth and has even threatened to supersede the popularity of traditional video gaming.
As a result of this vast and disproportionate expansion, the social gaming user base has swelled considerably, with a staggering 81 million global citizens playing at least one social game each day. This creates a compelling opportunity for small business owners across a range of industries to incorporate social gaming into their business model.
What Is Social Gaming?
In contemporary circles, social gaming refers to titles that are played through networking platforms such as Facebook. They allow interaction between individual users, and usually encourage participants to share resources or collaborate to achieve a common goal. In recent times, its growing user base and real-time nature has also appealed to various nonprofit ventures, which have partnered with market-leading designers such as Zynga to create titles that aspire to teach or effect social change. The best example of this came during 2010, when the design firm raised over $1 million for Haiti earthquake relief efforts by selling virtual products through Farmville and Mafia War Games.
In terms of the social gaming audience, there are a host of statistics suggesting that the majority of users are more mature than you may initially expect. In fact, the average age of a social gamer is currently 43, while 29% of all users are married with children. A further 43% of all social gamers have a formal college education, with 21% earning between $50,000 and $74,000 per year. These statistics offer an insight into an intelligent and relatively successful user base, who are targeted with increasingly creative and thoughtful gaming experiences to engage their sustained interest.
Small Business Lessons From the Social Gaming Model
From the way in which social game designers understand their audience, to the sheer profitability of the industry as a whole, it is clear that small business owners could learn a lot from the model. The social gaming industry is expected to be worth an estimated $11.3 billion by the end of 2016, as revenue drawn from such venues as advertising and the sale of virtual organic produce through farm-based games continues to rise. So what practical lessons can small business owners take from the social gaming model, and how can they be applied in other industries?
1. Create the Illusion of Free
While social games generate an incredible amount of money, the business model behind this profitability is far removed from anything else in the online industry. Essentially, social games are created under the illusion of free entertainment, as many do not charge a fixed fee for participation, instead offering players a choice of how much capital they invest into the experience. If this sounds like a flawed concept, it should be remembered that an estimated $1.26 billion was spent on virtual goods through social games on Facebook alone during the first half of 2012.
The key to the success of this model lies with the game designers and their knowledge of the social gaming audience. By understanding that the majority are engaged with families and in full-time employment, they have created a simple option between time and money – meaning players can either spend hours attempting to achieve a higher level, or simply purchase a virtual product or tool to help them achieve their goals faster. This is certainly a model that could be adopted by small and large businesses, whereby fixed costs would be replaced with optional fees that are applied to higher levels of service and actions that drastically enhance the wider consumer experience.
Several firms have capitalized on this social gaming business model, with Amazon providing a particularly relevant case in point. Thanks to the innovation of their Prime membership option, consumers have instant access to a range of free videos across several genres. But in addition to this, they can also view a number of titles that must be paid for. This affords choice to customers, who are allowed to dictate exactly how they spend their money when perusing the website, rather than investing in a generic subscription program. Thanks to the illusion of free membership, members are empowered to spend freely and as they see fit.
2. Enhance the Consumer Experience Based on Observed Behavior
One of the key advantages that social game designers have is that their product is played online and in real time, which means that moderators can see and respond to issues as they develop. It also enables manufacturers to observe user behavior and develop an understanding of what motivates gamers to spend their money. As a result, it is far easier for designers to innovate new additions and amendments as a way of enhancing their products, while also optimizing the impact of spending triggers and actionable icons.
The Zynga-based Facebook Farmville provides a relevant case in point, as its product teams monitor financial calls to action and participant satisfaction. This once forced them to realize that there was an adverse reaction among gamers when they spent an average of $35 each month on in-game purchases. This, in turn, prompted Zynga to change the call to action and allow users to perform in-game tasks and chores instead of spending cash once this threshold had been reached.
By monitoring user reactions and responding accordingly, social gamers remain engaged and willing to spend, and over time this generates a consistently growing profit margin. Small business owners can certainly apply this philosophy to their venture, simply by creating a fully interactive, ultra-dynamic social media marketing campaign that allows them to learn from their consumers and use this feedback to improve the products or services. This assists business leaders in understanding the exact issues that their consumers face, and allows them to make positive changes and potentially create brand new revenue streams.
One company that has understood this need is Giantnerd, which exists as an independent retailer of outdoor wear and hiking equipment. In order to develop an inherent understanding of its consumers, the company developed its own online community where shoppers can interact with employees and passionate vendors on a daily basis. With the opportunity to pose questions and engage in live chat with other members, customers can seek advice that is entirely subjective and designed only to enhance their experience. For example, if you consider novice hikers who are planning their first excursion, then this resource allows them to access advice on which products suit their chosen destinations. The result is an enhanced shopping experience, and hopefully a series of more educated purchasing decisions.
3. Embrace Cloud Technology and the Principles of CRM
It is easy to forget that Facebook is a cloud-based network, one that has inspired tremendous trust and engagement from its users. While it has not been without controversy, the site boasts more than one billion users who are empowered to share their personal details, experiences, and images within a public online space. By making social gaming titles accessible through the Facebook platform, numerous designers have subsequently tapped into this vast resource and its sizable volume of user data.
In effect, social gaming designers utilize Facebook as an interactive CRM (customer relationship manager) resource, which allows them to seamlessly manage user data and use it to optimize marketing, technical support, and overall customer service. This model has huge implications for small business owners, who can also utilize cloud-based platforms such as Zoho Office Suite, Microsoft Office Live, and Trello to improve their online capability.
All too often small business are hampered by the limitations of their in-house IT department, but cloud computing allows owners to run a number of advanced applications over the Internet. Whether you are looking to effectively manage a database of consumer information or hoping to perform a diagnostic analysis of customers using multiple data sets, cloud-orientated platforms offer unique advantages. They are particularly useful for independent firms that rely on the delivery of up-to-date information, especially those associated with marketing and business consultancy.
In terms of small business growth, one of the most relevant cloud applications is Adobe FormsCentral. Available in different guises either for free or at variable price points up to $11.99 per month, this system enables small business owners to create interactive forms and gather information from targeted consumers. Far from just correlating information, these forms are integrated with business intelligence capability that analyzes data sets and offers a fascinating insight into consumer behavior. Adobe FormsCentral can also be embedded into any online space in real time, including business websites and social media profiles.
Although it is undoubtedly unorthodox, the social gaming business model can serve as inspiration to industries throughout the commercial world. With its sustained growth set to continue until 2016 and beyond, the social gaming industry proves that not all sectors are doomed to fail during periods of economic instability. By adopting a similar approach to empowering customers, identifying behavioral trends, and applying cloud technology, small businesses can optimize their performance and achieve greater success.
What other business lessons can be learned from social gaming?