Musings on Zynga’s dominance of Facebook games

Nicholas Lovell wrote a great post earlier this week provocatively titled I think Facebook is over.  Nicholas writes about games and what he means is that Facebook is over as a platform to build sizeable new games businesses because competing with Zynga at scale is all but impossible, due to their size.  Amazingly Zynga 283m monthly active users is more than their next nine competitors combined (see AppData).

As Nicholas describes, Zynga’s scale translates into an unassailable competitive advantate for three reasons:

  • Their ability to cross promote their own games is an order of magnitude better than their competitors
  • They have the resources to ruthlessly copy any new games that start succeeding (e.g. Empires and Alies was a response to Army Attack and CityVille a response to Social City)
  • Their advertising budgets are much larger

In summary Zynga has scale and has locked up distribution, and competing with them in their own backyard is now analogous to trying to compete with EA in boxed console games.

(Note the caveat in the first paragraph: compete at scale, it remains very possible to build smaller profitable games businesses on Facebook.)

It is interesting to think about what this means for other games platforms, most notably mobile and the open web.  In both these areas the scale advantages and network effects that Zynga has benefited from are absent due to the presence of app stores and fragmented distribution.  Rovio, Bigpoint and MoshiMonsters are the hot games success stories here in Europe at the moment and all three have built success by working with multiple distribution partners.

All of which makes me wonder whether smarter games developers will increasingly be opting for platforms other than Facebook.  If they do, and the quality of games on Facebook starts to decline as a result then the title to Nicholas’s blog post might come to be regarded as prescient rather than provocative.  At least in a small way 🙂

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