Traditional game developers are scared to death of what is happening with “social games“, but that is fodder for another post. This post is about the big gasp that went up throughout the game industry when the site Second Shares posted a well through out article that that came up with the $5B valuation.
NOTE: As a corollary to this article about why I think Zynga is worth so much, you should check out why I won’t invest in traditional game publishers.
I posted the following thought on Twitter and Buzz yesterday, but could not get any traction. If you want to discuss this issue, let’s use my Buzz post (I have been getting so many comment spams, that I had to turn off comments on this blog).
Activision =$15B, Electronic Arts = $6B, Ubisoft = $1.3B. Zynga = $5B? Can this be true? Check out my thoughts. #twitter
As hard as it is for hard core gamers and developers to accept it, Zynga and other “social” game publishers are coming on strong. I believe there is good reason for this. EA, Activision, and Ubisoft do not have direct relationships with their customers, let alone have their email, demographic info, and credit card info, and precise analytic data about how players are using their games.
Also, at the end of the day, the old school, hard core gamer, console specific game publishers are addressing a niche market, i.e. 14-25 year old males. I admit it is a great market, and it has proven to be willing to buy a lot of games over the years, but when compared to all males and females in the world, it is a niche market.
All games will be social so that will not continue to be a unique selling point. However, getting off the console onto social nets, the net at large, and mobile markets with a willingness to address different demographics (older men and women) with different types of games and using a metrics drive development approach is a unique selling point. I think will be easier to address this type of change from a clean slate than it is to turn a hard core console game publisher.
It is already too late for the old school publishers to react. Zynga is worth too much to be bought by any of them. At some point, they will realize that it is easier for them to stick to their hard core knitting than it is to address this new demographic.
On the other hand, the guys at Venturebeat feel the valuation is way too high. At some point we will see, and this blog post will keep me honest.
Jeff Tunnell, Game Maker
Make It Big In Games