do very well. You started with the paid application model and also developed a virtual goods marketplace there.
X: Where does GSN fit in now?
DM: GSN was a leader in the skill-based game business early on and continues to be a leader today. GSN.com is also a casual game portal. And in 2010 we developed what people are referring to as a virtual casino, which is an incredibly popular space both on Facebook and on smartphones.
X: Define some of the terms here—what’s a skill based game, and what kinds of games are in a virtual casino?
DM: The key to a skill-based game is you need to remove all chance. In Solitaire, for example, you enable people to compete with the same exact deck. The other piece is fair matching. We want to make sure the games are enjoyable for all by matching people who have similar skill levels.
In a virtual casino, the games look very similar to real-world or “terrestrial” slot machines. The only difference is they deal with virtual currency. Typically, companies that play in this space give away an allotment of free tokens every day, and people who use their allotment can either wait until the next day to get another allotment or purchase more. You can’t win anything but more virtual currency.
X: Is that genre getting popular?
DM: Very much so. It’s becoming incredibly popular on Facebook, and now on the iPhone. If you look at the top-grossing applications on Facebook, a large number of them are virtual casino games. Zynga actually built its business on a casino game, Texas Hold Em poker, which funded them and enabled them to branch out into the other genres.
X: Which game genres are most profitable right now?
DM: If you look at it on an average-revenue-per-user basis, I think you’d find that mid-core and virtual casino games are highest up. The mid-core market is very small compared to the FarmVilles and those types of games—it’s probably only 1 to 2 million daily active users. But in terms of actual revenue, [mid-core games] generate tremendous amounts, because their users are spending a higher amount per person. A similar thing happens with virtual casino games. A Zynga game might have 15 million daily active users, but the revenue per user is going to be much smaller.
X: What are the most popular games within the GSN Games portal?
DM: Wheel of Fortune Slots is one of the best-known terrestrial slot machines, and we have the license for it in the social space. Undersea Treasure Slots is popular. Also Video Bingo, Outlaw Video Poker, and Enchanted Library, which is a hidden-object game with a collection and decoration component to it.
X: How did GSN end up building a games portal, rather than marketing separate games individually, the way Zynga does?
DM: The long version of the story is that I started a company called Mesmo back in 2006. It was a social video company, before YouTube was really big. The Facebook Platform was launching around the same time we were launching in May 2007, and we quickly jumped on that platform, but we realized that we were way ahead of the market—nobody was watching video on Facebook at that point.
So we pivoted into games in the TV space. TV Trivia was the first game we developed, and that ended up being huge. It was probably the largest TV trivia game every created. At the peak we had probably 5 million monthly active users. And we tried to build a social TV site out of that, and we broadened out into fan pages and the ability to
