Online social games started out as popular distractions for the masses on Facebook. But these days how often do you actually play “Mafia Wars”? While some doubts have been raised by industry insiders about the early model for attracting players to social and casual games, a handful of companies in and around New York’s lesser known gaming scene remain bullish about the sector’s potential.
Last week, Zynga (NASDAQ: [[ticker:ZNGA]]), arguably the biggest dog in this fight, acquired New York-based game developer startup OMGPOP in what may have been a defensive maneuver to absorb a fledgling rival. (Zynga did not immediately respond to requests for comment on the deal.) Meanwhile, Jun Group in New York, a social video ad platform, struck up a partnership on March 19 with casual and social game company King.com in London to use such games for video advertising. These are just some of the latest moves in this niche of the gaming industry that is trying to retain the interest of a fickle audience.
Casual and social games are breezy forms of entertainment typically aimed at the general public rather than more intensive, immersive “core” titles from major game publishers. Zynga, the developer of games including “Mafia Wars” and “Words with Friends,” established itself as an early leader in social games as Facebook grew in popularity.
However, Mitchell Reichgut, Jun Group’s CEO and founder, says changes by Facebook that cut back on rampant status updates whenever players earned rewards in social games have altered the way such games are promoted. “You used to be able to post that you just gained some points [in a game],” he says. “When they changed the rules a lot of that connectivity went away.” Seven-year-old Jun distributes marketing videos for its clients through mobile devices, social networks, and content sites.
Even with fewer status updates on Facebook promoting games such as “FarmVille,” Reichgut remains confident that Zynga and other social game makers can attract attention that advertisers want to tap into. “In the social video space, social games deliver by far the best value” as a platform, he says. “It’s a huge and growing audience. Zynga is not going [away].”
Reichgut’s company, which raised $2.5 million in December from Western Technology Investment, entered a partnership this month to bring video advertising to social games published by King.com. In addition to that, Jun also has partnerships with Sacramento-based social game developer KlickNation, which was acquired in December by Electronic Arts.
Social games, Reichgut says, offer advertisers a different way to connect with customers. For example, players can earn more points towards their games by watching promotional videos. “You get a much better result as an advertiser when you don’t interrupt somebody and they opt-in to the program,” he says.
Reichgut believes the social gaming model is evolving fast as social networks change the way people connect and is not in danger of dying off like some fads. “There will be shifts and turns, but that is natural,” he says.
With the formative days of social games in the past, game developers are finding new ways to innovate and compete for the public’s attention. Three-year-old Playmatics in New York, for example, is a developer of original online casual games as well as titles based on popular television shows such as “The Walking Dead” and “Breaking Bad,” on behalf of cable network AMC. Playmatics is primarily bootstrapped, but Margaret Wallace, the company’s CEO and co-founder, also raised $1 million through Swiss angel investors specifically to develop an original title called “Shadow Government.”
Wallace says she is trying different funding methods to support the development of various games. Thus far she has raised some $20,000 via the
