The question was: What are some of the cost/benefits associated with building an app in Facebook vs building a standalone site?

So at ohai! we are supporting both on-Facebook and off-Facebook experiences. We’re seeing some interesting data so far with our first MMO, City of Eternals. When people play embedded through Facebook, their usage pattern looks something like this: 5-6 minute sessions about 8-10 times a day. So they are round tripping in and out of the game world many times a day. When people play directly at the City of Eternals site, they’ll play for 20+ minute sessions 2-3 times a day.

Here’s a screenshot of the embedded, in-canvas Facebook experience:
(click through to see the larger image)

City of Eternals embedded within Facebook

Here are screenshots of the standalone experience at CityofEternals.com:

Standalone Experience at CityofEternals.com

Screenshot #2 of standalone City of Eternals Experience

We’re doing a few things differently in the on-boarding between the embedded app and the CityofEternals.com experience, but I don’t believe they are sufficient to explain the entirety of the difference.  There are a few different hypotheses that might explain these differences more thoroughly:

• The standalone site has a theoretically better playing experience, since it’s full screen; The full screen experience leads to different types of behavioral patterns in game.

  (For example: Players might be more likely to partake in longer missions, Players might be more likely to join groups and do group activities, Players might be more likely to participate in exploratory vs discrete goal oriented behaviors, etc.)

• The full screen experience has fewer distractions, leading to a different type of relationship between user and product.

  (For example: Players might be more likely to become citizens[1] of the world we’ve built, rather than just tourists, who come in and out to complete short, discrete tasks.)

• However, you can’t discount the ‘form’ factor of being very proximate to the social context where people already naturally live, which provides benefits around higher conversion rates / lower barriers to entry

  (For example: Facebook has done an amazing job of building a site that people log into religiously – daily, multiple times per day – it’s easier to attach a new service to that existing behavior than to ask users to form a new daily relationship with a new behavior – such as going to CityofEternals.com and logging in.

  Whenever you ask someone to learn a new daily behavior, the initial pitch better be compelling – to entice people to even try it, and then the value they receive in the first 60 seconds better be outstanding, to convince them that they want to try again.  Every single second in your service is a new potential conversion point.  Whereas on Facebook, the value proposition for logging in every day and returning has already been well established.)

• People are used to playing other social games in quick bursts multiple times per day, so that’s the mindset with which they approach embedded games to begin with.

  Again, back to the principle that it’s easier to draft off of existing, established behaviors than it is to forge new ones.  (Have you tried training your cat lately?)

We’re still in our early beta days, so we’ll be collecting a lot more data to test these hypotheses over time.

Then there are the cost/benefits around business related issues:

• The standalone site has a better chance of building a strong brand relationship with customers

• With a standalone site you have more control over the user experience

• With a standalone site you have to deal with a conversion rate hit of the first ‘try’

• With a standalone site you have less optimal access to user communication flows that are already prevalent in the on-Facebook experience.

• With a standalone site, you may be subjected to less volatility in your base platform (since the Facebook APIs have some external volatility that you can’t control)

• With a standalone site, you’re going to have to work harder at facilitating daily usage patterns

[1] Citizen (noun): I use the word citizen a lot when talking about the social web. A citizen is someone who is deeply engaged; someone who has a strong emotional connection with the community and the social software they’re participating in.  Someone who is invested in the health, stability and future of the service they’re using.  There are different levels of citizenship – some may be passive participants, some may become active policy makers.  But the hallmark is some level of emotional identification with the community and environment. Our goal is to turn our users into citizens.

 As I’m sure many of you know, many game developers/designers toil long and hard for game studios, only to receive very little if any equity for their efforts.  It’s an inequitable system.  I was an indie game developer for many years (MUDs, Mods) but I never wanted to join the traditional studio system because of what I perceived to be very inefficient employee management practices.

 The gaming industry is at the cusp of major structural change.  Traditional retail channels have left industry power in the hands of the few who could create scale to distribute across retail efficiently.  Now with the advent of open platforms such as such as XBL/XNA and web platforms like Kongregate, MiniClip, Areae/Metaplace, Facebook, etc, there will soon be numerous channels for game devs/designers to leverage to help them build their own profitable businesses.  And also, as players become more accustomed to playing games online or purchasing via online channels, there will be more venues for building new platforms and experimenting with different business models.  More importantly, many of these new games that will emerge will be much more lightweight social games, and so entirely new genres of gameplay will emerge. 

Bottom line: the gaming industry is at the cusp of dramatic structural overhaul in the next several years.  Some of this innovation will be driven by the large game companies (XBL, EA Blueprint), but I expect a bulk of the exciting new developments to come from a crop of startups yet to emerge. 
Anyways, I am hoping that these series of events at GDC will foster innovation, creativity, and a sense of what’s possible in the gaming industry.  At the very least, I want to introduce game industry folks to the possibility of being an entrepreneur or working for a startup.
You can read more about these events at GDC Director Jamil Moledina’s blog:
http://www.gdconf.com/news/directors_cut/

or at Gamasutra:
http://www.gamasutra.com/php-bin/news_index.php?story=17370
 

The first series of events takes place tomorrow, Friday February 22 – you can read about the 3 Startup Launchpad sessions here.

• Raising Venture Financing for your Startup: Tips, Tricks, and Hacks – 9:00-10:00am Room 2004 West Hall
• The 1st Annual Startup Showcase – See the 5 most exciting and innovative startups of the year – 12:00-1:00pm, Room 132 North Hall
• Lessons from the Front Lines: Startup CEOs share their insider stories – 4:00-5:00pm Room 2007 West Hall

Thanks for reading! I hope to see you there. And keep a lookout for the business plan contest we will be launching for Austin GDC in the next couple of months.

The whole thing is worth a read – it turns out it’s a lot easier to speak casually with someone than to blog (surprise!).  In it, I talk about one of the holy grails of online gaming:

“One of the hallmarks of a successful Web company is — if you look at the track record of the most successful companies that have stayed independent and sustainable, like eBay, Google or Amazon — they have built platforms [which can] foster entrepreneurs. There are ecosystems that spawn innovation from the community members themselves, and Facebook is falling in with that too, with the new platform launch. Few gaming people understand this intuitively — though, Xbox Live Arcade really fosters an entrepreneurial ecosystem, too. That’s something Areae is trying to focus on – how to build an actual ecosystem and a real, [open] web platform for people to [work, build, and extend upon].” 

This new space – the intersection of Web 2.0 and online gaming – is a very difficult one to define.  This categorization encompasses companies like Kongregate to Areae to Three Rings – each of whom is vastly different from the others.  To make it even more confusing, Conduit Labs is not really like any of the three companies I just mentioned.  They’re inventing an entirely different interpretation of what it means to sit at this intersection. 

Conduit Labs is building a gaming environment.  That is to say, the primary driver of user interaction is game mechanics.  This gaming environment lives in an immersive, graphically rich world.  But the gameplay Conduit Labs is building isn’t exactly like other online games we’ve all now become familiar with: there’s probably not going to be much kart racing or princess saving or dragon slaying.  We aren’t yet disclosing what the gameplay or graphical metaphor will consist of, because that’s part of the secret sauce. 

Leigh Alexander from Worlds In Motion wrote up a great interview with Nabeel that provides more insight into what Conduit Labs is up to.

Nabeel: “I think probably every other day now over the last couple months, I see a new casual MMO or virtual world startup; it’s been constant…and what I saw was the same kind of dichotomy — two types of startups. There’re hardcore MMO gaming guys trying to make that experience more accessible, sort of like World of Warcraft meets the web. And the other side of the coin is a bunch of web guys who want to build a web site with virtual gifting and more gaming.”

While Hyatt recognizes the value in both of those approaches, he adds, “I think they’re missing the larger point – which is that there is no interaction on the web that is like a social game. I don’t mean a single-player game, which is based on a legacy of, really, only video games; it doesn’t last hundreds of years. There’re actually thousands of years of games that are primarily social activities like dancing, or bowling. And those are about you bonding with your friends, and there’s nothing like that online right now. And I think the web and social networks provide a whole new medium to create something that’s never been seen before.”

Just like the Wii and Guitar Hero reinvented the social gaming metaphor for a broader audience, Conduit Labs is trying to do the same for your web gaming experience.  I’ve also seen innumerable business plans in the last year for startups in the online gaming and virtual world space.  But most of them have been rehashes of things we’ve already seen, building things like “making the MMO even more casual” or “putting casual games into Facebook” or “Club Penguin but with chimpanzees.”  (disclaimer: I actually like chimpanzees quite a bit, probably more than I like penguins.) 

We invested in Conduit Labs because I believe the team there really gets it: there’s an entirely new type of immersive experience waiting to be built.  It has less to do with technology (although we are building on the basic assumptions/principles of the zero-barrier MMO and all that entails), and more to do with social engineering.  This is a great team that has the right blend of experience that includes Web 2.0, hardcore MMOs and the scalability expertise that comes from supporting tens of thousands of concurrent users, and understanding how to design “fun” for a mass market audience that comes from building groundbreaking social games like Guitar Hero. 

 Yesterday, BusinessWeek published a special report called “Getting Serious about Gaming.”  Two of my investments are mentioned in this article, one of which is Areae:

“One of the most high-profile efforts in this area is the L.A.-based Areae, founded by industry veteran Raph Koster (former chief creative officer at Sony Online Entertainment (SNE)) in December, 2006. Still in stealth mode, the company is talking very broadly about its plan to reinvent virtual worlds. But the basic idea is to bring down the astronomical development costs of the popular MMOGs by borrowing from the equally popular and vastly more economical Web 2.0 technologies supporting sites such as MySpace and YouTube.”

Hrm, they don’t exactly get it right.  What they do get right is that Areae is still very stealthy. In all seriousness, I don’t like invoking a Web 2.0 metaphor where the sole conclusion is ”cost reduction.”  Web 2.0, while an accelerant of more cost efficient development models, is in my mind, primarily characterized by a collaborative and community-driven relationship with your users where “A+B” does not merely equal “A+B.”  This is the kind of alchemy all of us technologists strive for – how do we transform mundane, commodity database driven web pages into something that supports life?  ;>

And since when was MySpace Web 2.0?  

In any case, all my good natured snark aside, I’m very happy to see the transformation in the market that has taken place over the last year.  The conversation around next generation social media has moved far beyond Second Life and WoW.  Every day, I see new business plans and prototypes of entrepreneurs constantly innovating in this space. 

“Controlling the emotional intensity of an industry is an incredibly powerful source of advantage in the post-network economy.

But that’s a small part of the reason avatars are valuable.

The truth is that the post-network economy is an interaction economy. The avatar is a focal point for interaction – a sticky, context independent, information-rich focial point…which should be enough to explain why they can also be explosive focal points for value creation.”

I think we are actually making the same point, we’re just using different words to describe it. 

Whenever I evaluate a new consumer startup, what I am constantly ruminating is “What is the relationship between this service and the user who uses it? Is it a weak emotional relationship or a strong emotional relationship?  What is the nature of this relationship – is borne of need or desire?” and so on. 

I care about this because emotional intensity has a direct correlation with 1) how much attention a user is willing to spend on any given product/topic (Quantity) and 2) the Quality of the interaction the user is likely to have with this service.  Emotional intensity creates option value for the service provider. 

Think about your most recent romantic relationship.  The stronger you feel about someone, the more likely it is that you are going to 1) spend more time with that person and 2) explore the depths of the relationship’s possibilities.

As we are moving into an era where attention is the most valuable currency and the user is pummelled with more content they could possibly consume in a lifetime, the strength of one’s emotional connection with a service, a brand, or a product is of utmost importance.  The dominant strategy for creating defensible unfair advantage around your product in Web 2.0 was community and the associated network effects.  But in a world where every single service has deployed a community platform with identical feature sets, how do you differentiate? It’s not enough to deploy communication platforms, user profiles, and voting tools.  Social game mechanics help, because they lay the foundation for a number of different emotion states: tension, exhilaration, accomplishment, delight, etc.  

As product designer, your role is similar to that of a conductor of a large symphony.  Only, your instruments are peoples’ emotion states.  Each user experience is the orchestration of numerous emotion states.  The value of a customer to you is completely correlated with his/her set of emotional reactions.  To add complexity, the timber of each note varies by instrument and by person.  For example, the emotional footprint of surprise is different than that of longing.  Surprise has a big high and tapers off, leaving it with a short tail.  Some people may be frustrated by a feeling of longing, whereas some people may find it stimulating.  Ad infinium.

In short, this matters because emotional intensity is the most important filter by which people determine how to spend their time and energy.  If you understand what the emotional relationship with your user feels like, you can then figure out what the possible range of monetization opportunities might be. 

The question I was trying to answer was, “Is the next generation of the consumer web 3D?”  I think the answer is not necessarily.  

1. The reason why we’re asking this question is because there’s a bubble forming in the virtual world space right now.  

That’s a pretty incendiary statement. What do I mean by it?  What I see on the horizon are dozens and dozens of new virtual world platforms and titles hitting the market – far more than the public will want to consume.   By ‘title,’ I mean a self contained, branded version of a virtual world much like “Virtual Laguna Beach.”  All the big media and consumer goods companies are looking at what’s happening with online community sites like MySpace and Facebook and want in on this action desperately.  

However, I think that all of the media hype around Second Life is misleading the public about what the next generation consumer Internet might look like.   That isn’t to say that Second Life doesn’t have tremendous merit in moving the dialogue forward about what collaborative work and play spaces feel like.  What I mean is that there are now quite a few companies who equate “future of online communities” with “3D graphical world.”  The mad rush by these big brands to create empty showrooms in SecondLife is proof of this.   Just like in the dot-Bust days, there will be lots of shoddy substandard products brought to market in the mad frenzy to create a ‘presence.’ 

But the good news is that in this crazy landgrab, there will be a couple of winners that shine through.   There is considerable appetite for online play spaces right now – you can see the proof of this in the many bootstrapped and under the radar services that are getting a lot of traction. 

2.  What does the next generation consumer Internet look like?

What I’m interested in above all else is the nature and evolution of people and our constructs [culture, economic and belief systems.]  As I’ve said before, I think the real story behind the consumer web today is what’s going on cognitively – how our relationship with the Internet is changing. 

Here’s how I see the evolutionary arc of the online user experience:

Web 1.0: Information Sharing
Web 2.0: Interaction
Web 3.0: Immersion

By immersion, I mean that people will demand experiences that are more emotional, engaging and genuine.  3D graphics are one way to create immersiveness, but not the only tool we have in our toolkit.

Let’s look at how the ways people have expressed themselves online have changed over time:

Pre-Web: Text based worlds
(I am looking at a character named Ulion and the text he has used to describe himself)

Web 1.0: Geocities

Web 2.0: MySpace, currently the world’s largest massively multiplayer online game

Then, there are a few sites that reveal glimpses of what the future might look like.

Web 2.1: Gaia Online
(Gaia started as a bulletin board system that has slowly layered in a 2D virtual world graphical metaphor over time. What you’re looking at is one user’s profile.)

Web 2.1: Yelp

Web 2.1: Flixster

3. What are the implications?

We are moving from web pages to web places.  More and more game-like features will find their way into everyday web design – you see this already being implemented successfully on sites like Yelp and Flixster.  People will seek out experiences, rather than just content.  3D is just one tool out of the many we have available to create immersive, engaging experiences.  3D should be used tactically – it makes sense for some audiences and for some applications.  There are many ways to think about presence and dimensionality online.  3D graphics facilitate spatial/physical awareness. But we should also be thinking about 3 dimensional social presence and shared/collaborative presence.  Luckily, there are a couple of good examples in this space already.

This post will be continued…

 Early bird registration ends today, so if you want to go, sign up and receive a discount.

Also if you have any thoughts or ideas about the type of content we should cover, I welcome your suggestions. 

The folks at GigaGamez recently interviewed me for an article about Nintendo and the future of the Wii that they called, “Nintendo’s back…but can they hang on?”

I’m far more bullish about Nintendo’s future prospects than this GigaGamez article is, as my previous blog post indicates.  Jason McMaster makes some good points about Nintendo’s rather shaky past when it comes to television-centric consoles considering the long lull between the ancient success of the SNES and the recent release of the Wii. However, despite the fact that the Wii does hook up to a television and contains hardware innards that are very similiar to the Gamecube, I believe it is more the spiritual kin of the (wildly successful) Nintendo DS rather than the N64 and Gamecube.

I believe Nintendo’s prospects for the success of the Wii should be based on how they handled the DS. The way the DS game market unfolded also shows a pretty decent roadmap of how Nintendo and its third parties could succeed on the Wii platform. Like the DS, the Wii offers a new way to play games and interact with others. Nintendo translated this aspect of the DS into great success with Brain Age and other games that made novel use of the new input system to pull in the non-hardcore audience.   They seem to be doing the same with Wii Sports now, though it will take a little bit of time and a more even parity between supply and demand of the console to see if that holds up. I think it will.

The most important lesson of the DS, as it relates to Jason’s article, is that while the unique selling point of the unit is that it offers the novelty of a touch-screen interface, not every game has to use that novelty to its full capacity. Many of the greatest and best-selling games of the DS’s second and third wave of titles — games like New Super Mario Brothers, Mario Kart DS, Castlevania: Dawn of Sorrow & Portait of Ruin and Tetris DS don’t use the touchscreen for much more than a couple of token user interface reasons. And that is just fine, as long as there is also a smaller but consistent stream of games that DO use the new interface, like Brain Age, Kirby: Canvas Curse and Elite Beat Agents.

The same should hold true for the Wii. Not every Wii game needs to make the Wii remote the central aspect of the game experience. Between what is sure to be a large install base for the Wii (the system is still impossible to find at retail in many areas) and the fact that developing competitive titles for it will be far less expensive than developing AAA titles for the other “next-gen” consoles, I’m absolutely positive third party developer support will be as strong as Nintendo allows it to be. Hopefully everyone involved realizes, as they eventually did with the DS, that not every game has to be centered completely around the system’s novel interface.

Though Areae is still very stealthy, Areae sits at the intersection between Web 2.0 and MMOGs.  If you think about it, the Web 2.0 and the Massively Multiplayer Online Gaming communities have largely been pretty siloed – gamer developers go to game industry conferences and Web 2.0 folks go to Web 2.0 conferences, and there has not been enough intermingling between the two communities. 

But both industries have been inching closer and closer together.  I predict that the successful online communities in the future will continue to more strongly resemble MMOGs.  And MMOGs will continue to extend their reach and exposing their data to other Web applications – either formally, by the developers/publishers themselves, or informally by folks like Rupture. 

Here’s what the 2 communities can learn from each other: Game designers have been creating rich, fully immersive environments for years.   All of the design principles that I thought about when I was designing MUDs are identical to the issues facing Web designers today – how do I create more immersive environments? How do I give participants -equity- in this virtual world? How do I make users feel like real citizens in my social ecosystem? How do I create better scale around world and object creation? How can I expose building tools that were previously available only to Admins and Devs to the end users – and make them dead simple to use?   How much content should I pre-seed and what content containers do I think users are going to be more likely to want to customize and make their own? 

For Web 2.0 designers, there is a brilliant, must-read presentation that Amy Jo Kim put together about how to intelligently apply game design principles to Web 2.0 services to make them richer, more compelling, and more immersive (read: “sticky.”)

Yet, the Web 2.0 crowd knows a lot that the game devs don’t: how to create massively scalable, low barrier to entry, micro-chunked experiences.  How to create appealing, mass market products that are appealing to a diverse demographic.  How to iterate quickly and create production processes that give you tremendous economies of scale around innovation. 

I’m excited by the possibilities – Raph has brought on an excellent team and advisory board.  It’s time the Web 2.0 and Gaming communities begin collaborating for the betterment of all users, everywhere. 

Here’s some of the coverage on Areae thus far:

GameBiz Daily:

“I would describe what we’re trying to do as marrying together a lot of the philosophy of the web and web 2.0 with virtual worlds,” Koster told GameDaily BIZ. “We’ve been paying a lot of attention to how the Internet is going. If you remember my speech at the Austin Game Conference last year about whether or not the games business is full of giant dinosaurs… a lot of that ties into this.”

CNet:

Koster is not divulging much about Areae, but the company’s site alludes to its pure, massively-multiplayer online game DNA: “We’re working on some new tech that will literally change how virtual worlds are made. We’ve got a cool world or two incubating on the back burner.”

Gamasutra:

With what sounds like a firm emphasis on user participation, as well as user customization and content, all central tenants of the Web 2.0 ethos, we make an obvious leap toward the current open virtual world leader, Second Life, which Koster laughingly dismisses. “See, you’re already jumping to conclusions about what we’re making! Honestly, there are as many differences from Second Life as there are from Everquest.” He pauses, but concludes, “I’ll just have to leave you tantalized.”