Ah-hah! Over the weekend, we finally discovered the perfect analogy to explain the booming virtual goods business.(The one that Electronic Arts just spent $400 million buying startup Playfish to get into.)
The analogy came from Jimmy Fallon show producer Gavin Purcell, of all places.
On Twitter, he wrote: “Casual Gaming is the Arcade business rising from the ashes of the 1980s.”
Why does this resonate so well with us?
Arcade games made money by addicting people to simple games (like Pacman), introducing “friction” into these games (by making them harder after each level), and then charging small amounts of money to ease that friction (by allowing gamers to buy “lives.”)
That’s what social games do — charge people small amounts of money to reduce friction in games they are addicted to. Instead of paying another quarter for another life, social gamers buy sub-machine guns in “Mafia Wars,” and new farmland in “FarmVille.”
Another big similarity: Arcade games were usually played in a social environment. Zynga and Playfish are played on Facebook, a virtual social environment.
One big difference: Arcade owners bought machines and collected the coins gamers paid to play them. Facebook doesn’t own any of the game companies using its platform. It does, however, sell some of them ad space. We’ve heard Zynga spends $6 million a month on Facebook ads.