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Photo: IsCool Entertainment
You thought Zynga was the only Facebook games company to go public? Paris-based social games maker IsCool Entertainment has been a public company for a while now.
It’s small compared to Zynga–it earned 1 million euro in profits in 1H2011 on 8 million in revenues–but it’s growing and, more importantly, its status as a public company gives us great information on how the social games business works.
We met with IsCool Entertainment CEO Thibault Viort to talk about the company and the market.
Here’s what we learned:
- The social games business is HARD. Making a successful Facebook game requires bringing together very different skills and people: creatives and designers, data-crunching statisticians, infrastructure engineers and social marketing experts, and all of it on very fast product cycles. It takes a creative spark to make a good game, and then very quantitative work to figure out how to optimise it so that it spreads virally and monetizes well. Managing this combination of technical and creative work well is the true “nut to crack” to get the business right, and it’s hard. This is relevant to Zynga and other successful companies in the space, because this kind of hard-won expertise is a stronger barrier to entry (or at least scale) than raw user numbers or revenue.
- The relationships between games-makers are Facebook are now fine. Last year, relationships between Facebook and its social games maker were tense because Facebook APIs were changing all the time and there wasn’t enough communication. This has been fixed, Viort says: now Facebook is much better at managing its platform and communicating with its members.
- The US market is tapped out, and that’s why Zynga is not growing. Viort speculated that the reason Zynga has hit a ceiling is because the US social games market is saturated, and it’ll be harder for it to find growth opportunities in other geographies. (Because Viort is a European competitor, obviously this should be taken with a grain of salt, but it struck us as plausible.) The European market is more open-ended, Viort says, and obviously opportunities in Asia and other geographies are huge, but they’ll take longer to tap. In the US, one third of Facebook users are playing games, which means with churn around two thirds have played games, Viort estimates, which sounds like the most that can happen.
- THE TRUTH ABOUT ZYNGA: It’s Not Growing →
- The Concern That Facebook Could Destroy Zynga Overnight Is Overblown →
This note was published as part of BI Research, a new industry intelligence service from Business Insider. The service is currently in beta and is free. To learn more and sign up, please click here.
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