Monkey Gods CEO Jason Rubin Talks Facebook Games

With over one hundred million users logging onto Facebook each day, game developers big and small are seeing the social networking site as an irresistible platform for their games. The problem? How to make money when Facebook users expect the site’s applications to be 100% free. We talked with industry veteran Jason Rubin about his new social game development studio, Monkey Gods, and what it takes for a game to be popular and profitable on Facebook.

Game Informer: Your development studio currently has two games on the market: Snood on Facebook and the iPhone, and Monkwerks on Facebook and under development for the iPhone. What has your experience with Facebook been like thus far?

Jason Rubin: The first few games we did for Facebook were a test of the market.  We learned a huge amount from them, including the fact that they weren’t the right types of games to have made!  The market on Facebook has transformed extremely quickly in the last few years, from nascent to giving us a good idea of what near term maturity will look like.  That isn’t to say that new ideas won’t pop up like they still do every now and then in the console space decades from when the industry matured.  But it does mean that the business is more predictable and understandable than most think it is.  Most important, it will surprise most people that the Facebook market is not the great democracy everyone thinks it is: There are already parties with significant incumbent advantages, and a new developer will find it hard (but not impossible) to break through this.

GI: How has the revenue from your games on Facebook compared to your iPhone games? Can ads and micro-transactions compete with the traditional business model for video games?

JR: The revenue model for Facebook and iPhone are very different. The iPhone is (deceptively) easy to understand.  You sell units and get 70% of the revenue based on your sales price.  At least on the surface, this is much closer to the console and PC model.  But if you scratch the surface, it is very different.  On the console, you talk about “units” because the price is quite fixed.  On the iPhone, you talk only in revenue.  You can change the price so dynamically that revenue [differs] day to day.  So depending on your performance in many factors, you try to maximize revenue, not units. 

Monkey Gods chose to “distribute” through EA.  This might confuse most people.  Why would a company choose to distribute with a publisher in the “ultimate democracy” of the iPhone?  The answer is that publishers like EA still have many things to offer a game developer.  For example, with tens of thousands of apps available on a platform, finding a specific game becomes difficult.  People tend to buy games from people they trust.  EA has a sterling reputation, and many iPhone users have already bought EA games.  They find our game through the “more EA games” menu item in the games they have.  Sales = Ranking in the store, so such a jumpstart can give your app a chance to breakout.  EA has been an amazing partner for us, and their success on the iPhone says that they, and other large publishers, still have an important place in the market.

Facebook is the Wild West when it comes to revenue.  There are no rules, and importantly, there are no trusted sources of revenue transfer like there is on the iPhone store (the purchase).  Ad revenue doesn’t end up being the big win.  A game relying on ads is giving up the real money.  Unless you have hundreds of thousands of users a day (millions of monthly actives!) the ads just don’t add up to much.  The real money is in people paying for upgrades and features. 

The market has shown that a small number of people on Facebook are willing to trade money for time to get ahead.  So if 1/1000 per day people give you $15, then you are earning $.015 per person, per day (a penny and a half!).  As a comparison, Ads might net you $.0015 (a little more than a tenth of a penny) or 1/10th as much.  This doesn’t sound like a lot, but if you have 1,000,000 people playing every day at those rates, then this example nets you $15,000 a day!  That is $5 million a year in revenue.  There are games doing far better than these numbers.  For the hits, the money is real, and huge!

And thus you can see that right now, Facebook is capable of earning more than the iPhone for the mega-hit.  Is it a real business?  Absolutely!  The winners on Facebook (who also publish on MySpace, Tagged, and elsewhere) are raking it in.   There just aren’t games on the iPhone selling multiple millions of units at a few dollars a unit.  But on the other hand, the revenue on the iPhone is more regular and more reliable.  And Apple’s iTunes takes care of getting the user past the wall that stands between a person and entering a credit card or paying in another way.  They are both viable.  They are both good markets.  But very different.

GI: It seems the most popular games on Facebook are the ones that bug players to recruit friends and post notifications to their Facebook wall the most. Your games don’t use these techniques as much, but don’t have the same popularity either. How do you balance the potential of gaining new players with the possibility of annoying existing ones?

JR: This is a great question. Facebook games are a user number game.  The more users you know that are playing, the more you get excited by using it (the network effect).  And the more users, the more people will eventually fork over cash to get ahead and improve their gameplay experience.  You are absolutely right that the games that succeed are more aggressively viral, but there’s a lot more to it than that. 

First of all, the rules for what you can and can’t do to spread the game keep changing... almost weekly.  What is “legal” according to Facebook today may be forbidden tomorrow.  The early game companies, specifically Zynga, PlayFish, and Playdom, got ahead of this curve and built users when anything went.  Now, it is harder.  So they have an incredibly advantage over new games and companies.  To get one million people to look at a game requires extremely good ideas for spreading and luck today, or $300-500 thousand in ads.  They just put an ad on their current games and bingo, 1 million viewers.  This gives them a huge power in the marketplace, and gives new companies an uphill battle to fight.  A good example is FarmTown.  They did it right, and Zynga made a similar game, FarmVille, and turned on the tap for users.  FarmVille now has more users than FarmTown.

With over 50 million active monthly users, FarmVille is the most successful game on Facebook

As for the annoyance factor, there is a fine balance to the system, but when you are giving away the game for free, do people really have a right to complain if you ask them to help you spread it?  Users quite often play dozens of hours, if not more, of these games for free.  They have to give something back!

In the case of our game, we followed all the rules and tried for the best experience for the user.  We didn’t make games that were suited to gifting, inviting, and other interactions... in short we made a mistake.   The user experience on our games, based on return users is incredibly high, but the virality (measure of spreading) is very low.  As soon as we knew that, we decided not to market them hard.  The games were fun to play, but not financially viable.  Again, you need millions of monthly users to get real revenue coming in, and without a large number of micro transaction opportunities in the games, getting users through advertising is effectively paying people to play, not a revenue opportunity.

GI: A unique feature of your games is that your virtual currency, Monkey Points, carry over from one game to the next. What advantages do you think this offers your company over other developers who keep their games separate? Are there any disadvantages you can foresee?

JR: I think we pushed new ground with Monkey points when we launched them.  But again, the larger companies have a huge advantage in that they can implement these features and immediately get massive uptake (usage).  The larger companies have the advantage because “Zynga points” are far more compelling when you know you can use them across their many games.  And if you overbought on one title, you will find another one of their titles to spend your excess points before starting over and buying a smaller company’s points.  Unless Facebook itself starts a point system, this will always reinforce the dominance of the big companies.  So I think the market will evolve into partnerships with developers making games and then plugging into the big companies systems in return for users and support.  This becomes similar to the publisher/developer relationship in consoles. 

GI:  Where do you see Facebook heading as a gaming platform?

JR: The most interesting thing about Facebook games is the question whether in the long run, the successful products are going to be “games” in the sense that classic gamers like us would expect.  Games like Snood and MonkWerks -- that is, skill based games -- were successful for a while.  But what seems to really work now are even more casual games still. 

Let’s look at a specific game: the “farm” game, like “FarmTown”.  The only measure of how far you go is time/money.  You can get far by spending a lot of time on the game, or by paying to shortcut and make progress easier.  In both, the evolution of Facebook games has weeded out “skill” as a factor.  There is no skill in the farm games. 

You plant the crop and come back to harvest.  Then repeat.  Your crops can’t fail.  You never have to retry.  There is no score to beat, or metric of skill.   The nuances of harvesting other people’s fields, etc. aren’t skill based; they are simply ways of putting in more time.  Pay money, and you can get the big house faster.  But you can’t lose. 

In MonkWerks, there is a skill to getting more words, and you can suck at it.  In Snood, you can be worse at shooting and fail the round.  In FarmTown, such worries don’t exist.  Certainly, the farm games are “interactive entertainment.”  And millions upon millions of people are obviously really enjoying themselves at these games. I mean no slander when I ask if they are games or not, they are certainly what Facebook users want.

But they are not, by my definition, games because there is no competition, and no way to “lose.”  The Facebook user, at least today, seems to want this type of experience.  There are exceptions -- like Bejeweled -- but revenue vs. revenue, Bejeweled is not competing with FarmTown.  At least in the medium term, if maximizing revenue is the goal, the experiences will be more like the progressing but not challenging farm games and less like the skill based games we know as gamers.  This will only change if 1) the Facebook player’s desires change -- in other words they start wanting a challenge -- or 2) if more gamers as we classically know them start looking to Facebook as a platform.  Unfortunately, as Facebook games head away from challenge, it is less likely that gamers who like challenge will look to Facebook for their fix.  Only time will tell how this works out.