I am basically interested in how Zynga operates as an online game company – it is exciting and it grows really fast. As a business person, who wants to start a research design (BioHack!) company in a couple years, it is interesting for me to understand how Zynga has achieved this level of success and notoriety.
I would style this discussion as a case study, which presents some of my thoughts on Zynga and talk about how some of the ways Zynga these ideas can potentially work for my company.
Pirates –
Zynga is famous for copying games that are successful and doing it better than the original creators in blazing speed.
What does it mean to me –
Even a pirate can be pirated. Xp. Nah, I would give my baby – BioHack more brain juice and make sure that it operates from the same set of principles that I do:
· Do good
· Have fun
· Be prepared to failed ( - consequently we can operate from a space of possibility where we have nothing to lose)
· Innovate to create value
The biggest lesson for me over here is that it pays to learn from others who got it right and translate that lesson into strategies that I can implement. Despite the taint of unoriginality – I feel that taking what works and improving on it is the cheapest and most leveraged method. It is something few people try because of ego, I couldn’t care less because the real value is to do great work with research and invent new things by standing on the shoulders of giants. What I worry about more is giving people who invent the wheel their credit due and how can I continue to open source things. (=
There is simply, simply no point in reinventing the wheel.
Potential usefulness: 10 / 10
Micro-transactions –
Capitalizes on impulse spending and it allows the customers to self-select in terms of the amount that they are willing to pay. The premise for this is of course either there is worth to a rational customer in the purchase or that the user is irrational.
How Zynga capitalizes operates – It creates virtual value for virtual goods by making them premium and only accessible by purchase. The premium over the goods is likely to be much higher in the eyes of games addict because they can give a huge boost to game play or ego. It sucks to have one’s self image build upon and leadership boards.
What does it mean to me – The concept of micropayment itself interesting, because it allows my customers to purchase smaller units of goods or to try out premium services at a very low cost.
It caters to a larger portion of the market that in involved in the biotect/Life Science (which I have no idea if it exist or not. My guesses are that they could be amateur scientist or small biotech companies who are interested to use generic premium services). I am choosing between this and subscription, which itself commits the user to my service.
I definitely want to work on a long-term payment basis, and something which forces my company to continuously innovate and improve on our services and product rather than lump sum payment, because we cannot afford to get comfortable.
Potential usefulness: 4 / 10
Lead generation
How Zynga capitalizes operates – It offers in game rewards to its gamers who pass on their private information to other companies or fills in surveys.
What does it mean to me - I can offer my bio-informatics services online for free, then get users to submit their contact information such that I am able to collate a database of potential clients/partners to whom I can offer business opportunities or services. If the services are convenient and powerful services seems to leverage on Word- Of - Mouth to expand the company’s network along this lines. Furthermore, it would establish my company’s credibility (if the web services does well) and increase my customers proficiency in our software User Interface and our operational method as they have the incentive to familiarize themselves.
Potential usefulness: 7/ 10
What other interesting things Zynga has done –
Socially conscious goods – This is again an excellent twist to capitalize on the donations/charity market. I guess the slant is arguably good, but I remain skeptical about Zynga’s intention given their history and their lion’s share in the donation.
Heavy advertisement – Exciting. It could mean a few things:
· Zynga growth strategy is super aggressive.
· Sex sells, but be for it can sell, you need to let people know of the existence of it. Same applies for games I guess, vary the degree of morality.
· It needs a damn to PR campaign to give its dirty image a good wash before it hits the real pot of gold at IPO.
17 comments:
It seems that Zynga is very different from google's "Do no evil" ^^
Your thoughts inspire me a lot. "The biggest lesson for me over here is that it pays to learn from others who got it right and translate that lesson into strategies that I can implement." I *strongly* agree with you. And I don't think what Zynga do is pirating. If you can improve a game and make it hotter, you are doing what others can not do. So what you are doing is original.
My question is Zynga is a online game company, but yours is a "research design" company. Is there anything you think you can not learn from Zynga because it may not work in your field?
Yeah :D Precisely, I've always believed it doesn't matter who's first unless you can carry it through. In rl, speed is of the essence b/c it gives an advantage when you are very evenly matched and everything is so competitive, but a small firm comes up with a good idea, there's no way it can compete with behemoths who can do better advertising, have the resources to solve the kinks and improve their ideas (: If I see a really awesome app that few are using, there's nothing that will stop me from copying it - why not? I remember once reading an article about individuals who design stuff to sell online in their shops and getting their designs copied by huge department stores. Well, that's life :( Unless you do something to get yourself noticed, people are just going to ride on your ideas. So work fast if you are first or you'll be overtaken. Designs are especially easy to steal =p
But I think it is still important for individual firms to come up with creative ideas that they can be solely credited for. For their rep :P Haha. But copying a successful idea that overlaps with what they do makes perfect sense.
Mm, but isn't Zynga pretty different from the company you have intended? Different models work for different orgs, although ofc there is some that you can learn.
ahh bingyu highlighted the same last point earlier.
any idea why Zynga is able to get away with wholesale-copying the idea of Restaurant City?
There are certain risks and hassles that come with lawsuits. If Playfish were to fire a lawsuit against Zynga, it could end up in a lose-lose situation. While I do not know the law that well, here's how I see it:
1) Fighting a court case is very expensive and can drag on for years. The amount that is later won from the case may not be a justifiable sum to fight the case.
2) Such publicity may not be good for either of each company and could drag both companies down. Also, any action that Playfish now takes reflects on EA.
3) Such lines of copying may be difficult to argue and Playfish is not confident of winning a case.
In the case of the people who created Mob Wars and Zynga, the case was settled out of court. As such, there may be currently no record or precedent established on how such cases, where social games are copied, are treated in court.
@jon - From how I see it, the settlements are actually what playfish is looking for, since an actual conviction and shutting down of zynga games probably won't bring those same users back to Restaurant City.
@micro-transactions - Is this somehow related to the law of ostentatious goods? By charging for something that is virtually free, the user is instead given an illusion that it is worth paying for over the 'free' selection. Or that he can save 'time' levelling instead and earn whatever bonuses by buying them.
Orry
@Orry - For Playfish to get a settlement however, they will first have to issue a legal letter. This will bring media attention and I think that they do not want any media attention.
Also, there may be other legal and political issues. While Playfish has a branch in US, it is based in UK and Zynga is based in the US. This will be an added obstacle. Where should the lawsuit be fought at? The place of where the lawsuit is based will most probably have an effect on how things turn out. This is troublesome. In the end, it may be more hassle for Playfish.
From what I've read, virtual goods are not to be considered goods in the slightest sense. Instead, when players pay for virtual goods through micro-transactions, they are paying for a service. Players do not own a virtual good that they have bought. I think that most players who buy virtual goods probably understand this as well because this issue has been brought up before.
I feel that we cannot fault Zynga for copying restaurant city. Because if Zynga didn't copy, some other gaming company would have. Sadly, it is how it works. People will copy winning ideas. I feel that it is Playfish's responsibility to protect it's ideas and games. Law suit may not be the best solution. But if Playfish does take legal action against Zynga, it may benefit Playfish in the long term. Other companies will realise that Playfish wouldn't allow other companies to copy their games without a fight. It may deter other companies from copying Playfish games in the future. Just my two cents.
If Playfish wants to protect its ideas and games, any other ideas beside taking legal action?
Mm well Zynga has more user than Playfish since it has lured over some Playfish users and new users. For the first case, I guess it's b/c even if Zynga is a clone, they did a better job. In the second instance, probably due to Zynga's advertising. So, what Playfish can do is make a better app (doesn't matter if you are first, but you must execute it the best) and respond successfully to feedback, as well as more advertising? :P
Yes, I agree that advertising is essential for Playfish to sufficiently compete with Zynga. I would also argue that Playfish should have better utilised its first-mover advantage by trying to establish a more connected relationship with the Facebook community or by improving their branding early on within the platform. Zynga's brand clearly dominates in this case, helping their cause.
I think it was the Lead Generation that push Zynga up the ladder right? In that case, unless Playfish wants to play dirty too, if not no chance at all?
So in conclusion right, being the first only allows the company to have first mover advantage.. But others might have the power to overtake you if they have the capability?
Actually I think what Playfish wants is the compensation. I doubt they will get the users to jump from cafe world to restaurant city even if they win the lawsuit.. So no point.. Take the money..
- Hong Jun
but yet playfish haven't done anything yet.
"So in conclusion right, being the first only allows the company to have first mover advantage.. But others might have the power to overtake you if they have the capability?"
Yap. Like we've learnt, you must also be the best at executing it to retain your advantage.
And actually, considering that Playfish is under EA, I don't think they care so much about a monetary compensation. Whatever they settle on, in the unlikely event that they do, would be peanuts to them.
@Shannon: But at that time when Playfish sued, are they under EA? I don't think so right? EA acquired Playfish after that right?
- Hong Jun
@Tomithy,
How come you haven't responded to any of the comments on your blog?
Also, can you tell us more about what BioHack! is going to sell? Not sure how you can also become a pirate.
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