Facebook and Twitter on LIVE: More Ads to Come?

The integration of Twitter and Facebook onto Xbox LIVE was announced this summer at E3 some months ago, the launch came out today.While the Xbox LIVE experience is already one marked by advertisements, not only for games but also partner companies like Netflix, it's not a stretch to speculate that this is another channel through which advertising will approach the gaming market.

Facebook already hosts targeted ads, and Twitter's announcement several weeks back about the upcoming ads in the future make it hard-pressed for me to imagine that these features would be offered for free, sans-ads, on such a huge commercial giant like LIVE.

Facebook: Soon to be more Civilized.

Yesterday Games.com reported that Civilization, one of the pillars of the real-time strategy videogame genre, will be launching a version of its long-running franchise on Facebook in the upcoming year.

As I mentioned to fellow classmate katdiogo in a comment on a recent post about Farmville on Facebook, there are very few games available on Facebook that appeal to me. Though I clearly enjoy playing videogames, as someone with regular access to other gaming platforms, Facebook does not tend to draw me in.

However, the news of Civilization coming to everyone's favorite social-networking site, for me, could be a (no pun intended, honest) game-changer. When I grew up, the bread and butter of my videogame experience was half Doom, half Warcraft and Command and Conquer style RTS (real-time strategy) games -- until I was about 8 years-old and started playing online games.

Civilization is a game which defines the RTS genre for many people. Much like something in Farmville, the game is based on progression (rather than say, Pacman or Tetris -- you are generally building off of where you left from. The idea is to take a group of people (normally sorted by nationality) from their start as simple gatherer-hunters, up to their pinnacle as world-dominating superpowers.

I initially heard about this game via Twitter, when all the gaming sites I follow suddenly went crazy as they broadcasted the news. Then, I had gaming friends who similarly tweeted and retweeted the information. I know I just made the point about buzz driving games on social-networking sites, but this is a prime example of what I meant. Already, without having to do anything other than pump their story into the right channels, many people in the target audience (people who have enjoyed past Civ games and would be likely to try out the Facebook version) have this news on their radar.

It remains to be seen if the game would have any more power to retain a player-base than the usual Facebook game-application fare, but given Civilization's (well-earned, in my opinion) good reputation amongst avid gamers and even an older audience (the first Civilization game was published in 1991), I have high hopes already.

Gamers on Social Networks... a Whole Goddamn Lot, Too

I recently touched on the idea of the "give it away free" business model when it comes to video games in a post about World of Goo's temporary offer of "pay what you can." While it's quite rare for traditional videogames (PC or console alike) to adopt this strategy, there is actually quite a large precedent for "play for free" videogames, especially online games.

And I'm not just talking about Text Twist or some dodgy online pool game. I'm talking about games that people play, often without even associating them with videogames. Even the most stereotypically anti-geek, mainstream, Gossip-Girl loving individual might spend hours a day fiddling around with these games.

But enough with the cheesy suspense: I'm talking about Facebook. On Thursday USA Today reported that Farmville, a game which will celebrate it's four month anniversary this October, has 56 million unique players monthly, and something like 20 million unique players daily.

Atul Bagga, a gaming analyst at market researcher Think Equity, expects the $500 million to $600 million social-gaming slice of the online market to at least double, to $1 billion, in 2010.

And where, oh where, does that money come from? After all, downloading the application and running it -- playing the game itself -- is free. The answer comes from two main streams of revenue. The first is micro-transactions. While you aren't paying a monthly subscription fee (like you would pay to play World of Warcraft, or what you pay to access Xbox Live's full services), you might, from time to time, spend a dollar here or there (on particular farming tools in Farmville, for example). The games don't necessarily nickle-and-dime you to death, because most of the experience is free. However, all that pocket change certainly adds up.

The other revenue stream comes from advertisers.

Meanwhile, advertisers are gravitating to the popular social-gaming sections of social networks to reach tens of millions of consumers.

"It's attractive real estate," says Hi5's Trigg. Hewlett-Packard, Verizon and Netflix are among major brand names running banner ads on MySpace's gaming areas.

It's unclear what, if any, portion of this goes directly to the publishers of the specified applications like Farmville (rather than just Facebook itself). However, it is more than clear that this industry is experiencing incredible growth with profit margins that could make anyone salivate.

The cleverest part of the advertising, when it comes to games like Farmville, is that it is so damn cheap. After all, the cost it takes to implement an obnoxious "Invite your Friends!!!" template is obscenely inexpensive in comparison to running something like a TV ad. You don't need a well organized campaign that sprawls across every available window. All you need is to prompt your players to invite a handful of other people, who go on to invite a handful more.

The best trick, of course, is to reward the players for doing your advertising for them. Instead of paying an agency hundreds of thousands of bucks, you pay one dedicated player 100 apples or oranges, or whatever the hell the currency is in Farmville, to get one other player on board. Maybe if they invite two friends they get a cow. Ten friends? A barn.

I'm probably showing that I definitely don't play this game to anyone who does, but the point holds true: you are paying people in fake currency to do what you would otherwise have to pay people in cold hard cash to do.

The downside to social gaming, however, is that they are like viruses. They blossom exponentially for a little while, infecting many of the people they come into contact with, dominating a population. But then people get over them (or, I don't know, die -- time to abandon the metaphor). In the terms of social gaming, they get bored. Then they move on. The same system that makes it so easy to join games like Farmville is what makes them easy to leave: they get swallowed up by the 'next big thing.'

To put it in more proper vocabularly: these games thrive on buzz, which is also the core component to their advertisment.