Business Lessons From Farmville – Part 3

Continued from Part 2 –  In Part 2 we discussed the publicity and communal aspects of building a successful viral application, with examples from Zynga’s Farmville game.

3. Manage Scalability

Like all rapidly growing applications, Farmville has scalability issues – as of this writing, they are working on a serious issue pertaining to how the application loads.

Any rapidly growing application has a tendency to run up against physical limits to both the design of the application and also the underlying hardware on which it is running. The result is that at each order of magnitude of growth in traffic, significant work may be required in order to redesign the application. In the meantime, it isn’t uncommon for these kinds of apps to have outages, extreme slowness, or bizarre and unscripted behaviour.

What Zynga has done is to appropriately deal with user expectations: firstly be explaining what the situation is, and secondly by compensating users (in this case via free game items) for the irritation. It is surprising how many companies will try to either hide or deny outages due to scalability issues.

4. Make Money

Making money out of a busy website or application is harder than it may seem.

The “throw something up on the web and put ads on it” model hasn’t worked well in a number of years (yes, I also know a few people still successfully doing this – just try duplicating it from scratch now).

This means that a company that is successfully making money online is worth analyzing in more detail. I don’t know how much Zynga is making (they’re a private company), but from what I’ve read they’re profitable.

Say what you want about the morality of selling virtual items via micropayments, the model appears to work well – at least for the most addictive of online games.

Farmville has two types of internal “currency” for purchasing items in the game:

One type of currency is easily earned within the game, and can be used to purchase the most common items.

The “premium” currency – which is usually obtained through a micropayment (although small quantities of it now circulate within the game as well) – can be used to purchase a variety of premium items that either make game play easier, or convey some form of status.

This model allows people to play the game without having to buy anything, while allowing the most enthusiastic players to essentially subsidize everyone else.

This “freemium” business model works at a similar psychological level to the old “shareware” software licenses – people can use it for free, but also feel like there is some level of obligation to pay, based on their own perceived value of the app.

5. Multiply

On a fickle internet, success may be fleeting.

If a website attracts significant traffic – and money – they need to immediately start planning the next step.

It appears that Zynga realizes that there may be inherent limits to how big a specific web game can get, and that their approach also includes the notion of continually duplicating their success with new games – particularly using cross-pollination approaches such as using familiar characters.

Duplicating a successful methodology over and over can be a useful means of sustaining viral success – particularly if one is skilled at redirecting existing “customers” to the next big thing. By building all of their games around a standard platform – in this case Facebook – the development time to create new apps is reduced. There is also a consistant user interface between the apps, allowing for faster user adoption.

If you play Farmville, you will quickly notice that Zynga has posted advertising at the top of each page for their other games. The objective is to “cross-pollinate” the user list from their various games (my understanding is that they are now running a large number of games on Facebook and other platforms).

One trick – which they don’t seem to be using right now – would be to allow users to utilize the same game currency across all of the games on their platform. I’ve seen this used in practice elsewhere.

Two last things that they appear to be doing well: a)  Zynga developed certain iconic characters for Farmville (i.e. the cartoon animals), and they have used these animals (and similar characters) in other apps that are directly marketed to the users of Farmville. In addition, b) they rapidly create competing products whenever another development team builds a game that could move into their marketspace – and they make an effort to improve on the original. The second company into a market can do very nicely indeed – just think of the Beta vs VHS wars.

In the final part of this article, I will wrap things up and provide some other examples from other businesses. To be continued…

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