The Name Of The “Game” Is Engagement

August 9, 2010

Future brand loyalist or virtual goods buyer?


Social gaming start-ups are a hot commodity these days.  In the past 12 months, Playfish was acquired by Electronic Arts and Playdom (more recently) was acquired by Disney.  Zynga, which remains independent, has a valuation that’s reported to be as high as $5B.  I expect that CrowdStar, another independent gaming start-up, will be acquired before 2010 closes.

These gaming companies provide “free to play” games on the web and on smartphones.  They then sell virtual goods (within the games) so users can achieve an elevation in status (e.g. a sharper sword, more crop for the farm, designer sunglasses to replace your generic pair, etc.).

Sustainable Growth Can Be Challenging

These gaming start-ups have attractive attributes:

  1. Ability to generate hundreds of millions in revenue (in some cases, more)
  2. High growth rates in users, revenue
  3. High profit margins, since the “cost of goods” (for virtual goods) is virtually zero

While it’s hard to argue with the results that these start-ups are turning in, I wonder if we might be in a mini-gaming-bubble, in terms of current valuations and the potential of sustainable, long term growth.

Social games can be similar to the recording and film industries.  Success depends on the blockbuster hit.  Over time, it becomes more and more challenging to consistently produce the blockbusters, especially in the face of growing competition.  Today, Facebook serves as a great “record label” for the gaming companies.  It provides a marketing vehicle that you can’t find anywhere else – “distribution” to its 500+ MM “listeners” (users).

The gaming companies know, however, that they can’t put all their eggs in the Facebook basket – hence, the plans from Zynga to launch their own Zynga Live platform (as one example).  The gaming companies need their blockbuster hits to turn into self-standing brands (e.g. FarmVille), which then relies on a variety of distribution vehicles.

We know that consumers can be fickle, however.  Recall the progression of “hot social network”, from Friendster to MySpace to Twitter/Facebook.  Games will have a related challenge.  FarmVille is not going to be the #1 game forever, which means that Zynga is already figuring out the “next FarmVille”.

I believe there will be a short list of winners in a market that will be increasingly fierce.  In addition, I wonder if over the long term, the rate of virtual goods purchasing is sustainable – or whether it will continue to grow over the long term.

A New Game in Town?

One of the challenges of the virtual goods model is the funding source. Revenue growth is dependent on fickle consumers, who could love your game one day and move on to another game the next day.  And yes, I realize that part of good game design is to build in the hooks to create user loyalty.

That being said, what about services whose funding source comes from brands that want to reach consumers?  The bills in their “wallet” are of higher denominations than the $1’s and $5’s that consumers use to purchase virtual goods.  In addition, “brands are already brands”, which mean that they have a pre-existing following from consumers.


Consider Foursquare.  Some consider it a “location based service”.  I view Foursquare as an engagement platform that’s built on top of a location based system.  In fact, Foursquare has a loyalty program that generated successful outcomes for Starbucks, Ben & Jerry’s, Whole Foods and many others.

The Foursquare business model is both powerful and scalable: powerful in its use of technology (e.g. location based check-ins) and scalable in leveraging existing brands (e.g. Starbucks) for the consumer following and activity.

Location based technology is great, but the long term success of Foursquare is more about the engagement and loyalty programs it facilitates for brands, based on the applicable and available technology of the day.

Nitro Participation Engine from Bunchball

Keep your eye on the Nitro Participation Engine from Bunchball – a Silicon Valley start-up who counts NBC, Warner Brothers and Victoria’s Secret as clients.  The Nitro engine “drives participation using Gamification”, which means that any brand can easily add gaming elements to their web site(s) – and then leverage the Nitro engine to track user actions, points, status and leaderboard. In addition, brands can use Nitro to deploy and sell virtual goods.

What This Could Mean

I think we could be witnessing a transformation of the advertising industry.  If the 90’s and the 00’s were about banner ads and paid search, this coming decade could be about engagement and loyalty platforms.

Foursquare, Bunchball and others have much to gain – if they can tap into a small percentage of the $100+B spent on advertising annually, they’ll make their investors very happy.

These engagement platforms can move from brand impressions (90’s) to brand engagements – where the engagements are longer lasting and more valuable than a click on a paid search ad.  They’re more participatory and can result in immediate purchases (e.g. the latte that someone just purchased at Starbucks).  In addition and perhaps more importantly, they enhance loyalty between consumers and brands, which is great for the long term.

Of course, sustainable growth is a challenge with any technology. Engagement platforms will face their own challenges as they see adoption grow.  Consumers will only be able to participate in so many engagement or loyalty programs.  That being said, consumers are taking batting practice right now – the first inning has yet to start.  Enjoy the ballgame!

I’ve now managed to speak enough.  Leave a comment below to share your thoughts on this topic.

Related Links

  1. ClickZ article (by Christopher Heine) on brand engagement featuring Booyah, Loopt, Brightkite, Gowalla and Stickybits
  2. Foursquare’s Future Slowly Takes Shape“, by Om Malik of GigaOM
  3. Social-media games: Badges or badgering?“, by Caroline McCarthy of CNET

Incorporate Gaming In Virtual Events

November 5, 2009


We’ve reached a point in the virtual events industry where users who have attended 1-5 events (or more) are starting to ask, “What’s next”?  If the industry doesn’t effectively answer that question, then users will eventually stop coming back and attendance will suffer.  One concept that makes a lot of sense is to introduce gaming into virtual events.  By doing so, you’ll achieve real results.  Why gaming?  It’s all about REEL:



Retention is a key objective of any virtual event – whether it’s a lead generation event (virtual tradeshow), partner education event or a virtual sales meeting, you want attendees to leave the event with a level of retention over the content you’ve provided (e.g. exhibitor product information, your own product and technology specifications or the the coming year’s sales priorities and initiatives).  Even in a virtual career fair, “retention” is about job candidates retaining information about your company and why they might want to work there.

With gaming, retention isn’t going to be achieved magically.  Rather, you’ll need to be very strategic in weaving your content message (and objectives) into the games themselves.  So you’re not providing games for 100% fun – but rather, crafting real business value out of participation in the games.  So first determine the messaging you want to convey to your attendees – and itemize the set of desired actions/outcomes you’d like to see them take in the virtual event.  Your tactics will then fall out from there, in terms of how to achieve your objectives within the games.  Sample tactics include:

  1. Place clues in the games that require participants to find and consume content in the show (e.g. view Webcasts, visit booths, etc.)
  2. Award game points based on participant actions
  3. Reward participants who successfully complete quizzes – whereby the questions are associated with content that can be found within the event

In summary, the structure of the game is all about driving business value – with attendees leaving your event with the desired level of retention.  The retention level translates into ROI on behalf of the event exhibitors, executive sponsors and show hosts.


All virtual event hosts want to maximize engagement at their event – long session times, high attendee participation, etc.  The way this is achieved via gaming is not just in the sheer interaction with the game elements.  There’s also the factor of competition.  It’s natural for users to exhibit a competitive spirit – competition brings us validation (to know that we’re “better” than the “opponents”), recognition (to achieve a certain status or to see our name atop the leaderboard) and acclaim (to know that we’ve been crowned the champion).

So be sure to make competition a key element of your gaming, as it provides the constant “pulse” (heartbeat) behind the event.  With a leaderboard that’s updated in near-realtime, there will be constant buzz and activity as players jockey with one another for the top billing.

At the platform level, use the familiar video game tactic of “unlocking” certain features or capabilities based on levels you achieve in the game.  Perhaps it’s a special avatar or profile image (to designate your status) or a capability that puts me at an advantage against other gamers.  Lastly, provide compelling prize(s) to participants – otherwise, their incentive to compete may wane.


When’s the last time you heard someone say they “had fun” at a virtual event?  Not too often, I’d imagine.  Well that’s a goal of gaming – while driving business value, you can simultaneously allow attendees to have some pure, old-fashioned fun.

Perhaps you create a game or two that has no (or very subtle) tie-in to your business objectives.  Or, you create a fun game that has business association, but is very fun to participate in (e.g. Jeopardy, Deal Or No Deal, Who Wants To Be A Millionaire, etc.).  If you’ve generated retention on the part of attendees – and they enjoyed the experience, then you’ve just created a win-win scenario.


An obvious point, but enjoyment lends itself to loyalty.  The more I enjoy an experience, the more I want to do it again.  With gaming, you have a real (or “REEL”) opportunity to create attendee loyalty, so that they come back for your next event.

Furthermore, in hosting an extended event (consider the case of an ongoing event that runs around the clock for a few weeks), the competitive aspect of the event keeps users coming back in to interact with the games, accumulate points and keep (or improve) their standing on the leaderboard.  As a virtual event host, loyalty is your pot of gold – loyal attendees means loyal exhibitors, sponsors, etc.

In summary, incorporating gaming into virtual events is a REEL opportunity that you should consider – if done right, all of your constituents will thank you for it.

Related links

  1. Gaming and Virtual Reality at Cisco’s Annual Sales Meeting (
  2. Cisco GSX — A Countdown to a Landmark Virtual Event (
  3. Marketing Lessons from Foursquare ( – observations on the mobile gaming service created by Foursquare)

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