Let’s take a look at disruptive products as we head into the annual Game Developers Conference this week. The traditional console game market has taken a beating in the last year or two. On the PC and web, conventional games have also flattened out. This is especially true for games that have a price tag but many websites offering conventional free games have also suffered from declining traffic. Even World of Warcraft seems to have peaked as a conventional MMO game with a subscription model, and may sell more virtual items within a year.
Instead we have seen tremendous growth in mobile app store games, Facebook games and free-to-play browser games with virtual items. This is vividly illustrated in Digital Chocolate’s own numbers. Last year we had 50 million game downloads in our first year on the iPhone. In just the last two weeks we’ve tripled our daily Facebook audience and are now reaching more than 1 million players per month. And our fastest area of revenue growth is in virtual items on Facebook.
In short, the iPhone and Facebook platforms are classic examples of disruptive products as per Clayton Christensen. For traditional gamers, the purpose of a game is to be entertained and to feel good by winning the game. Hence the game is an end in itself. With disruption, a new market emerges with customers who care about a new benefit that is offered at a higher level of simplicity and convenience. A billion people that do not consider themselves gamers are now playing new kinds of casual games that are not an end; they are a means to an end. And the end, or key new benefit, is the social value.
Figuratively speaking, we all used to live in a small village. We saw the same family members and intimate friends every day. We had fabulous social lives. Then we invented cars, suburbs, huge cities and television. Pretty soon we were commuting alone; not knowing the people around us, not even our neighbors; and huddling at home in front of our TV. We’ve gotten lonely. And a bad social life is as deadly as smoking. Don’t believe that? You won’t be surprised that a smoker can cut his risk of death in half if they stop smoking. But studies have found that if the same person is not a member of a club, they can join a club and keep on smoking, and the social benefits of the club will equally cut their risk of death in half. We all know about the harmful effects of a blackened lung and it turns out a blackened social life is just as deadly.
This need is now so pervasive that it has even diverted traditional hardcore gamers, a later stage phenomenon in product disruption. A gamer that bought the PlayStation had their friends over and walloped them at games like Madden Football. Then he upgraded to the PlayStation 2, but after awhile the friends wouldn’t play with him. It shouldn’t have been a huge surprise when this guy did not buy the PlayStation 3. Instead he purchased casual social games like the Nintendo Wii and Guitar Hero.
And now he and his friends have iPhones and are on Facebook, also known as, “The Website That Ate The Internet”. These are network-connected and social platforms that offer tremendous new levels of simplicity and convenience. These platforms are instantly available and the apps are free and easy to use. And social! The disruption cycle is being completed as both new customers and traditional customers make the shift to the disruptive products.
There has been much criticism from traditional corners about first-generation Facebook games. Admittedly the games sometime seem like spam or viruses and probably irritate a lot of Facebook users. And with shallow gameplay, many of these games have huge churn rates where consumers “drive by” but don’t get engaged in the game. But disruptive products always start out less powerful and with fewer features than their predecessors and they add more power over time. A new generation of Facebook social games is on the cusp and we will be seeing big leaps in areas including innovation, the quality of art, the quantity of animation, the depth of gameplay and the legitimacy of really playing socially with your friends instead of just “spamming” them to adopt the lost cow. Try NanoTowns™, NanoStar™ Castles and NanoStar™ Siege in the coming weeks and see if you agree.


Ilkka Paananen, President of Digital Chocolate
Marc Metis, Chief Marketing Officer of Digital Chocolate
Saurin Shah, Vice President of Digital Chocolate




