The perils of Facebook as a games platform

When South Korea started worrying about gambling games on Facebook, their startling solution recently was to summarily switch off all Facebook games – a decision that has undoubtedly cost developers millions of dollars.

Once again, Facebook proved it is one of the biggest targets for government regulators, but this is just one of the pitfalls facing games companies considering developing on its still huge platform. What other tank traps await studios developing for Facebook? How open is it and is it still viable?

A platform implies stability; a safe, consistent place to launch and maintain games. But Facebook is still the most notoriously unstable of platforms, in terms of what you can do with its platform. Its policies have always been subject to sudden and enforced changes that aren’t too difficult for competent teams to navigate technically, but whose impact on commercial models can be severe.

Platform holders naturally seek to continually evolve their platforms, which theoretically should benefit users and companies alike, but on Facebook there are evolutionary winners and losers. After each major policy shift, companies have died or left.

Apps that relied on being able to send free recruitment posts into everyone’s feeds suddenly found their main marketing channel had been drastically reduced. When Facebook introduced its single currency, it ejected the payment and offers companies that had underpinned a new and lucrative microtransactions market.

Facebook is a very Darwinian platform in general. Players can churn swiftly and in huge numbers. But the way the platform changes amplifies this considerably.

Facebook is still the most notoriously unstable of platforms, in terms of what you can do with its platform.

Some developers describe a Facebook “tax”, referring not to the revenue share, but a cost contingency (budgeted as high as 25 per cent for some) to handle changes to Facebook’s technology and platform policies. Fail to put that aside and you could be dead in the water.

Face of change

What was the most open of platforms has slowly but steadily been closed down. Recent changes mandate approvals for every new product that does more than just log you in, scrape email and search friend lists. If you want to get a user’s location, access a user’s status, publish on behalf of the user, know a user’s birthday and other API actions, you need to be vetted.

A small and presumably busy team now makes life/death decisions on new games, with a ‘three strikes and you’re out’ rule reminiscent of Californian criminal law. After the third rejection, you cannot submit again until a time-out of unspecified length. This makes Apple, whose sometimes arbitrary approval process makes developers complain but at least allows appeals, look positively modern.

If a platform’s approvals system doesn’t work smoothly, consistently but flexibly, developers will go elsewhere. It remains to be seen how well Facebook’s functions but they are certainly not easy to run. On many other games platforms, particularly consoles, it is surprisingly hard to get a game released. Even Gabe Newell admits that Steam’s Greenlight is broken and not fit for purpose for many indie PC developers.

Facebook is also notable for the strategic use of its open platform to allow and then restrict new markets. Coins is just one example of how Facebook has repeatedly invited third parties to innovate new apps before later banning their activity. Its latest API will block a range of successful companies’ products from the formerly permissible activity of reading users’ streams.

Unless some kind of grandfather deal is done, already live apps like Flipboard and Hootsuite that collect or make recommendations based on users’ feeds will be blocked from April 2016, and new apps are blocked altogether. This is a serious strategic risk for companies trying to innovate on the Facebook platform – you could find yourself banned or curtailed if you’ve unwittingly been competing with Facebook’s future products.

So is this unpredictable and constantly changing platform still commercially viable for games? Granted, Facebook has seen a steady exodus of games companies either leaving or turning to the less choppy and faster growing mobile market. As a result, Facebook’s games revenues plateaued and then started to fall.

Facebook is still home to some of the most profitable games companies, and it can still make you money, but you better be ready to move fast when unpredictable changes inevitably happen.

Nick Gibson is a director at Games Investor Consulting, which provides commercial check-ups, strategy and data to games, media and finance companies.
www.gamesinvestor.com