Is Zynga the Canary in the Social Games Coal Mine?

Infographic courtesy of Tableau Software (click to see interactive version)

Cross-posted from my Forbes.com blog The New Persuaders:

I stopped playing FarmVille several months ago. Why? I got bored. Apparently a lot of other people are getting bored, too–at least with playing FarmVille and other Zynga games on  their personal computers.

According to a research note from Cowen & Co. analyst Doug Creutz today, social games played on Facebook such as Zynga’s are seeing steadily dropping usage–leading to a fearsome 10% drop in its shares today, to $5 or less.

The reason, he says, is likely that more and more people are playing social games on their smartphones and tablets:

We believe that mobile devices may be siphoning off an accelerating number of gamers from Facebook. Facebook itself is increasingly being accessed by mobile devices, however it is not possible to play Facebook-native apps through Facebook on a smartphone. We believe that over the last two months, trends in the casual digital gaming space have swung decisively towards mobile and away from social, at least in Western markets.

No doubt that’s one reason, and an inevitable one as more people use their smartphones and tablets instead of PCs for many tasks (and fun and games). But I also wonder if enough people are realizing that these games are taking a little too much of their lives. …

Read the rest of the post at The New Persuaders.

How Long Will Social Games Keep Us Hooked?

Not long after I started my farm (pictured above) on FarmVille, the leading social game on Facebook, I got a message from a friend. He was relaying a question from his wife, who had seen countless semiautomated posts to my Facebook Wall chronicling my progress in the game. Her query: “What’s the matter with him?”

It wasn’t the only such reaction I got from playing Farmville. I started the game as research to write a story on their rise for Graduate School of Business alumni magazine at Stanford University, where a surprisingly large number of social games founders or managers got degrees. It seems that people either love social games (one friend either is doing a very deep research project on them or needs an intervention) or hate them. But it’s hard to deny that they’re a game apart from most previous online games, because millions of regular people who don’t even know the term “gamer,” let alone touched an Xbox console or joined a World of Warcraft guild, are playing them.

I hope my story explains some of the reasons why, but what I’m uncertain about is how far social games can go. Clearly, Zynga and other social games leaders have found a way to provide entertainment people enjoy–and, let’s not mince words, appeal to people’s addictive nature by adroitly manipulating game mechanics to keep players coming back again and again. As a result, Zynga is raking in big bucks and seems headed for a blockbuster IPO. And games may well support a second big business in virtual currency for Facebook.

Given their undeniable appeal, it seems that social games are here to stay for a good long time. But I also wonder if the slowdown and churn we’ve seen in social games this year indicates a certain weariness on the part of players. I’m afraid I don’t have the addictive gene, so much of the appeal of social games is lost on me (although I would like to reach level 12 in FarmVille so I can plant chile peppers…).

But even people who respond to the rewards of these games can feel like they’re on a treadmill. As a result, social games companies are trying to add more wrinkles to their games to keep users from getting bored. But then, like so many tech companies that have fallen victim to the Innovator’s Dilemma, they may start losing the mass market, for whom the simplicity of social games is key. Only a few companies, I’ll wager, will be able to walk that thin line.