Trip Hawkins: Has Facebook Gone Too Far?

Trip Hawkins: Has Facebook Gone Too Far?

Facebook recently announced some interesting new developments to its interface and back-end, but I find myself wondering right now if the firm has gone a bridge too far. Beginning about six months ago, Facebook began to indicate that they were going to reel in the game spam on their social network. This was followed by a series of moves that turned down the spigot and began to choke off the viral coefficients of Faecbook games.

Using and, I recently did a “before and after” comparison and was surprised to see that the top 10 Facebook game companies of 2009 have lost 58 million customers since Facebook dialed things down. It is easy to overlook the systemic change if you only look at one game or one company, but the top 10 from last year had 615 million MAUs (monthly average users, or “uniques”). Now that is what we call a statistically valid sample size!  And now they have 557 million, a decline of almost 10%. These are mostly venture-funded tech growth companies, not the type to give up without a fight. I think many of them turned to Facebook ads to avert their declines, but found that it didn’t work. At a systemic level, this is bad for these companies, but also bad for Facebook in the long run. The spam of 2009 may have been an overdone fraud, but with the cost of ads having skyrocketed, the alternative to ads is a tax that these companies cannot afford.

Facebook made the changes because they want their site aesthetic to feel clean – almost clinical and antiseptic with a lot of white space and simple geometric shapes and lines. I was joking with an industry colleague yesterday who said that Facebook wanted to feel like a church social, not a trip to Vegas. For example, today, Facebook seems to feel about games the way that Apple did until three years ago: That they are the nine plagues. So they buried their app system and reduced notifications, along with other changes that have made app discovery more challenging and less impulse-driven. I think that Facebook thinks that it got what it wanted, but did the social network really?

Okay, so Facebook looks cleaner, but is that really what players want? I’m not so sure – after all, customers themselves were choosing to engage with these games when reminded about them. Meanwhile, many game publishers responded to sagging audiences by filling the coffers of Facebook with purchases of Facebook ads. The same ad keywords became more expensive as a result and too expensive for many. All of this drove up Facebook revenue, but I think we are now seeing that the smart money is in cutting spending back because, for many of them, it doesn’t float the boat. Basically, they had been too dependent on a free ride that was giving them a high viral coefficient. They had no advertising cost so it didn’t matter very much that their games weren’t very engaging or generated little revenue. It was a free ride.

About Trip Hawkins
Trip Hawkins is CEO of Digital Chocolate, a top publisher of social applications like Millionaire City, MMA Pro Fighter and Tower Bloxx. A new media pioneer for 30 years, Trip helped define the personal computer at Apple and founded industry leaders Electronic Arts and 3DO.

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