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FarmVille No Longer Facebook's Top Application

Date: Nov 20 2010 09:38:32 Source: Forbes Views:
KeyWord: FarmVille, Facebook’s Top Application

This is a historic moment for social games. "FarmVille," the hit Facebook game among all hit Facebook games, is no longer the top app on the social network. For the first time since claiming the top spot more than a year ago in August 2009, FarmVille has fallen to second place in terms of monthly active users on Facebook, according to AppData.com. Coming in at no. 1 now is the app "Phrases."

"Phrases" is a curious and inconspicuous sort of app that allows users some self-expression on their Facebook walls through images and phrases. It may be a testament to the power of user-generated content. I reached out to the creators of Phrases through several email addresses available on their Facebook page to learn more about them and their plans, but haven't heard back from this mysterious outfit.

To be sure, FarmVille is still easily the top app in terms of daily active users, at more than 16 million compared to the second-highest app Windows Live Messenger at nearly 10 million. But its decrease in monthly active users is still a big step down, or more accurately, a steady decline for the game. Just last February, FarmVille hit its peak with more than 80 million monthly active users. Eight months later, that number has continued a downwards march, now down to just under 54 million users.

FarmVille has played a large part in helping social games company Zynga dominate and reach its unbelievable valuation of $5.51 billion in just four years, surpassing videogame giant Electronic Arts' value. In the meantime, Zynga's collective monthly active users numbers across all its games has also taken a dive, recently dipping below 200 million monthly active users for the first time since it passed that milestone one year ago. The company hasn't been able to follow up with a hit of quite the same magnitude as FarmVille. FrontierVille, for instance, launched a few months earlier, initially took off, zooming past 30 million users. But just as quickly, growth cooled, and users have begun a slow trickle out of the game.

While FarmVille is a game that's been around for a while, part of its declining fortune is from the changes Facebook has made to the platform, no longer allowing Zynga and others to access the ‘viral' user acquisition channels they once had. This has had an effect on the entire social games ecosystem on Facebook.

"I think the gold rush is pretty much over now, the days of easy money are gone," says Interpret games analyst Michael Cai. That's good and bad news for Zynga. Good in that it already has a big - the biggest - network of users it can cross - promote its new games on. This helps ensure that each new game it delivers will attract lots of users. Zynga also has the money to spend outright and acquire new users through heavy marketing. A smaller social games company, on the other hand, has neither the money, the network, nor the viral acquisition channels to entice new users to its games.

But it's bad news for Zynga too in that user growth in the US may have leveled off for good, says Cai. The percentage of people who spend money in a game may go up a little, as might the average revenue per user, but neither is likely to see a significant jump. "The growth from this point on is going to be more organic than explosive," Cai says.

If the US has cooled to social games, Zynga and other developers would be wise to look to international markets for growth. That's exactly why Zynga's latest title "CityVille" was the company's first international launch. The SimCity-like game is available in five languages: English, French, Spanish, Italian and German. Social games developers now need to think international and invest in localization. They also need to focus on developing better and more interesting games. CityVille is perhaps Zynga's most complex game to date in terms of graphics and game mechanics. And at a conference on Wednesday, Zynga chief Mark Pincus said that by the company would have 400 of its 1,300 employees focused on creating new intellectual property by the end of the quarter.

But the hits-driven games industry is fickle, and it's difficult to predict what users' tastes will swing towards next time. Zynga looks great right now, with a $5.51 billion valuation, more than half a billion dollars in total funding, a stable of top social games and a still-large network of users. FarmVille's fall is symbolic of what's to come, however, for Zynga and for the rest of the social games industry.

Zynga exploded over the past few years in the US, but growth now will be found in new markets - global and mobile - and it won't come easy, either. The social games industry is maturing and transitioning into the next phase. A new dawn will greet the citizens of FarmVille tomorrow.

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