Thursday, August 16, 2007

The fame lottery. Can there be a YouTube of Games?

Gamasutra reports that Kongregate has received $5 million in VC funding in a round led by Greylock Partners. Kongregate is a flash game aggregator, which allows some user created content. Their marketing pitch is that they are the YouTube of games. They are sitting at 800,000 users, even if when I checked they only had a couple thousand online. In many ways, it reminds me of, which has been waiting for liftoff for a couple of years.

It sounds good to be the YouTube of games. But it's worth considering (reductively) the features of the site and video itself that helped the site grow. One, YouTube gained a ton of traffic early using other people's content. Especially the professionally produced and very high quality kind. It’s the equivalent of being able to post a free version of World of Warcraft to Kongregate, which is not going to happen. Two, it gave people a forum to easily share their home videos with small numbers of people. These millions and millions of videos have tended to be very low quality, but that was good enough when all you wanted to see was your new niece or a star basketball recruit. On the back of those two uses, YouTube grew a large and involved enough audience that an absolutely minuscule number of videos can now "go viral" and spawn an Interstar. It's like a fame lottery and people are suckers for a lottery. Blog aggregators like BoingBoing or Slashdot offer the same sort of lottery for text content. (I'm not saying that the stuff that goes big doesn't deserve it. It must strike some chord. My statement is smaller: tons of deserving stuff still goes unrecognized.)

Are games really amenable to the fame model? The amount of effort (read: time or money) required to produce a good game is several orders of magnitude higher than that required to produce the average YouTube video or blog post. Kongregate is trying to emphasize small persistent worlds, which are another order of magnitude more complicated than the normal casual and flash games. Kaneva has been trying to do this for years with only niche success. With the development budgets ($20-100k) they are talking about, it is hard to imagine they are going to get the high quality products that will be necessary to drive this site. What is really in it for a good developer?

The incentive that Kongregate is hoping to offer to developers is that they are building in microtransactions, which is a catchall phrase for the consumer behavior of spending small amounts of money for in-game advantage of some sort. This is a good idea, but consumers are only willing to pay money for things they care about. The context of the game creates the willingness to spend money on microtransactions. Are the games going to be good enough that consumers will want to spend money on them? That’s a big question and one that almost no flash developed game outside Runescape has answered.

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