Is the Facebook video game market dying or just evolving?

farmville 2

Facebook is still one of the fastest growing video game platforms in the world… right? With real money gambling expanding the opportunities to earn fat cash on Facebook and new developers like Amazon Games Studio embracing the social network as its entry into video games, the sky seems to be the limit. Even as that sky falls on former titans like the ever-shrinking Zynga, Facebook is still a healthy proposition in theory. So Zynga’s market cap plummeted from an estimated $7 billion in December to around $2 billion today! That doesn’t mean social gaming on the world’s most populace social network is dead.

Au contraire. The rot appears to be spreading in the game development world.

“Facebook is still a viable platform for independent developers looking to make money on a game,” Benchmark Capital venture investor Mitch Lasky told The Los Angeles Times, “However, companies with aspirations to be larger publishers—Kabam, Kixeye, even Zynga—are moving aggressively off the Facebook platform to mobile and the open Web. Publishers aren’t convinced that the costs of being on Facebook are worth it.”

There’s the rub: The cost of staying in the Facebook game. There are still players on the social network, 900 million potentials and growing, but the fees game makers incur chasing that audience are growing fast. CrowdStar, the developer behind games like Happy Aquarium and Happy Pets, enjoyed an audience of 31 million active users 18 months ago. The cost of marketing new games and paying Facebook 30 percent of all revenue made through the network has chased the publisher away from the network. “Facebook is no longer the viral platform it used to be for games,” said CrowdStar CEO Peter Relan.

“Everytime marketing costs go up,” said Kixeye SVP of marketing Brandon Barber, “Another handful of aspiring developers bit the dust. Facebook is very aware of this now.” Kixeye is behind hugely successful web games like Desktop Defender. Its audience on Facebook is much smaller than CrowdStar’s, roughly 5 million active monthly users as of April. Its revenue projections are impressive though. The company expects to make $100 million this year.

It owes its success however to relying on stronger game design that doesn’t rely on viral tactics like Zynga’s FarmVille to build an audience. “Frankly we don’t need the viral bullshit that other developers depend on,” Kixeye CEO Will Harbin told TechCrunch in April, “We have the luxury to make the games we want to make.”

So perhaps the Facebook game exodus isn’t of game developers in total. It’s that users aren’t interested in the type of empty social games that made Zynga into the bloated behemoth it is today. There’s opportunity for game makers like Kixeye—and who did need to immediately build revenue—on Facebook provided they’re making deeper, more rewarding games. It remains to be seen though if Facebook games will make as much money as they used to once that transition is complete.

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