Little did I know at the time of writing Dissecting the Success of Social Gaming - that only a few days later, Michael Arrington of TechCrunch would send the industry into a frenzy with his blowing the whistle on offer-scams (the shady lead-gen and subscription offers provided by some advertisers in exchange of points to be spent in-game on virtual goods).
While Michael deserves huge kudos for bringing attention to the issue and for triggering action (Zynga and MySpace have since announced tighter controls on 3rd party offers), much confusion has arisen across the media from the cyber-echo of his points. Here’s an attempt to clarify:
- Scams are not generated by the gaming companies. They come in through the third party suppliers of lead-generation offers that allow players to gain virtual points without having to pay for them.
- Offering free points to players for filling out surveys, signing up for newsletters, etc is not a scam nor is it unethical business in principle. What is a scam and absolutely unethical is for advertisers to ask for mobile phone numbers as a way to sneak-in a charge or a monthly subscription fee to the unaware user.
- The social gaming business model is still sound. As reported by Zynga, about 1/3 of its revenue comes from offer suppliers. To understand what impact scams have on a gaming company’s business, the more relevant figure would be the percentage of that 1/3 that are scams.
There is no doubt everyone in the supply chain needs to recognize the issue of scams and eliminate them by doing their part in vetting the advertisers: Facebook, the gaming companies and the third party offer suppliers (OfferPal, SuperRewards, etc). Well done Mark Pincus of Zynga for being the first to act.
For a balanced reaction to this loud debate check out this article on Inside Social Games.