Could it be that Americans just have too much real stuff that they don’t want anything virtual?
In 2009, I wrote a story for BusinessWeek detailing the cash machine that the seemingly frivolous social games company Zynga had started to become. This at a time when no apps were really making money.
Soon after, I embarked on a two-year journey around the world for my second book, which included some 20-plus weeks in Asia. It was there I saw firsthand that this free-to-play, virtual gifts economy, while novel in the US, was as old as ecommerce and portals on the Asian Web.
Of course, we all knew that virtual goods were huge in Asia, and many of us mocked those crazy foreigners spending their real money buying fake gifts. It wasn’t until Zynga started letting us do the exact same thing that we — typical Americans — hailed their amazing invention of a brand new way to make money online.
It was on one of my brief trips home between Brazil and India that I heard the most extreme version of this. Sitting in the Creamery in SOMA, brutally jetlagged, I was waiting for a 10am meeting. The day before I’d been in the Rio favelas, hearing how some kids had used YouTube to force City Hall to pay attention to their horrendous rat problem. When I landed in India in 48 hours or so, I’d meet up with VNL to hear how the innovative mobile equipment company was transforming the lives of millions in remote villages.
But today, I was in douche-ville (no, sadly, that’s not a Zynga game). At that time, the Creamery was where you could see the most annoying elements of the Valley. People funding an app with the hopes of a flip, all hanging out, drinking coffee, and talking about doing stuff.
Still thinking about my day in the favelas, I heard the woman next to me argue — with passion — that Farmville was the most significant development we’d seen in our lifetimes. The sad thing was, the guy sitting opposite here, was arguing — equally as passionately — that it was merely in the top five.
That was only a few years ago.
Zynga once looked like it had the power to do three magic things: to bring legitimacy to the Facebook ecosystem as a place where big companies could be built, to bring virtual goods to America in a meaningful way, and to pioneer a new era in gaming. The markets were abuzz leading up to its IPO last December, never mind that Korean Nexon — which pioneered free-to-play games — was going public the same time. Nexon has held up considerably better. While Zynga was seen as a potential EA killer, it was Nexon who was rumored to be buying EA, back when we had a rare sit down with Nexon’s founder Jay Kim.
Zynga is on the ropes now. CEO Mark Pincus gave an exceedingly candid picture of the company and a good case for not giving up on him at our PandoMonthly in July. The company certainly has one thing going for it: A CEO who is used to being hated and isn’t captivated with pleasing Wall Street, buy-back and layoffs notwithstanding.
This is the second virtual goods company to be heralded as THE NEXT BIG THING by the Valley and mainstream media alike, only to disappoint in the end. The first was SecondLife. Clearly there are huge differences between them. SecondLife was pre-Facebook and was incredibly immersive, while Zynga games are all about getting in and getting out. And Zynga got much further as a company. But the rise and stumble of both makes me wonder: Was America, culturally, just late to virtual goods, or for some reason are we just not that into them and never will be.
I’ve asked this question to all sorts of people over the years — investors, entrepreneurs, even cultural psychologists in multiple countries — and I’ve never gotten a clean answer. But a big problem might be the quality of Americans’ imaginations.
People repeatedly have said one of the reasons Tencent is so big in China is the one-child policy. No matter how poor a family was, each child always had four grandparents and two parents giving him or her a few pennies in spending cash. That was enough to buy the virtual things Tencent sold, 10 cents at a time.
Others have speculated that the one-child policy had created a nation of children with imaginary friends and active imaginations. They felt at home in imaginary worlds with imaginary things. American children, on the other hand, have siblings galore — not to mention boxes and boxes of real toys.
That leads me to something that SecondLife founder Philip Rosedale said about virtual world usage in the US. When given limitless options for what they could possibly be — a sexy fox, a guy with a penis-shaped head, a warrior — people overwhelming shaped their second lives into a version of Beverly Hills. There were almost always palm trees, he said. They wanted the opulence they saw in the media and couldn’t have. What he described was a staggering lack of imagination.
Sure enough, many of Zynga’s most popular games — Farmville, Cityville, and the like — are based on close approximations of real world things. Perhaps what’s missing is the aspirational element that Americans so clearly crave. Throw in a few palm trees and maybe Americans will truly, permanently embrace social games.
[Image courtesy n-re-k]