POINT OF view

Beyond FarmVille: The Evolution and

By Annicka Campbell , Associate, Marketing Strategy & Analysis, and Seijen Takamura,
Senior Associate, Marketing Strategy & Analysis

Why do games matter?

Video games play an important role in the lives of millions of people around the world. Moreover,
during the past two years, the way our society thinks about video games has experienced a serious
shift. The people who play video games have changed. Gaming channels have changed. The games
themselves have even changed.

As marketers, it’s important to acknowledge these changes and recognize the opportunities that
gaming represents for brands. Brands are infusing gaming into product campaigns, customer
experiences, mobile applications, and more — ultimately, gaming has the ability to improve loyalty and
engagement among customers.

We’ve written this white paper to illustrate the impact of the social gaming industry in the United
States. In the following pages, we’ll identify some key changes in the demographics, development, and
social relevancy of games, in addition to touching upon some key strengths and weaknesses of gaming
mechanics within the context of marketing and advertising.

Numbers Talk
The size and monetary scope of the video game industry is mind-boggling. In 2009, the worldwide video
game industry generated $60 billion in revenue, a number that’s forecast to grow to $70 billion by 2015.
To put things in perspective, Hollywood generated $10.6 billion dollars in revenue in 2009 — and the
US gaming industry generated $25.29 billion dollars during the same timeframe. Moreover, the sale
of virtual goods within social games alone generated $726 million dollars in revenue in 2009,and are
expected to increase to $2 billion dollars in 2012.

It’s important to note that when we talk about the video game industry, we’re referring to everything:
video games, PC games, mobile games, social games, all of it. Gaming has become massive in both
the number of people who play and the amount of revenue it generates — and will continue to grow
exponentially in coming years.

Who cares about games?

Today, nearly everyone cares. And if they don’t, they should. Over the past two years, the way we’ve
thought about video games has made a complete shift. The people who play video games have
changed. The places they are played have changed, and the types of games have changed.

© Sapient Corporation, 2011

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As marketers, all of these changes have relevance. Brands are infusing games and game mechanics
into product campaigns, customer experiences, mobile applications, and more. All of these efforts are
intended to improve loyalty and engagement among consumers.

We’ve written this paper to help you understand the impact of the video gaming industry in the U.S.,
identify some key changes in the demographics and development of games, understand why games
are relevant, and identify some key strengths and weaknesses. We’ll also showcase some branded
efforts that leverage social gaming.

Cultural stigma
As we’ve already mentioned, gaming has become a much more culturally accepted form of
entertainment — and it’s more accessible to a wider audience than ever before.

The cliché of the typical video gamer — a younger male who lives at home — is now outdated. Today,
most American families are playing some form of a video game in the course of their daily lives. This
year, 67 percent of American households will play video games, and 64 percent of parents think games
are a positive force in their children’s lives — highlighting the increasing cultural acceptance of video
games.

It’s likely that gamer culture is changing because the way we perceive games has also changed. In
the 1980s and 90s, video games were considered to be a waste of time and a negative force in young
peoples’ lives. Today, it’s an educational toy, a social experience, and a form of exercise.

The story of social

We can’t fully understand the evolution of the gaming universe without first evaluating the role that
social gaming within that universe.

When we talk about social gaming, what exactly do we mean?

The term ‘social gaming’ can be misleading — after all, by definition, a game is an inherently social
act. However, in this context, we are talking about games that must be three things: casual, digital, and
played within a social network or mobile application.

Social games have some key characteristics:

1. They integrate into a social graph. They allow players to play with friends they know in real life,
people with whom players have established, offline relationships.

2. They are “stickier” than traditional games. Just as people are affected in a real way by the actions
of their real friends, the game has the potential viral ability and popularity because of that personal
connection.

3. They have a unique niche within the gaming ecosystem. Social games are driven by social interaction
and obligation rather than by strategy. They are graphically light, quick to play, and cheap and fast to
develop.

The new revolution

Social gaming has triggered a transformative shift into a demographic revolution. These are games for
everyone, thanks to their emphasis on community and their (relatively) low learning curves.

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Social games are very accessible to non-gamers: 35 percent of the people playing social games in the
United States had never played a video game before. Moreover, as of January 2010, 54 percent of the
U.S. social gaming population are women. The age distribution also tends to skew older; 46 percent of
social gamers are between the ages of 40 and 59. And when it comes to volume of people playing, the
numbers are impressive: 20 percent of the U.S. population ages six and older have played a game on a
social network within the past three months. That equates to almost 60 million people.

Cross platform integration

Another hugely important development in the realm of gaming is the emergence of the cross —
platform gaming experience. Today, we play games on our smartphones, Web browsers, Facebook
accounts, Nintendo Wiis, and Xbox Kinects, in addition to traditional gaming consoles like the Xbox and
PlayStation. In 2010, 42 percent of Americans will play a game on their mobile phone. The number of
families that own one or more designated game console has greatly increased as well — 67 percent of
American homes own a console or PC used to play games, and 27 percent of the time spent online by
an adult American is spent on games.

Don’t expect the designated console to disappear. Instead, expect to see more games that support play
across independent and playable mobile devices such as the Xbox Kinect, the Apple iPad, and smart
phones.

Branded Gaming Efforts

Brands are beginning to experiment with incorporating social gaming into their cross-channel
campaigns. Many of these efforts are still experimental in nature, and a framework for developing
and implementing social game campaigns isn’t yet available, we can learn by looking at the following
successful and engaging examples of branded games.

1. Pepsi
The Refresh Everything Project is an interactive competition that uses elements of play to bring
real value to consumers’ lives. In 2010, Pepsi announced that it would pull its multi-decade, multi-
million dollar Super Bowl ad and devote $20 million to a social media cause campaign. While Pepsi is
considered a traditional brand, this idea was anything but.

Pepsi used that $20 million dollars to create a grant fund (www.refresheverything.com) where people
from all over the US can nominate projects in local communities that need funding, whether that be
a sports team in need of uniforms or a project devoted to building houses. To date, more people have
voted for causes on the Pepsi Refresh site than voted in the 2008 presidential election.

Pepsi took a cause marketing campaign and voting process and turned it into an interactive game that
encourages users to return multiple times per day to vote, check the leaderboards, and read about
winning campaigns — all while engaging and interacting with the Pepsi brand in a meaningful way.

2. Mint.com
Mint.com allows users to track and better organize their personal finances in an interactive format.
Mint.com has begun to experiment with turning personal finance into a game — with points, merit
badges, and more.

In 2009, the site launched a new feature called Financial Fitness that adds an element of gaming to
the service. The game outlines five main principles users should focus on with regard to finance (e.g.,
managing debt, spending less). Each principle has tasks associated with it, and rewards users when
they successfully complete the task.

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Mint helps its users make progress within their daily lives and helps them achieve monetary goals
through saving and responsibility. By turning their users’ mundane (and quite possibly confusing)
personal finances into something fun and competitive, engagement among users increased.

3. Nike+
Nike+ has been around since 2006. This piece of hardware — turned-application uses GPS and an
iPhone accelerometer app to track and share running behavior across multiple platforms, including
a mobile app, social network, and the Nike website (which includes Facebook integration). The app
tracks the user’s progress online and shares favorite runs.

Nike+ is a great example of taking the online gaming offline. In August 2008, 800,000 runners logged
on and signed up to run a 10K race simultaneously in 25 cities, from Chicago to São Paulo, upping the
ante as far as what it means for a game to go global.

Using Nike+, the once — solitary experience of running and outdoor training is now a very social
experience that integrates your progress with others’. It also encourages users to explore new areas,
meet other local runners, and compete with friends during training. In this sense, we see how closely
related social gaming and location-based services truly are, as services that help us interact with our
offline environments, explore new territory, and connect with friends both new and old.

4. American Standard
This bathroom fixture brand has been around for over 130 years. Thanks to a more functional product
offering, it’s not a brand that we expected to see dabbling in the social gaming space – but they’re
getting involved in an interesting and useful way.

American Standard recently released a mobile application and website called Responsible Bathroom.
The concept: turning energy and water conservation into a social game. This game encourages
competition, education, and tracking to help users make their homes more energy and water friendly.

Once users take the introduction quiz to evaluate how efficient their bathroom usage is, they track
energy use over time (hopefully decreasing) and learn about ways to conserve. Over time, the
app calculator lets players track how much water and money they’re saving, with American
Standard products in particular. Users are also enrolled in a weekly sweepstakes and are
rewarded with local rebates.

This app offers real return and real savings, in addition to awareness of an important environmental
cause that customers can impact with simple changes during their daily lives. We’re guessing that the
app will also improve loyalty and brand perception for American Standard — something to think about
for brands that hope to offer social gaming to their users in the future.

5. Bing
Bing’s FarmVille promotion was featured in March of 2010. FarmVille users were invited to become
fans of the Bing Facebook page and received Farm Cash, FarmVille’s virtual currency, in return. Bing
acquired 400,000 Facebook fans in one day through a FarmVille promotion. While this stand-alone
promotion seems like a clever integration, it also begs the question: How valuable are the fans really?

While this could have been an unsuccessful attempt at user loyalty, Microsoft’s social media team
crafted Facebook updates to cater to FarmVille users. One update read: “Any FarmVille fans out there?
Try using Bing to get the most out of your crops and animals.” By linking to a Bing search result for
“FarmVille Animals,” the update drew 585 comments and 20,000 click-throughs in four hours.

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The idea of giving users incentives to participate in actions to gain virtual currency has been a
revolutionary one for Facebook. But the challenge lies in getting the right kind of fans — the ones who
can be the most valuable for your brand — and engaging them beyond just a click.

What does it all mean?

Infusing game mechanics into consumer experiences can make moments even more engaging and
memorable, but there are some things to remember:

1. Incentive is important. Games can make marketing stick and engage consumers, whether
they are branded or not. However, game mechanics are not a Band-Aid. To be effective, the
game must have a tangible reward or value associated with it — from a cause (in the case of
Pepsi and American Standard) to personal gain (in the case of Mint.com).

2. Mind the demographic shift. Today, video games are played in most U.S. households, and
are played by both genders and people of every age. Brands that wouldn’t typically to turn to
gaming as a viable marketing channel should now begin to consider it a new way of connecting
with the same segments they’ve reached via more traditional channels in the past.

3.Embrace the integration. Game advertising is not longer defined as in-game billboards.
Games happen on any device with a screen — phone, computer, or console — all options for
brands looking to get involved.

Today, games can happen anywhere, and our interactions with video games have changed.
The perception of games in American culture as a negative force has evolved into an understanding
of games as a positive developmental tool for both children and older people. We play with anyone,
and we can play anywhere, if we want to. And gaming is no longer just a sliver of our lives; it’s a daily
experience. Video games are an important part of our lives today, and consumers have shown that
they’re more than willing to engage with brands that embrace the same mentality. It will be interesting
to see how brands take stock of this evolution, and how they will leverage these changes to impact their
cross-channel campaigns and their relationships with consumers.

ideaengineers.sapient.com

Seijen and Annicka are members of SapientNitro’s Consumer & Industry

Research Team , the company’s pulse on all thing trends. Supporting all
Sapient offices globally, but based in Chicago, the team is comprised of
6 full-time researchers dedicated not only to monitoring developments
and news within specific digital channels like Mobile or Social Media,
but also to analyzing how these technology trends can be leveraged
strategically within industry-verticals or specific client projects.

© Sapient Corporation, 2011