FEATURE: Hi5 alive to social gaming

Social gaming is the network's stated primary platform for growth. Its navigation points the user to games from the front page; more so than its rivals. While MySpace' focus is on music, and Facebook on just about anything, Hi5 has identified social gaming as its thing.

Its developer partner program is based on revenue share, without any financial commitment in advertising from the producer. It also operates a global micropayment economy that's far advanced of its rivals.

On the face of it, gaming on social networks makes more sense for consumers than playing via online gaming sites. The major draw is that your friends are already there, and that any new friends you make will be part of a wider non-gaming culture you've chosen to join.

Also, a person's gaming achievements and tastes become part of his or her overall social platform. It's hardly surprising that operations set up as gaming destinations are trying hard to re-invent themselves as social networks.

Hi5's executive producer of games Andrew Sheppard has previously worked at GameSpot, EA (on Spore) and at Outspark. He makes no bones about his belief that games sites are going to be outflanked by social sites that can offer an equivalence in game quality.

"They have no notion of the social graph. It's like ICQ. It was cool once, but the world has moved on. We see those businesses as broken, with a tiny percentage converting to pay and prices coming down. We're seeing a rapid commoditization of content and very little space to innovate. In my opinion, as a game developer and someone who believes in games, that model is in a death spiral."

But games on social networks generally range from indifferent to so-so. Hi5 believes it can deliver enough quality to grab non-gamers and gamers alike. The firm is working on a platform-wide avatar system that it says will "go well beyond Xbox Live" and is courting game developers around the world, with the promise of instant traffic and, if the game is accepted by consumers, instant revenues.

Sheppard says, "Every time we have talked to a developer the biggest deal for them is getting traffic to their game as quickly as possible. What they love to hear is that they put their game onto Hi5 and get hundreds of thousands of users in just a few days and not have to pay for that traffic up front."

Hi5 says it will sign up games that are available on other platforms, but says innovative games that take advantage of social features and social mores are the ones that consumers like.

Mike Trigg, VP of marketing and business development explains, "The opportunity is to bring the social aspects of online interaction together with gaming. Games are inherently social. If you think about games through time they have always been interactive, social and collaborative. It's only recently that games have been done against a computer as a solitary occupation. It’s refreshing to see it being re-enabled as a social pastime."

He adds, "We are working very closely with partners to distribute their games and drive players to them. Our approach is markedly different from a MySpace or a Facebook. The model there is to pay advertising fees to go promote the game, and there is no established virtual currency so the revenues share is not so clear-cut.

"When we partner with a game developer we help them promote the game within the site and we provide the virtual currency APIs for them. We deal with all the currency issues and we split the revenues with them. Rather than us making money off the partners we are making money with them."

Hi5 makes a big play of its virtual currency. The company points out that the biggest friction point for online gaming is paying for content. Within the context of an online community with a healthy, establish economy, this problem goes away. It certainly worked out for Xbox Live.

Trigg says solving the currency issues have been a major challenge, and is therefore a benefit to developers. One reason why Hi5 has such a varied international audience was its decision to localize before its rivals.

"A lot of people underestimate the complexities of virtual currencies as they wade into this area. We were acutely aware of the challenges because we have always operated an international operation. You don't just have to consider currencies and languages but also disparities in spending power and the fact the different payment methods have different levels of adoption - credit cards - 60- or 70 different payment method, cash cards, premium SMS etc."

Hi5 says its audience is also "more green field" than other networks, which major on the more crammed English-language market.

But, ultimately, isn't this going to be just another sector of the market that gets quickly filled up with a baffling array of me-too products? Sheppard says it's something Hi5 watches carefully.

"Facebook has 350,000 applications. They boast about this. I don't see how that compels people to create games for the platform, especially given that games are handled no differently than any other app. Imagine having to compete with 350,000 SKUs?

"That's the inherent inequity of the Facebook approach. It's all about getting your app onto the front page. Their approach is let people find content that they'll like and hope it goes viral. Our approach is present content to the user that we know they'll like. Its very different."

Ultimately, developers can only succeed by creating games for social platforms that are designed to take the platform into account. As Trigg says, the only things that really count are "fidelity, virality and the quality of converting the consumer's enjoyment into revenues".