Playfish: Social gaming space will see more consolidation this year

Playfish founder and CEO Kristian Segerstrale has said the social gaming space is becoming increasingly tough to enter due to the market's growth and maturity, and that he expects this year to bring even more consolidation to the sector.

But he added that many opportunities still exist for newcomers able to spot the trends of tomorrow, since the industry is rapidly changing.

"I actually think that the social gaming space, as it's defined today, is becoming increasingly difficult. Because in many ways [...] it is already a relatively established market, there are defined brands. I think that this year you'll see more consolidation," said Segerstrale, speaking ahead of his Nordic Game keynote on entrepreneurship set to take place this week.

"I wouldn't set up a company to create another farm game on Facebook. But, by definition, if you're an entrepreneur you're setting up to win in the next 3-5 years, you don't try to set up a company to win in an established category today, you try to create the category of tomorrow," he added.

He said there is "no question" a valuation bubble exists around virtual goods companies, but that their path was following those of any industry, including the iPhone one.

"Like any industry, it's complicated but for example there's initial success, rapid growth followed by hubris in terms of investment cases and whatnot, followed by a very successful good business environment but one which evolved with the natural part of the games industry," he explained.

"I think people look at something like social games, and they've been looking at it for the past year and thinking this is something entirely new, entirely different which will defy gravity and be a different kind of game environment. This year I think will show them that this will be the natural extension of the games market where a couple of things matter – scale matters, access to franchises matters. The overall gaming market becoming multi-platform means that you have to have multi-platform capability in order to really be able to reach the kind of scale you need to reach in the market.

"I think that in the past year there's been this sort of misconception that social gaming is something entirely different and new and will follow completely different rules to the rest of the games industry. I think you'll actually see this year that the kind of thinking around the industry will be much more how it fits into the broader games industry and does similar things to the broader games industry like access to franchises, like multi-platform publishing muscle and marketing spend will all be important."

And he predicted that as the games industry progressed through its shift from physical product to digital services, social games would remain at the "cutting edge", leading the way for other platforms to follow.

The full interview with Kristian Segerstrale can be read here.