Gamification gets popular, but it’s still finding its feet

Gamification, or using game mechanics in non-game applications, is the new black.

It has become fashionable as game designers turn their talents from creating fun games to creating fun web sites and other cool experiences for major brands.

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But it’s definitely not a new idea, said Gabe Zichermann (right), organizer of the first-ever Gamification Summit, which took place yesterday in San Francisco. He said that many of the ideas about loyalty and reward programs have been repackaged in a better form with the latest craze around the topic. But many of those ideas have met with varying success over the past decades.

Certainly, gamification has buzz. The summit sold out and drew more than 400 people. The Game Developers Conference in late-February and early March will also have a “serious games summit” that will be devoted in part to gamification. Experts are trying to figure out how to use game techniques to deal with problems such as obesity.

Zichermann said that some loyalty programs go back as far as the 19th century. They got more modern in the 1930s with the creation of Green Stamps. Frequent flyer award programs became the rage at airlines in the 1980s, and the new achievement and virtual reward programs have been generating a lot of buzz in the past couple of years thanks to Foursquare, which gives badges to people who check in at locations on their mobile devices.

One difference is that older loyalty programs were blunt instruments. They started with “buy this now” and then you can get rewards. Now brands offer users various ways to get familiar with their content. At some point, users will make a purchase. But they may do it well after they engage, share, or discover the brand.

Engagement is the new way to measure the benefits of gamification, rather than outdated metrics such as page views. Zichermann says that the metrics that matter with engagement are timeliness, frequency of return, duration of visits, virality, and user ratings. For some brands, some of those metrics are more important than others.

Users who participate in gamification programs, such as signing up to get virtual rewards for visiting a web site, want status, access to cool things, power to do more than others, and free stuff, Zichermann said.

At some point, this buzz will turn into a real industry. Wanda Meloni, analyst at M2 Research, estimates that the production of gamification projects will generate $1.6 billion in revenues by 2015. That means it will grow from just 3 percent of social media marketing budgets in 2010 to more than 23 percent by 2015. The average growth rate for the next two years is 150 percent, in terms of revenues.

The vendors in the market currently include Badgeville, Big Door Media, Bunchball, CrowdTwist, Cynergy, Gamify, SpectrumDNA, Reputely, Leapfrog Builders, iActionable, Scvngr, and Manumatix. Prominent venture capitalists such as Tim Chang of Norwest Venture Partners and Glenn Entis of VanEdge Capital have expressed interest in investing in more gamification startups.

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Clients are asking these companies to help them implement game mechanics. About 44 percent of them want increased user engagement, 22 percent want more brand awareness, and 33 percent want more brand loyalty, according to M2 Research. More than 40 percent of the clients are in entertainment, with the rest in publishing, consumer goods, healthcare and financial. Relatively few are in retail, education and telecommunications.

There are skeptics. At the Gamification Summit, there were a number of comments on the show’s Twitter feed that indicated a backlash. Panelists acknowledged that was case. Gamification has to be properly designed. Nicole Lazarro, founder of XEODesign, half joked that poorly designed gamification can kill. She noted that gamification designers have changed the bridge toll system on the Bay Bridge, where you pay a lower toll if you are driving at off-peak hours. But that resulted in cars stopping in their lanes as they waited for the clock to change on a Friday night from the peak toll to the off-peak toll.

“Many people criticize gamification broadly,” Zichermann said. “One of the false tautologies is that they look at early examples and, because they don’t find that experience compelling themselves, they don’t find it compelling. That’s a false conclusion.”

There are new variants to gamification as well. Zichermann refers to the lighter form as “game sugar,” or a light touch of gamification as the addition of points and rewards so that web sites and other products can get more loyal users. But Jane McGonigal, author of Reality is Broken: Why games make us better and how they can change the world, said she feels gamification is often just scratching the surface. She thinks that gamification efforts aimed at increasing engagement have to offer users the same kind of addictive experience that great games deliver, putting the user into a highly motivated state of mind, or eustress. So far, there are few examples of such intensive gamification efforts.

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Zynga’s games are good examples of more intensive gamification of tasks such as staying in touch with friends on Facebook. Zynga is famous for tweaking its games so that users don’t get stuck in the games and at some point will convert from free play to becoming a paying user. Once gamification efforts become more mature, they can follow in the footsteps of Zynga, tweaking their efforts constantly for better results.