Mayfield Fund’s Chang Peers Into Gamification Crystal Ball

The San Francisco Gamification Summit came to a close Thursday.  Backer of gamification startups, Tim Chang, shares his top 5 inisights regarding opportunities and threats in this field.

via Matthew Wong,

Mayfield Fund Managing Partner Tim Chang is not new to the growing field of gamification.

In the past couple of years, Chang has worked with some of the leading start-ups in gamification — the trend in which companies use rewards, leaderboards and other gaming mechanics to influence the behavior of customers or employees.

After backing Badgeville, Gigya and HealthTap, Chang continues to hear pitches from new companies hoping to break into the quickly evolving market.

At the three-day Gamification Summit in San Francisco, which ended Thursday, Chang elaborated on several opportunities and threats to gamification companies in the upcoming years. Below are five of his noteworthy insights:

The number one challenge facing gamification start-ups is the need to show evidence of return on investment and case studies of success.

“We’re in a phase where all companies want to test a pilot of a gamification platform,” Chang said. “But there needs to be an acid test of whether gamification is a real business or not, for example, how many businesses renew the pilot or not.”

An entire new set of jobs will be created because of gamification.

Running the gamification platform for customers is as important as the technology itself, Chang said. Gamification could sprout an ecosystem of complementary businesses including system integrators, who build and manage gamification technology for companies, measurement companies, consultancies and analytic quants.  Those skills will all be needed to apply the know-how to gamification platforms, according to Chang.

Zynga can teach gamification companies something about user interface.

“Every Zynga game introduces elements as you go,” Chang said. “Gamification platforms in any vertical need to teach by doing instead of teach by seeing.” Making the user interface of a gamification platform adaptive, with real-time feedback, will result in more delight in using the tool itself, Chang added.

Gamification companies should stop worrying about “deadbeats.”

Because many companies in the gamification space use the “freemium” business model, with only approximately 10% of users paying for premium content or software, Chang said that gamification companies need to “stop looking at the other 90% as deadbeats.” Opportunities for those who “earn” instead of pay for their use of different gamification platforms include customer feedback, new referrals and social media postings.

The four leading start-ups in the gamification space right now are Bunchball, Gigya, Badgeville and Big Door.

“There are substantial investments going into these four horsemen,” Chang said. With a recurring revenue model that appeals to Wall Street, Chang said, gamification companies present viable IPO candidates. And because a wide range of enterprise companies including, Oracle, SAP and even Accenture and IBM can incorporate gamification platforms easily, Chang said potential acquisition opportunities are also high for “the best of the breed.”

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