Hugh de Loayza, vice president of business development for Zynga, is extremely bullish on the social gaming business -- which is shaping up to be the posterchild for industry growth in 2009. Zynga, of course, operates many of the most popular games on Facebook -- including FarmVille, Café World, and Mafia Wars -- the top three titles, as of this writing, for monthly active users.

This interview took place at last month's GDC China in Shanghai shortly after the launch of Café World. In his presentation, de Loayza revealed that the title is Zynga's fastest growing game yet -- it reached 3 million users in just six days. As of this writing, it has over 28 million monthly active users.

De Loayza's background, of course, is not in social gaming, but in casual games -- with stints at EA's Pogo and Sony Online Entertainment -- so he understands the industry's transition.

Here, he speaks about not just what makes these games successful, but why developers like Brian Reynolds, who left Big Huge Games for Zynga, are attracted to the social games space -- besides the potential profits.

What do you ascribe Café World's success to?

Hugh de Loayza: It's a network effect where we're driving traffic across multiple extremely large games. It's a little bit of good fortune that we have.

Do you track the percentage of people that come in via, say, FarmVille?

HD: We are an incredibly analytical organization, so we track just about everything. It's the secret sauce behind all that stuff. There's a lot of mathemagics that go into it.

Obviously, "virality" has been a huge buzzword. You guys capitalize on that with a lot of status updates and news feed stuff in Facebook. Where do you see where that is right now, as things evolve and people become used to seeing it? What is the current state of virality?

HD: It's a constantly evolving state. That's the magic behind what we do. Certain things we do will work, and others won't. You try new ones, and A, B, C, D, E, F, G testing constantly. The current state is that some of that stuff does work. We also have to pay really significant attention and care to the rulesets that are put in place by the social networks.

Do you find that as there are more games and more experiences doing more virality, that there's a saturation effect that the audience is reaching?

HD: I'm sure that the audience reaches some degree of saturation. We all do, if we're spending a lot of time on there. The trick for us is understanding new mechanisms that will inspire them to do that. It's also about good gameplay, right? That is a part of the gameplay, but it's also about building experiences that they want to share with others through the communication channels.

It's no secret that Playfish has been really critical of the auto-inviting systems that a lot of games have, and have talked more about creating experiences that users organically wish to bring their friends into. You guys have to look at it both ways, right?

HD: I guess we do look at it both ways, but the truth of the matter is that the response speaks for itself. If 18 million people are playing FarmVille, it's a game that they want to share with their friends, and it's an experience that they want to provide. There are other opportunities for farm games, including [Playfish's] Country Story. It's a good experience.

If you look at the evolution of the farm genre, in light of the Chinese markets, there was a high degree of game cloning. There was Harvest Moon, then Happy Farm, which was launched in Asia, and that begat the Western farm games. How do you see that issue? How do you see the overall saturation of game ideas that are cloned? The source is not original, and once something becomes big, it becomes pervasively copied?

HD: Our games are pretty distinctively different from the traditional Asian farm games. A shooter is a shooter, so a harvest mechanic is a harvest mechanic. But the story you wrap around it is different. The other thing to pay attention to is that you've got a service that you're running.

The value is in that service, for the users. If it's something that's constantly changing, you're in the same sandbox, but at the same time, it's a widely different experience all the time. It's the difference between Half-Life, which is basically a shooter, to Combat Arms, or whatever. It's the same shooting mechanism, it's just different services around it.

There's room for innovation within a genre. Do you worry that when the concepts are something simple like farming or harvesting that it doesn't give you a lot of insurance to not be cloned as a game, whereas if you had more of a high concept that it would be something less possible to be cloned?

HD: People are going to try. It's been going on in many spaces forever, and not just the games space. People are going to try to attempt to clone you. I think it's still going to be hard for them. Part of that is that we've had such dominant traffic capabilities at this point in time that people seem to be preferring the original experiences that we're providing for them moreso than the other opportunities that they have.

If indeed there are 60 other farm games out there [as suggested by one speaker at GDC China -- Ed. note], why are they playing FarmVille? It's because it's a great experience and a great game.

Nobody's knocked off Rollercoaster Kingdom, right? One would expect that will probably happen. I don't think they're going to be as successful, because we provide a really great opportunity for them.

Is that why you're making investments into bringing over experienced game designers from the PC games industry? These are people who can create experiences that are robust.

HD: I think that is absolutely why we're doing it. We're probably one of the few companies that has. [In my GDC China presentation] I talked a little bit about breaking game guys.

We take those game sensibilities, and really want to apply those in a social manner. It's just a different way of thinking, and it's an analytical approach to game design. But at the end of the day, it makes for an experience that is now a meaningful part of 20 million peoples' daily lives.

We do tremendous focus studies. One of the things we did early on that was really smart was that we had a lot of web DNA, and really started to focus on a lot of game stuff.

You're not making experiences that are not consonant with what Brian Reynolds, from Big Huge Games [and now at Zynga] did in the past, but the strategy core gameplay aspect that your company concentrates on touches on what he has experience with. But the themes of his work might be different from what you guys might be willing to launch. How does that work?

HD: I think Brian is a perfect example of a guy who is excited and engaged about using an analytical and data-driven approach to doing his game design, and taking his knowledge base of the genres in which he has worked and extending them into a different vehicle created around this notion of social interaction.

You come from more of a games background than a web background.

HD: Absolutely.

What do you think is the key? There has been a lot of talk about how production values are only going to get higher, and the competition is only going to get fiercer. Is that how you see the market shaping up on the social experience?

HD: Absolutely. I think the days of the indie developer are beyond us. If Flash is going to be the ubiquitous thing that comes out there, and you're going to need guys who have that sensibility, then you're going to need to have a support team.

Let's assume it gets to a million or two million DAU [daily active users]. That's a pretty significant task that you have to take as a company. So now you're a ten-person company, right? As you grow, it grows exponentially from there. I think the game is changing.

Do you worry about falling into the same trap that console games fell into? They got more and more elaborate, and then became more and more focused toward a hardcore audience. That could be a danger for your space, right?

HD: We've actually made investments into some innovative games that were incredibly hardcore. If you look at Guild of Heroes, for example, we did roll that out. It was a version of Diablo built in Flash, and it wasn't successful, and we didn't support it any longer.

The truth of the matter is that we kind of did, and were mindful of it, and we tried to build specifically for that casual, social platform. We've gotten really good at that. We've varied, but we've found our sweet spot right now.

With Facebook being a really broad platform that everyone is involved in at a basic level, do you think there is a way to attract a more traditional gamer into participating?

HD: It's an interesting question, and it's one that I think about. Gaming is part of your life. It's not your entire life. If you want to build your profile to be more gamer-centric, you'll do that inevitably anyway.

But I think it's a niche market, and the sweeter spot is to go wider and to build things that are really palpable, where moms and dads are playing with their six-year-old kid. That's a really interesting effect that's happening for us.

But you can't have a six-year-old kid on there. You mean they're playing with their kid locally?

HD: The kids are managing their farms.

Isn't that dicey, though? That's a gray area, right? The kids aren't really supposed to be on Facebook.

HD: It's a gray area. I know, they're not supposed to be on Facebook. You're right. But we hear this all the time. "My kid is managing my farm!"

I'm only asking because I think that kind of thing happens all the time, and I think if parents are watching, it's not a danger. But it does open up a legal gray area, right?

HD: Well, no. You have to be 18 and above to join Facebook, and what happens in the home is really the responsibility of the parent. It's not our responsibility. We just happen to make an experience that is family-oriented and widespread casual. They share that experience because they feel that it's approachable and it's sanguine.

How do you choose what route to go down next? Farming and restaurants have already had some established games with some success in those themes. Is that where it is? Or is it because you think they're accessible to the broad audience?

HD: I think they're A, accessible to the broad audience, and B... if you look at evolutionary trends with simulations, we've now opened up a new trend. We see this happen in the casual space all the time as well. In the simulation space, there have been a couple of successes.

You look at those successes, and then you innovate upon those to make them much more social experiences. It's the same thing that Playfish is doing with many of their games, where they took a look at the Nintendo DS and said, "Okay, these are the ones that are successful, and we're going to make that a social experience."

That's true. It's a dicey issue. People in the industry -- not necessarily in the audience -- get frustrated with this concept of looking towards other games for inspiration. How does that affect your moves? Or does it not affect your moves?

HD: It doesn't. We love to make great social experiences. Maybe where you're getting a little bit tripped up is that you're looking directly at the game experience and not the whole package, which is really this notion of building social interaction in and amongst games. That's the entire experience. The game is somewhat of a vehicle of that. That's the whole experience, and that's a lot of the artistry we're bringing to the table.

I think that's a fair point. I'm getting neither here nor there about it, personally, in the sense that I don't care. The copying issue is what it is. But I think a lot of the outside view is ignoring that there's an art to the social gaming aspect of it.

HD: It's a super-key important element. That experience that we're providing... if we're getting 15 percent of the U.S. population in traffic on a daily basis, it's resonating with somebody.

They're like, "Oh, this is cool. I can play a game for five or 10 minutes, and I can broadcast that to my friends." That's how the platform works. "I like to do it with Zynga more than any other, because they're providing me that social experience."

You talked about breaking designers and getting them to understand the social experience. How do you do that?

HD: Analysis, analysis, analysis. It's been like that. [In traditional development] It's just like, "Oh, it's going to be a great experience," and this and that. We'll spend two years down a ship cycle, and, "Oops, I was wrong!"

So now it's like, "If we do this, I think we can measure that, and here's how we're going to measure and tweak it later down the road."

So it's essentially analysis of seeing if people are using the game in the way you were expecting them to, and then modifying and tweaking things if they're not?

HD: What's exciting to Brian and other game developers in the social space is you stay with your game and you monitor it live. You see how the game is responding to your design decisions, and you can alter and adapt immediately.

That is super-exciting for guys who have invested. A standard console game developer, if he has a 30-year life cycle, he's going to get out maybe 15 titles, and that's it. You've got 15 shots to make your decisions correct. Here, you can make a decision on a daily basis and alter it, tweak it, and live with it for a longer period of time.

People have said that they produce about 20 percent of the content they're expecting to produce during their game's lifespan up front. Would you say that that's typical of Zynga?

HD: We don't have a ratio that we go by. Moreso, we try to keep fresh content continually going. We plan out on a roadmap cycle that's several months out.

You continuously look at that roadmap? Is there a planned obsolescence or a transition?

HD: I think it's too new to have that. The phenomenon is just too...

Is that something you're anticipating?

HD: I don't know. It's that slide rule concept I was talking about. There's going to be more traffic. There's going to be more people that come in the door, and people are going to pick back up experiences. I do it all the time.

I actually referenced an old game that I used to play the other day, and I was like, "Oh, I'm going to go back and play that game." And lo and behold, it was like, "Why did I ever leave it?" It's just like when you go back and pick up your old console stuff.

Something that Playfish alluded to the other day is that they see a potential coming marketing war. That might be the next step of the evolution. You talked about your networks being your strength and getting new users in, but marketing could be the next step that's relevant. So if people start spending on marketing, it might create a console war -- like an arms race, a Sony and Microsoft situation.

HD: Well, we market it as it is today. We buy advertising and seed installs for sure. We just have the good fortune of having this network thing now. But initially, we did a ton of marketing, and they don't do any, in fact, or very little. I think they just started rolling it out. It will be interesting to see where they go with it. A marketing war is a marketing war.

Do you see that being potentially important?

HD: Well, we still do marketing. But we've also gotten to a scale where that marketing... Actually, I heard some recent analysis around this saying that marketing doesn't necessarily make sense, unless you've got scale. Because you're not going to have the ROI to be able to capitalize on that marketing scale.

You guys are generating millions or tens of millions of dollars. ?

HD: I don't talk about revenue.

I will say that I think you guys do millions of dollars in revenue. Do you see a time where something like a commercial during American Idol could be viable for you guys? That kind of marketing.

HD: You mean, from a financial perspective, could it be done? I suppose, sure. If we raised money, we could go buy a Super Bowl commercial or something. But similarly, is it going to be effective? I don't think so. It wouldn't be a sensible use of the money.

That's my question. Do you think it's effective?

HD: Television advertising?

Broad audience targeting in the mainstream.

HD: Are people going to Facebook Magazine to go read about upcoming social trends?

Absolutely not.

HD: I don't think there's even a potential vehicle for it, outside of directly on the social network.

You guys aren't totally married to Facebook either, are you?

HD: We support MySpace, Bebo, and Sonico. We were supporting Hi5. We're pretty much all over the place.

You're not supporting Hi5 anymore?

HD: We recently... we actually have two games there still.

CN: Do you see social networking consolidation potentially?

HD: I think we'll see some degree of consolidation there. We're definitely seeing some. Certain social networks see traffic to other social networks. We see growth in different regions. It all depends on the area. Orkut is growing like crazy in India. It depends on what the flavor of the week is.

That's the question. Facebook's business model, as I understand it, is predicated on the assumption that if they reach a certain user target, they will become de facto. Do you see the market like that?

HD: I think very highly of Facebook's capabilities, let's just say that. It's along the lines of "Good design wins." When I think about the difference between some of the choices that other social networks are making and Facebook is making, they provide a great product.

Whether or not that speaks to every culture, I don't know, and I think that's going to be the distinctive point. Orkut also provides a great product, and it seems to speak more to a different demographic.